Two FSC Securities Corp. brokers and a Seal Beach investment-advisor firm were sanctioned Monday by a Securities and Exchange Commission judge on charges they fraudulently failed to tell investors of mutual fund fees.
The administrative law judge, though, dismissed other SEC charges that the brokers failed to disclose they would get higher commissions if customers made one fund investment over another.
SEC staff members are reviewing the decision and will decide whether to appeal it to the agency's commissioners, SEC enforcement director Richard H. Walker said. The agency "is continuing to watch carefully" funds' fee disclosures, he said.
The SEC brought the unusual case in December 1998 as part of a campaign to get the fund industry to disclose its fees more clearly. The agency alleged that the brokers steered customers to an investment that charged higher fees and paid a bigger broker commission than an alternative investment in the same fund.