|Wear a long sleeve shirt!
This has been going on with the broker for a number of years. Here is a press release from NASD on the censuring and fining of this upstanding broker.
A couple of points from the press release:
- “Using misleading sales scripts, inappropriate comparisons and omissions of important information, First Command sold hundreds of thousands of complicated and often enormously expensive plans to young members of our armed services, who are frequently inexperienced investors,” said NASD Vice Chairman Mary L. Schapiro. I guess this is their way of thanking our military.
- Under Systematic Investment Plans, an investor makes monthly payments for a fixed term, typically 15 years, which are invested in underlying mutual funds. The purchaser is charged a 50 percent sales load on the first 12 monthly payments.
Yes, as through this world I've wandered I've seen lots of funny men; Some will rob you with a six-gun, And some with a fountain pen.
- First Command told its clients that a benefit of the high first-year sales charge was to “instill discipline.” However, First Command failed to inform its customers of the lost earnings potential as a result of the sales charges deducted from the customer’s first 12 months’ investments. For example, an investor who made monthly payments of $100, totaling $1,200 in the first year, would be left with an investment in the funds of only $600 for that year. How can these people sleep at night? Do they not have a conscience?