Spring 2005
First Command Financial Planning Inc., the financial services company that serves nearly 300,000 current and former military families, has agreed to pay $12 million to settle charges that it used misleading sales materials and omitted important information from sales pitches and scripts used to promote investment plans with high first-year sales charges.
The Securities and Exchange Commission and the National Association of Securities Dealers (NASD), the securities industry's self-policing organization, announced the settlements with the company regarding sales of so-called "systematic investment plans."
Also known as contractual or periodic payment plans, these plans allow investors to accumulate shares by making monthly payments for a period of 10 to 25 years, but investors pay fees of up to 50 percent of their investment for the first year. The plans all but disappeared from the general market during the 1970s and now are sold almost exclusively to military customers.
"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.
First Command clients should go to the NASD website (www.nasd.com) to find out if they are eligible for restitution.