FINRA Fine Axa re 401k Fraud

On May 2, FINRA fined Axa for lying to 401k sponsors, members.

  • AXA Advisors, LLC, misrepresentations to 401(k) plan sponsors and participants.
  • Firm sells and services, group annuity contracts for employer-sponsored 401(k)
    retirement plans that an affiliated life insurance company issues and administers.

Alleged Violations

  • AXA advised employers to help determine what funds should be included within
    group annuity contracts for 401(k) plans, which company offered to employees.
  • AXA distributed various documents created by affiliated life insurance company
    to retirement plan sponsors, that contained list of available investment options.
  • This listed options including available funds, organized by underlying investment.
  • Violated NASD Rule 3010 and FINRA Rule 2210 communication, 3110 and 2010.


  • From 2010 to 2015, AXA distributed documents that negligently misrepresented
    that 5 bonds issued were investment-grade when, many consisted of junk bonds.
  • Fund used by many plans, participants, had 65% of portfolio in high-yield bonds.
  • Due to the misclassification, AXA distributed thousands of enrollment forms and
    investment options attachments, to sponsors that were inaccurate or misleading.
  • 14,500 enrollment forms misclassified the credit quality, for the five bond funds.
  • Misrepresentations affected 800 retirement plans having 6,200 plan participants.


  • Failed to have supervisory systems or written supervisory procedures to achieve
    compliance with rules re accuracy of descriptions of credit quality of bond funds.
  • Relied on affiliated life insurer to classify bond funds in group annuity contracts.


  • AXA will pay restitution to participants who were invested in one or more of the
    5 relevant funds and may have been adversely impacted by the misclassification.
  • Firm agreed to pay $772k, for misrepresentations to plan sponsors, participants.
  • Including a payment of $600k fine, and $172,000 in restitution to affected plans.
  • Firm was also ordered to send corrective disclosure to affected plan participants.