DOW JONES NEWSWIRES
The Financial Industry Regulatory Authority entered settlements
regarding auction-rate securities with four more firms, but said
two SunTrust Bank Inc. (STI) units decided not to complete their
tentative settlements.
Investors were trapped early last year when the market for the
securities, typically marketed as being as liquid as a bank
account, froze. Since then, numerous financial firms have been
reaching settlements that allow the holders to cash out while
dealing with allegations that investors were misled.
"Firms have an obligation to use fair and balanced marketing
materials when selling any security, including Auction Rate
Securities," said Finra Chief of Enforcement Susan L. Merrill.
"This includes full disclosure of liquidity risks, which
unfortunately became a reality in the ARS market last year."
Thursday's settlement includes NatCity Investments Inc., which
was fined $300,000; M&T Securities Inc. and Janney Montgomery
Scott LLC, both fined $200,000; and M&I Financial Advisors
Inc., fined $150,000. All four also agreed to begin or complete
offers to repurchase the securities from investors. M&T and
M&I are units of M&T Bank Corp. and Marshall & Ilsley
Corp. (MI), respectively, while NatCity is now part of PNC
Financial Services Group Inc. (PNC).
Finra, which to date has imposed a total of $2.6 million in
fines and secured the return of $1.2 billion to investors from nine
firms, said two SunTrust Banks Inc. (STI) units decided not to
complete their tentative settlements. Finra will continue to
investigate both firms' activities related to ARS.
-By Jay Miller, Dow Jones Newswires; 201-938-2331;
jay.miller@dowjones.com