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Rating:NASD Orders Expedited Refunds Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, August 27, 2003

NASD Orders Expedited Refunds

by: Sean Hanna, Editor in Chief

The National Association of Securities Dealers has taken the unusual step off circulating a membership wide bulletin advising them to pay discounts on commissions owed under breakpoint schedules. The NASD posted the message on its Web site Sunday at the following link ().

Typically, the NASD targets specific firms for actions such as this. In this case, though, the problem of proper breakpoint recognition is thought to be an industry wide one. When the NASD studied the issue at a sample of firms earlier this year, it found that up to a third of brokerages might have charged the incorrect commission to fund buyers.

The NASD also placed a calculator on the site that is designed to help shareholders determine the amount by which their commission should be reduced.

Although the matter does not affect fund firms directly, the message covers more than 600 broker-dealers that are NASD members. Many of those brokerage firms also sponsor their own fund family.

In the letter, NASD officials wrote that they expect members to make refunds to customers "expeditiously" in cases in which they are aware that customers did not receive the sales load discount to which they were entitled.

It also advised its members to make refunds to any customers who come forward and assert that they did not receive all applicable breakpoint discounts. It added that member firms may not "place the burden of demonstrating entitlement to a refund upon the customer and, therefore, may not refuse to make a refund to a customer without first checking its own records to determine whether the customer is entitled to a refund." It added that they might require documentation from customers in those cases in which they do not hold the needed records.  

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