The complaint alleges that the defendants illegally charged excessive front end sales charges to customers and clients who purchased Class A mutual fund shares, by failing to apply the proper and available breakpoints to reduce the sales charges, and pocketed most of the overcharge.
The complaint was filed on February 24, 2010 in the Stearns County District Court in the State of Minnesota on behalf of all customers or clients of PrimeVest who paid an excessive front-end sales charge due to PrimeVest's failure to properly apply any and all possible breakpoint discounts during the period from December 24, 2002 through the present (the "Class Period").
The complaint alleges that PrimeVest charged the plaintiffs $17,187.14 in sales charges on the mutual fund shares they purchased, an overcharge of $4,980.37, by failing to give the plaintiffs the benefit of the breakpoint discounts they were entitled to receive due to rights of accumulation. The action seeks to recover losses under common law and provisions of Minnesota's consumer protection statutes.
According to the complaint, PrimeVest and ING—despite their longtime self-portrayal as highly professional and dedicated to the fair treatment of investors and compliance with FINRA rules—failed to meet their contractual obligations and enriched themselves at their customers' and clients' expense. Defendants did so in direct disregard of Notice to Members 02-85 issued by FINRA on December 23, 2002, entitled "NASD Requires Immediate Member Firm Action Regarding Mutual Fund Purchases and Breakpoint Schedules." The Notice stated, in part:
As a result of recent and ongoing examinations, NASD and Securities and Exchange Commission (SEC) staff are concerned that some member firms have not been charging investors the correct sales loads in many instances, particularly for mutual fund transactions involving letters of intent and rights of accumulation. NASD is directing each of its member firms that sells mutual fund shares to immediately review the adequacy of its policies and procedures to ensure that they are designed and implemented so that investors are charged the correct sales loads on mutual fund transactions. This review must include an assessment by each firm of whether it has been charging investors the correct sales loads. Firms must promptly adopt and implement any changes to their policies and procedures that are necessary to ensure that investors are charged the correct sales loads on mutual fund transactions in the future.
