Three firms will pay a total of $600,000 in fines to the Financial Industry Regulatory Authority to settle charges relating to the sale of auction-rate securities.
Northwestern Mutual Investment Services LLC, City Securities Corp. and Fifth Third Securities Inc. also agreed to repurchase a total of more than $128 million in ARS from customers. The firms neither admitted nor denied the charges.
Northwestern Mutual — part of the family of companies of the same name based in Milwaukee — was fined $200,000 and agreed to repurchase about $103 million in ARS. City Securities, which calls itself Indiana's oldest and largest independent, full-service investment bank, was fined $250,000 and will repurchase $13.1 million. Fifth Third Securities, owned by Fifth Third Bancorp of Cincinnati, was fined $150,000 and will repurchase $11.9 million.
Finra noted that Northwestern Mutual launched an offer in September 2008 to buy back ARS from all customer accounts and has completed its repurchases.
Finra said each firm sold ARS using ads and materials that were not fair and balanced or that failed to adequately disclose the risks of ARS.
So far Finra has reached ARS settlements with 12 firms, imposing a total of $3.2 million in fines and guaranteeing the return of more than $1.3 billion to investors. It continues investigations of several other firms.
All told, more than $60 billion in buyback agreements have been reached with state and federal officials.
