NASD Plans Action on Investor Overcharges

The regulatory body NASD said Tuesday that it plans to take action this month against two or three brokerages it says overcharged investors who bought mutual funds with upfront sales fees.

Brokerages are failing to give investors promised discounts, known as “breakpoints,” when they buy fund shares, said the NASD, which has been investigating mutual fund sales at securities firms. It did not name any of the companies.

Regulators are scrutinizing sales of mutual fund shares as U.S. stock funds suffered losses for the third year in 2002.

The NASD, a self-policing brokers’ group, and the Securities and Exchange Commission have been probing fund sales at dozens of brokerages in the last six months. Mutual fund companies such as Fidelity Investments and the Vanguard Group aren’t part of the investigation, NASD Vice Chairman Mary L. Schapiro said.

The NASD plans to seek restitution for investor overcharges, Schapiro said. It is unlikely to seek fines or the ouster of executives because the offenses appear to be unintentional. Among the charges will be allegations that NASD rules requiring equitable trade practices were violated, she said.