NASD announced Tuesday that it has fined Quick & Reilly Inc. - which is now a part of Banc of America Investment Services Inc. - $570,000 and Piper Jaffray & Co. $275,000 for alleged violations of its directed brokerage rule.
The two companies neither admitted nor denied the charges but consented to the industry self-regulatory body's findings.
NASD said it found that both companies operated "preferred partner" or "shelf space" programs, giving favorable treatment to funds offered by certain mutual fund companies in return for brokerage commissions and other payments.
Piper Jaffray, which operated its preferred partner program from 1998 to 2003, included 12 to 15 fund complexes in its program but sold funds offered by more than 100 fund complexes. Quick & Reilly maintained its program from 2001 to 2003 and included 16 to 20 fund complexes while selling offerings from about 300 fund firms.
Several of the fund companies participating in the preferred partner programs allegedly paid part or all of the extra fees by directing their brokerage business to the two companies.
