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Rating:Two Fidelity BDs Fined for Ads Aimed at Military Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, May 09, 2007

Two Fidelity BDs Fined for Ads Aimed at Military

by: Marie Glancy

As reported yesterday in BDInsider, the National Association of Securities Dealers has slapped a $400,000 fine on two New England-based Fidelity broker-dealers, saying they targeted military personnel with misleading advertisements of Destiny I and II systematic investment plans. Prospective customers should know they can buy the same funds more cheaply elsewhere, says NASD.

The Wall Street Journal carried the story in its Fund Track column today, noting that systematic investment plans like these usually involve hefty front-end fees during the first year of payments and were banned as part of the Military Personnel Financial Services Protection Act of 2006. NASD charges the two broker-dealers, Fidelity Investments Institutional Services Co of Smithfield, R.I., and Fidelity Distributors Corp. of Boston, distributed sales materials that misrepresented the Destiny plans' performances.

The broker-dealers are also required, over the next five years, to notify plan holders who attempt to increase their investments that shares of the same underlying funds can be purchased separately, and that they can this way avoid extra charges of up to 50 percent in the first year. Meanwhile, the collected fines will go to the NASD Investor Education Foundation, dedicated to helping military personnel and their families make sound financial decisions.  

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