On-line brokers E-Trade have been fined $90,000 by the National
Association of Securities Dealers Regulation, Inc. (“NASDR”) for
failing to comply with advertising regulations. NASDR explained
that several advertising ventures undertaken by E-Trade violated
aspects of its advertising rules.
NASDR is an independent subsidiary of the National Association
for Securitiesa Dealers (NASD), which was set up by the US
government to regulate the securities industry. The particular
investigation into E-Trade’s activities revealed that the company
had misleadingly claimed that a mutual fund introduced in 1999 had
been “ranked by Morningstar as the lowest cost tech index fund”.
The fund had not been ranked by Morningstar and so the statement
included in several advertisements was false.
In addition, E-Trade was found to have carried out two direct
mailing marketing campaigns in breach of NASDR regulations and its
compliance and supervisory procedures for advertising activities
failed to comply with NASDR standards.
E-Trade has neither admitted nor denied the regulatory body’s
findings, but the following statement from the company has been
reported by News.com:
“E-Trade’s advertising review and approval
procedures, along with its supervisory system and written
supervisory procedures, have been enhanced to further ensure
compliance with NASD rules concerning advertisements and sales
literature.”
