The NASD on Wednesday said it fined units of American Express Inc. (AXP), Citigroup Inc. (C) and J.P. Morgan Chase & Co. (JPM) a total of $21.25 million for steering customers to mutual funds that were not the most cost effective.

Separately, the Securities and Exchange Commission (search) said Citigroup would pay $20 million to settle charges that it failed to provide customers with important information about fund shares.

The NASD said it fined American Express Financial Advisors (search) $13 million, Citigroup Global Markets Inc. (search) $6.25 million, and Chase Investment Services (search) $2 million. It said the companies agreed to a remediation plan for more than 50,000 households.

The firms did not admit or deny the allegations.

The NASD said Citigroup and Chase sold "Class B" and "Class C" fund shares, and American Express sold "Class B" shares, without consistently considering or adequately disclosing that "Class A" shares would have provided higher overall returns to investors.

Class A shares carry front-end sales charges, known as loads, while Class B and C shares carry back-end loads. B and C shares, however, carry higher annual expenses than A shares for as long as they are held.

"In recommending mutual funds that offer different share classes, brokers must consider the costs for each class and the effect those costs will have on a customer's investment, and recommend the share class that is most advantageous to the customer," said NASD Vice Chairman Mary Schapiro.

Citigroup spokeswoman Kim Atwater said her bank was pleased to resolve the NASD matter. She said she had not seen the SEC ruling.

J.P. Morgan spokeswoman Kristen Batteria declined to comment on the NASD action. An American Express spokeswoman did not immediately return a call seeking comment.

The NASD, which regulates broker-dealers, was formerly known as the National Association of Securities Dealers (search).