NASD said Wednesday that it had fined an American International Group Inc. unit more than $1.1 million in connection with allegations that the unit received directed brokerage business in return for giving preferred treatment to 12 fund companies.
The regulator said American General Securities Inc., a Houston unit of AIG, violated a rule that prohibits companies from favoring the sale of shares of particular mutual funds in reciprocity for brokerage commissions. The company neither admitted nor denied the allegations but agreed to the settlement.
NASD said it found that from January 2002 through September 2003 American General operated a revenue-sharing program in which fund companies paid a fee in return for preferential treatment. Three of the 12 fund companies paid their fees for the shelf space program by directing about $2.7 million of fund portfolio brokerage commissions to American General. The remaining nine paid in cash.
