Three mutual fund companies have been slapped with fines totaling $700,000 by the National Association of Securities Dealers for improperly treating brokers to fancy parties and pricey meals, the agency announced Monday. The NASD, which oversees the U.S. securities industry, limits the use of "noncash compensation" that fund distributors can provide to brokers so that brokers will recommend investments to clients based on the client's best interests rather than perks the broker might get.

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The biggest fine--$425,000--was levied on Chicago-based Scudder Distributors. The NASD said that between 2001 and 2004, Scudder hosted elaborate theme parties, including a 2002 re-creation of the famed Sunset Strip bar the Whisky a Go-Go. Party preparations included bringing in makeup artists to ensure that attendees "looked the part," NASD said. All three firms were cited for providing impermissible live entertainment at education and training meetings.

The companies--Scudder, Boston-based Putnam Retail Management and New York-based Alliance Bernstein Investments--settled with NASD without admitting or denying the allegations.

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