AmSouth Broker Unit Censured By NASD in Mutual-Fund Sales
April 03, 2011
BIRMINGHAM, Ala. -- AmSouth Bancorp.'s brokerage unit was censured by the National Association of Securities Dealers and fined $150,000 for its marketing and sale of mutual funds. AmSouth consented to NASD's finding that bank employees were paid to generate business for the brokerage unit -- a violation of NASD rules. In addition, the NASD found that AmSouth couldn't document that certain investments were suitable for customers, and found that it made ``misleading written statements'' about one of the funds to certain customers. The NASD said many of the sales-practice violations occurred because AmSouth's supervision system was ``inadequate.'' Jimmy Mckenzie, an AmSouth spokesman, said the bank hadn't admitted any wrongdoing and that ``almost all of the issues raised occurred three to five years ago and most were related to documentation and record keeping.'' He said the bank has since hired additional supervisory personnel and beefed up its compliance procedures. The censure is the latest in a series of complaints about mutual-fund sales practices at banks and their brokerage arms. As banks have aggressively plunged into the sale of mutual funds, customers have complained that they haven't been told about the risks of these investments. AmSouth was sued last April by a customer alleging it used deceptive practices in selling him investment securities. And a former compliance officer of the brokerage unit has filed an arbitration claim protesting his dismissal and alleging inappropriate sales practices and inadequate supervision. AmSouth denied allegations in both cases.
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