NASD, the U.S. private-sector provider of financial regulatory services, has fined Morgan Stanley DW Inc. US$2 million for luring its brokers to pitch in-house mutual funds in return for Britney Spears tickets, along with other alleged goodies.

NASD says the contests violated NASD rules because they favored Morgan Stanley’s in-house mutual funds.

The regulator says that, between October 1999 and December 2002, the firm conducted 29 contests, and offered or awarded various forms of non-cash compensation to the winners, including concert tickets to Britney Spears and Rolling Stones concerts, tickets to the NBA finals, tuition for a high-performance automobile racing school, and trips to resorts.

Morgan Stanley conducted at least two national contests, 10 regional contests and 17 branch contests that violated NASD conduct rules. The estimated value of the contest rewards totaled US$1 million.

NASD also charged Morgan Stanley and the head of its retail sales division, Bruce Alonso, with supervisory violations. He was censured and fined US$250,000.

In settling the charges, Morgan Stanley and Alonso neither admitted nor denied the charges.

“It is not acceptable for NASD-regulated firms to hold contests for prizes that promote the sale of one fund, especially their own, over other mutual fund products,” said Mary Schapiro, NASD’s vice chairman and president of Regulatory Policy and Oversight. “NASD rules are designed to prevent brokers from placing their interest in receiving lucrative rewards over the investment needs of their customers.