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Fidelity Settles FINRA Charges for Ultra Short Bond Fund

According to an Investment News report, Fidelity has agreed to settle with Finra and pay a $375,000 fine over alleged sales violations involving the Fidelity Ultra Short Bond Fund from December 2006 through December 2008.

Finra alleged that Fidelity’s two broker-dealers, Fidelity Brokerage Services LLC and Fidelity Investments Institutional Services Co. Inc., produced misleading sales materials and advertising for the fund, and lacked adequate supervisory procedures.

The fund began to lose value in June 2007 as the subprime crisis unfolded, yet Fidelity’s sales materials continued to state that the fund held “high-credit-quality” fixed-income securities.

Prior to June 2007, the fund’s net asset value was around $10 per share, but by April 2008, the price had fallen to $8.25.

Separately, in May, a federal court approved a settlement in a related class action filed in 2008 against several Fidelity units. Fidelity agreed to pay $7.5 million to the bond fund investors in that suit.

In a similar case settled last year, The Charles Schwab Corp. agreed to pay nearly $119 million to end charges filed by regulators over its YieldPlus bond fund, which imploded during the crisis. In a separate class action claim finalized in 2010, Schwab agreed to pay investors another $235 million.

The White Law Group continues to investigate potential FINRA arbitration claims involving Fidelity’s Ultra Short Bond Fund and Charles Schwab’s YieldPlus bond fund.  For those individuals that opted out of the class actions filed, FINRA arbitration may be a way to help you recover your investment losses in these investments.

To speak with a securities attorney regarding your litigation options, please call The White Law Group at 312/238-9650 for a free consultation.

The White Law Group is a national securities fraud, securities arbitration and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.

For more information on the firm, visit https://whitesecuritieslaw.com.

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