violating state and federal securities laws requiring advisers to act in a clients' best interests and to disclose conflicts of interest that could taint their recommendations.
It appears that their sales reps were given large incentives to sell in-house mutual funds. The top selling reps were even given a free one year lease for a Mercedes. I can't imagine that their advice to their customers would be clouded. I mean, American Express probably has funds that are good. Oh wait, there is more to the article:
...regulators said investors were harmed because American Express funds had lackluster returns. Over the five years ended Jan. 31, fewer than a quarter of the company's funds beat the average investment performance of comparable funds, according to Chicago researcher Morningstar Inc.
If you think American Express is the only one doing this, think again. Even my former employer (a large mutual fund/brokerage firm based in Boston) which is perceived as a company who only pays their employees in salary pushed their in-house funds with incentives. Of course, the incentives weren't anything as nice as a Mercedes, but it became clear that if you did not sell their funds first you would have a black mark on your permanent record.
Be wary when a stockbroker pitches you an in-house product. More likely than not they are not thinking of your best interests.