Fund Sales at AmEx Questioned
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New Hampshire regulators are seeking at least $17.5 million in penalties from American Express Co., alleging that the company rewarded financial advisors who steered clients toward underperforming in-house mutual funds.
In one sales contest, the company’s subsidiary American Express Financial Advisors offered sales agents who sold the most company funds a free one-year lease on a Mercedes-Benz, according to the complaint filed Thursday.
Regulators called the company’s disclosures of the incentives “inadequate, obscure and misleading.” It also said the firm “failed to reveal the extensive and insidious nature” of the conflicts.
American Express Financial Advisors spokesman David Kanihan disputed some charges.
“Our advisors do not receive more compensation to sell in-house mutual funds versus nonproprietary funds,” he said Friday. “The majority of mutual funds we sell in New Hampshire and elsewhere are nonproprietary.”
American Express shares fell 37 cents to $54.13 on the New York Stock Exchange.
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