US investment firms Scudder, Putnam and AllianceBernstein were collectively fined $700,000 by industry regulator NASD for doling out illegal...

US investment firms Scudder, Putnam and AllianceBernstein were collectively fined $700,000 by industry regulator NASD for doling out illegal soft-dollar payments designed to curry favour amongst distributors of their investment products. The regulator specified numerous instances from 2001 to 2004 when the distribution arms of Scudder in Chicago, Putnam in Boston and AllianceBernstein in New York, improperly provided and paid for entertainment above a reasonable amount for attendees of training and education meetings. Scudder was fined $425,000 for soft-dollar infringements which included footing the bill for “expensive meals at premier restaurants in New York City”; throwing an “elaborate rock-and-roll party” in 2002; and paying for additional nights of lodging as well as golf, fishing, and horseback riding activities when there were no scheduled educational or training activities – a NASD statement said. Putnam was fined $175,000 for similar activities including food, entertainment and accommodation expenses which included tickets to a Boston Red Sox baseball game in 2001. AllianceBernstein was fined $100,000 for paying for advisors and guests to attend dinners at prominent New York City restaurants and attend Broadway plays. NASD rules limit the use of non-cash compensation such as reimbursement for travel expenses, meals and lodging in connection with training and education meetings to help ensure the integrity of investment recommendations. According to a statement, NASD rules are designed to prevent point-of-sale incentives from compromising a broker's objectivity in matching the investment needs of the customer with the appropriate investment product. In settling with the regulator, all three firms neither admitted nor denied the allegations, but consented to the entry of the findings.