Regulator clamps down on company for conflict-of-interest
AIG might be planning to get out of the broker-dealer arena, but that hasn’t stopped the SEC clamping down on the company for an alleged conflict-of-interest.
According to a report at Law360, the regulator has reached a $9.5 million settlement with the insurance giant relating to sales that carried 12b-1 fees even though cheaper deals were available. The report at the law news website suggests that Sagepoint Financial, FSC Securities Corp and Alliance Associates picked up $2 million in the form of extra fees without disclosing the conflict of interest to clients.
A Reuters report states that the regulator was displeased with the units of the insurance company for not accurately monitoring accounts over reverse churning. Reverse churning is a practice of lower trading frequency within fixed fee accounts.
The clampdown from the SEC comes after AIG announced that it will dispose of its broker-dealer segment. Its decision was made after the Department of Labor chose to introduce tight new regulations over retirement products – these regulations will be implemented in the near future.
According to Bloomberg, AIG’s three units managed a total of $13.2 billion across 67,000 accounts – overall its retirement business brought in a $2.84 billion pre-tax operating income last year.
It is not the first time that the SEC has looked at conflict-of-interest issues. It settled with JPMorgan last year to the total of $267 million for not disclosing to its clients that they were placed in more expensive proprietary mutual funds.
According to a report at Law360, the regulator has reached a $9.5 million settlement with the insurance giant relating to sales that carried 12b-1 fees even though cheaper deals were available. The report at the law news website suggests that Sagepoint Financial, FSC Securities Corp and Alliance Associates picked up $2 million in the form of extra fees without disclosing the conflict of interest to clients.
A Reuters report states that the regulator was displeased with the units of the insurance company for not accurately monitoring accounts over reverse churning. Reverse churning is a practice of lower trading frequency within fixed fee accounts.
The clampdown from the SEC comes after AIG announced that it will dispose of its broker-dealer segment. Its decision was made after the Department of Labor chose to introduce tight new regulations over retirement products – these regulations will be implemented in the near future.
According to Bloomberg, AIG’s three units managed a total of $13.2 billion across 67,000 accounts – overall its retirement business brought in a $2.84 billion pre-tax operating income last year.
It is not the first time that the SEC has looked at conflict-of-interest issues. It settled with JPMorgan last year to the total of $267 million for not disclosing to its clients that they were placed in more expensive proprietary mutual funds.
