A class action has been filed in a federal court in New York against American International Group Inc. and a subsidiary that sold NationsFunds mutual funds found last year by NASD to have received preferential treatment in exchange for directed brokerage, according to the Schiffrin & Barroway LLP law firm in Radnor, Pa.
The lawsuit alleges on behalf of buyers of the funds from June 30, 2000, through June 8, 2005, that NASD, the securities industry's self-regulatory body, announced a fine for AIG last June 8 in connection with the receipt of directed brokerage in exchange for preferential treatment for certain mutual fund companies and families known as the shelf-space funds. Damages from the alleged misconduct were not specified.
The Schiffrin & Barroway firm's complaint, filed Thursday in U.S. District Court for the Eastern District of New York, alleges that the defendants, contravening their disclosure obligations and fiduciary responsibilities, failed to properly disclose that they had been aggressively pushing salespeople to sell shelf-space funds that offered financial incentives and rewards to AIG and its employees.
The funds were bought from the AIG Advisor Group unit, which consisted during that period of the broker-dealers Royal Alliance Inc., SunAmerica Securities Inc., FSC Securities Corp., Sentra Securities Corp., Spelman & Co. Inc., and Advantage Capital Corp.
