The U.S. Financial Industry Regulatory Authority has fined AXA Advisors, LLC, US$1.2 million for failing to adequately supervise its fee-based brokerage business and distributing misleading sales literature for its fee-based brokerage account program, CapAdvantage, between 2001 and 2005.

In addition to the fine, FINRA also ordered AXA Advisors to return US$1.4 million in fees to approximately 1,800 customers who, it says, were inappropriately placed or kept in fee-based brokerage accounts. The firm is voluntarily refunding customers an additional US$1.2 million, making the total amount returned to CapAdvantage customers more than US$2.6 million.

The regulator notes that AXA Advisors also unilaterally took steps to enhance its system and procedures and to close accounts that were not appropriate. FINRA says it considered these steps in determining the sanctions in this case.

In settling the case, the firm neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.

“When a firm offers a new service to customers, such as a fee-based brokerage account, it must tailor its supervisory systems to the newly offered product,” said Susan Merrill, FINRA executive vice president and chief of enforcement, in a release. “AXA Advisors failed to put in place supervisory systems designed to ensure that its CapAdvantage fee-based account was appropriate for the customers it placed in the program. The firm also provided inaccurate information to brokers and customers about how fees would be assessed in these accounts.”