Waddell & Reed to Pay $507,000 to End Claims
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Waddell & Reed Financial Inc. will pay $507,000 to settle claims of improper variable-annuities sales by the Missouri Securities Division.
The state will be paid as part of a settlement reached in April between Waddell & Reed and the NASD over similar allegations, Missouri Secretary of State Robin Carnahan said Thursday. Investors in Missouri will receive more than $400,000; $107,000 more will be allocated to Missouri public schools and investor education funds.
The settlement ends a dispute that began March 25, when the Missouri Securities Division suspended the Overland Park, Kan.-based company’s business in the state while it investigated its sales practices.
The state and the NASD contended that Waddell & Reed harmed customers by switching variable annuities to earn extra fees.
Waddell & Reed obtained a temporary restraining order in the days after the Missouri Securities Division’s suspension, barring its enforcement.
In the settlement reached in April, Waddell & Reed agreed to reimburse customers as much as $11 million and pay a $5-million fine. The money manager also agreed to a separate penalty of $2 million to settle similar claims by some state regulators.
Waddell & Reed’s actions affected 250 investors in the state and netted the firm $1.6 million in commissions, Carnahan said.
Waddell & Reed had no immediate comment. Its shares fell 10 cents to $18.50.
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