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News August 8, 2005 Issue

American Express Financial Advisors Settles NH Proceeding for $7.4 Mil

American Express Financial Advisors recently paid a total of $7.4 million to settle charges brought by the New Hampshire Bureau of Securities Regulation. The regulator claimed that the adviser failed to disclose to New Hampshire clients that financial advisors, when recommending mutual funds to clients, faced a conflict of interest because they were encouraged and incentivized to recommend American Express mutual funds and outside mutual funds that had entered into marketing agreements with American Express. The regulator also alleged that the financial advisors used model portfolios that contained only American Express funds, which largely underperformed other available products.