First Horizon National in Memphis, Tenn., will record an $11.6 million expense in the third quarter, after an arbitration panel officially ruled against it in a securities-related dispute with First United Corp. in Oakland, Md.
The $25.4 billion-asset holding company for First Tennessee Bank will record the pretax expense retroactive to the third quarter, according to a regulatory filing Monday. The expense will be recorded as a litigation matter under noninterest expense. First Horizon learned of the panel's decision late Friday, after it had already issued third-quarter results.
The decision had been expected. First Horizon had warned earlier last week that it expected to be fined up to $11.5 million by a Financial Industry Regulatory Authority arbitration panel, after learning of the panel's decision from its legal counsel. The filing Monday provided confirmation of the fine and additional details on how it would be accounted for.
In a separate document filed with the Securities and Exchange on Monday, the $1.3 billion-asset First United identified the award as $11.5 million in compensatory damages.
The dispute centered around sales of preferred-term securities by First Horizon's FTN Financial Securities unit, to two customers, including First United Bank & Trust, a unit of First United Corp.
First United accused First Horizon, in its recommendation to purchase certain trust-preferred securities, of fraud, breach of fiduciary duty, breach of contract and violation of rules concerning suitability and other regulatory standards. First United had sought damages of up to $46.5 million.