Alliance Capital Takes $5M charge for Potential Directed Brokerage Settlement

March 15, 2005 ( - New York money manager Alliance Capital Management Holding L.P. announced Tuesday that it has kicked off settlement talks with the NASD of improper sales practices involving directed brokerage commissions.

Web site statement said the talks with the regulator began Friday about potential improprieties in Alliance Capital’s mutual fund distribution unit. The company said that in advance of a settlement, it took $5 million charge against 2004 earnings. As a result, net income per Alliance Holding Unit was reduced to $2.43 from the $2.45 previously reported for the year ended December 31, 2004. Allianceis organized as a master limited partnership and passes its income through to unit holders as cash distributions.

Directed brokerage involves payments to brokerage firms for promoting sales of an investment manager’s fund products that can take the form of commissions on purchases and sales of securities.

Alliance agreed in December 2003 to settle other charges in the mutual fund trading scandal for $250 million and also agreed to cut fees by 20% for five years in a move that would save investors $350 million (See Alliance, Regulators Reach Settlement ).

Allianceis majority owned by Axa Financial Inc., the US arm of French insurer Axa.