8 Brokerages Are Fined for Taking Kickbacks

NASD said it fined eight brokerages, including U.S. units of Prudential and Lord Abbett & Co., almost $7.8 million for taking kickbacks from mutual funds.

Commonwealth Financial Network, Mutual Service Corp., Lincoln Financial Advisors Corp., Lord Abbett Distributor and four Prudential units steered clients into preferred funds in return for payments, NASD said in a statement Monday. In return, the fund firms sent their trading business to the brokerages, the regulator said.

“We continue to pursue conduct which puts the interests of firms ahead of the interests of customers,” Barry Goldsmith, NASD’s enforcement chief, said in a statement. The “costs are paid not by the mutual fund company but by the funds’ shareholders,” he said. None of the brokerages admitted or denied wrongdoing.

NASD has brought 20 actions for similar violations, including a June case against 15 brokerages that were fined $34 million for pushing certain funds. OppenheimerFunds Inc., a unit of MassMutual Financial Group, agreed to stop paying brokerages in a September settlement with the Securities and Exchange Commission.

In Monday’s case, National Planning Holdings Inc., the Prudential unit that oversees IFC Holdings Inc., National Planning Corp., SII Investments Inc. and Investment Centers of America Inc., paid the biggest fine at $3.85 million.

Waltham, Mass.-based Commonwealth Financial paid $1.4 million, followed by West Palm Beach, Fla.-based Mutual Service at $1.3 million; Fort Wayne, Ind.-based Lincoln Financial Advisors at $950,000; and Jersey City, N.J.-based Lord Abbett at $255,000, said NASD, formerly the National Assn. of Securities Dealers.