Amsouth Bancorp.'s broker-dealer was fined $150,000 and censured by the National Association of Securities Dealers on Friday for improper mutual fund sales practices.

"Broker-dealer firms must be especially vigilant and ensure that customers who purchase mutual funds on the premises of banks understand the risks and rewards of those investments,"said NASD regulation president Mary Schapiro in a prepared statement.

The NASD faulted the Birmingham, Ala.-based bank's brokerage unit for inadequately documenting its evaluation of mutual funds for sale, misrepresenting mutual fund risks to customers, and failing to adequately document certain mutual fund sales.

In addition, Amsouth consented to NASD's findings that Amsouth had improperly compensated bank employees for referrals, the NASD said.

Under the disciplinary action, Amsouth brokerage has agreed to a compliance audit of internal policies and procedures by an outside firm, the NASD said.

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