WASHINGTON - A former Pennsylvania securities broker has been fined $2 million by the National Association of Securities Dealers based on charges that he sold $1.7 million in fictitious tax-exempt bonds and other investments to 18 investors.

But NASD said Clement W. McLaughlin Jr. of Yardley, Pa., who was also barred from the securities business, does not have to pay the fine unless he attempts to get future NASD approval to re-enter the business.

Under the settlement with NASD, the fine was in effect suspended because Mr. McLaughlin, a former broker with several major national firms, already reached an agreement with the Securities and Exchange Commission earlier this summer.

In that settlement, he agreed to return the $1.7 million to investors and pay a $690,000 penalty. NASD officials said.

Both the SEC and NASD-charge that Mr. McLaughlin set up a fictitious firm called Brunswick Asset Management and told investors that their money would be invested in tax-exempt bonds and other securities.

Instead, federal enforcement officials say Mr. McLaughlin reportedly used most of the $1.7 million for such personal bills as country club fees, private school tuition for his children, and gambling debts.

John Nocella, vice president and director of NASD's District 9 office in Philadelpha, said the association did not demand immediate payment of the fine because the SEC already is seeking payment from Mr. McLaughlin, who is serving a three-year prison term after pleading guilty to stealing the funds.

"We were aware that Mr. McLaughlin was due to be sentenced for his criminal conduct and that the SEC intended to bring a civil proceeding which would seek restitution," Mr. Nocella said. "The NASD did not seek to duplicate the fines and restitution."

Instead, NASD "directed its efforts to removing Mr. McLaughlin from the securities industry as expeditiously as possibly," he said.

Mr. McLaughlin's attorney, Roderick C. Lankler, was unavailable for comment.

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