Check out the NASD site at http://www.nasd.com/web/idcplg?IdcService=SS_GET_PAGE&ssDocName=NASDW_005975
for info on how selling higher cost DSC shares is considered a breach of fiduciary responsibility by a trusted professional. (National Association of Securities Dealers, United States)
In August 2002, NASD affirmed a hearing panel decision that a broker made unsuitable recommendations to a customer. The broker had sold $2.1 million in Class B shares in two mutual fund families to a customer. The amount invested in one fund family was enough to entitle the customer to obtain Class A shares with no front-end load. The amount invested in the second fund family would have entitled the customer to obtain the largest breakpoint discount on Class A shares. NASD's National Adjudicatory Council held that a broker's suitability obligation includes the requirement to minimize the sales charges paid for mutual fund shares, when consistent with the customer's investment objectives. The broker's recommendation was unsuitable because the customer's purchase of Class B rather than Class A shares resulted in significantly higher commission costs, including the payment of contingent deferred sales charges upon sale of the shares. The broker was fined $40,000, suspended in all capacities for one year, and ordered to pay restitution of $55,567, plus interest, to the customer's estate. See Department of Enforcement v. Wendell D. Belden (PDF 40 KB).
