The broker-dealer accused by the New York Times of gauging military officers when they purchase mutual funds through contractual plans has changed its course. The Times reported Friday
that last week First Command Financial Services stopped selling the plans which carry commissions of up to half the first-year contribution. The company said it discontinued the product in response to media and Congressional concerns.
First Command also said that it expects to face SEC and NASD action in response to its practices. "Although we continue to cooperate with both organizations and look forward to resolving all issues under review in the near future, it is likely that some regulatory action toward First Command will occur," Lanny J. Davis, a Washington lawyer who represents First Command told the paper.
The stories detailing the practices of Fort Worth, Texas-based First Command were reported by Times reporter Diana Henriques, the author of Fidelity's World, starting last July. In October the House passed a bill banning contractual plans. A Senate bill failed to pass.
The funds included in First Command's product included: Fidelity Destiny II and funds from Franklin Resources, AIM/Invesco and Pioneer Investments.
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