Finra fines AXA $600,000 over misclassified bond funds

Published by Investment News

By  InvestmentNews

May 2, 2019 @ 12:28 pm

Funds sold to 401(k) plans as investment grade actually held lots of junk


The Financial Industry Regulatory Authority Inc. has fined AXA Advisors$600,000 and ordered the firm to pay approximately $172,000 in restitution for distributing materials that “negligently misrepresentated” five bond funds as investment grade when much of the portfolios consisted of junk bonds.

Finra said that AXA will pay the restitution to participants in 401(k) retirement plans that offered the funds. As part of the settlement, Finra also required AXA to send corrective disclosures to all affected plan participants, Finra said in a release.

“We remain committed to transparency and accuracy in all communications and we regret this occurred,” an AXA spokesman said in an email. “We are pleased to have resolved this matter and are providing remediation to those who may have been adversely impacted.”

As a result of the misclassifications, AXA distributed thousands of enrollment forms, investment options attachments, and other documents to plan sponsors that were inaccurate and misleading, Finra said. Specifically, AXA distributed approximately 14,500 enrollment forms and 2,500 investment options attachments that misclassified the credit quality of the five bond funds between September 2010 and November 2015. The misrepresentations affected approximately 800 retirement plans and 6,200 plan participants.

FREE Consultation |  585-310-5140

Peiffer Wolf Carr & Kane has helped thousands of investors who have suffered substantial losses. If you have Variable Annuities or Life Insurance Products in your investment portfolio, Contact Us by calling 585-310-5140 or by filling out an online Contact Form for a FREE Consultation.

Peiffer Wolf (1316 Posts)

In our legal system, every person is innocent until and unless found guilty by a court of law or a tribunal. Whenever we reference “allegations” or charges that are “alleged,” such allegations or charges have not been proven, and are merely accusations, not findings of fault, as of the date of the blog. We do not have, nor do we undertake, a duty to continue to monitor or follow cases about which we report, and/or to publish subsequent blogs regarding various developments that may occur in such cases. Readers are encouraged to conduct their own research regarding any such cases and any developments that may or may not have occurred in such cases.