The National Association of Securities Dealers (NASD) announced a total of US$7 million in fines against four broker-dealers affiliated with ING America Insurance Holdings Inc. in connection with the receipt of directed brokerage in exchange for preferential treatment for certain mutual fund companies.

The regulator charged that the conduct by the four ING broker-dealers violated its Anti-Reciprocal Rule, which prohibits arrangements in which brokerage commissions are used to compensate firms for selling mutual fund shares. The rule is also designed to ensure that execution of portfolio transactions is guided by the principle of “best execution” and not by other considerations.

“The use of directed brokerage commissions from a mutual fund as an incentive towards the marketing or preferred treatment of those funds is an impermissible use of customer assets,” said James Shorris, NASD executive vice president and head of enforcement. “NASD will continue to pursue mutual fund sales practices that put the interests of firms ahead of the interests of customers.”

To date, the NASD has brought more than 30 enforcement actions for similar violations, it noted.

In settling with the NASD, the broker-dealers neither admitted nor denied the allegations, but consented to the entry of its findings.