Brokers Failed to Tell of Fees, SEC Charges

The Securities and Exchange Commission charged two FSC Securities Corp. brokers, Ronald Kindschi and Michael A. Flanagan Sr., and Seal Beach investment advisory firm Spectrum Administration Inc. with failure to tell investors of mutual fund fees. The agency alleged that Kindschi and Flanagan persuaded customers to invest a total of $200,000 in a mutual fund without disclosing that they could have paid lower fees and gotten higher net returns by investing in a different class of the same fund. Kindschi, a part owner of Spectrum, also was a branch office owner for Atlanta-based FSC Securities in Seal Beach. The brokers and Spectrum, which managed $148.5 million in assets in 1996, are contesting the charges. Spectrum has changed its name to SAI Capital, according to employees. In a related action Wednesday, FSC, a subsidiary of SunAmerica Inc., agreed to pay $50,000 to settle charges it failed to properly supervise another broker in Pennsylvania. The SEC alleged that the broker persuaded customers to switch investments without telling them of charges they incurred or commissions he gained. FSC, which had 1,500 brokers last year, neither admitted nor denied wrongdoing. None of those charged would comment.