South Carolina has ended its probe of NationsBank Corp.'s brokerage business, settling months of uncertainty over the company's ability to sell securities in the state.

Jim Miles, South Carolina's secretary of state, said he was satisfied after a four-month review of the company's NationsSecurities subsidiary that it had not intentionally misled customers about investment risks.

The review by his office's securities division turned up several record- keeping and technical violations by the brokerage arm of the Charlotte, N.C., banking company. But the faults were not serious enough to warrant enforcement action, Mr. Miles said.

As part of an accord finalized last week, NationsSecurities agreed to take several steps to alter the way it monitors investment sales in the state. For example, the company will institute new bookkeeping and tracking procedures to keep closer tabs on customer records.

Ellison Clary, a spokesman for NationsBank Corp., called the agreement "a very positive development."

However, the South Carolina decision doesn't end NationsBank's legal worries. The company still faces lawsuits from mutual fund shareholders and brokers in four states - South Carolina, Virginia, Florida, and Texas.

Indeed, Mr. Miles said in a prepared statement that South Carolina investors will join shareholder suits over NationsSecurities' sales of two closed-end mutual funds known as term trusts, assuming the lawsuits win class-action status.

In addition, state officials in Florida and Georgia have requested information from NationsSecurities about its operations. The company has complied with these requests, Mr. Clary said.

South Carolina initiated its probe of NationsSecurities in January, after several customers complained that they had lost money on what they understood to be safe investments.

Banks that sell mutual funds and other securities are obligated to make sure customers understand the difference between these uninsured investments and staple banking products such as insured certificates of deposit.

In March, amid a dispute over its authority to audit NationsSecurities, the state had threatened to strip the unit of its brokerage powers. A month later, NationsSecurities agreed to the examination and the state dropped its threat, pending completion of the audit. Executives with NationsSecurities have consistently denied any wrongdoing.

Industry observers said the South Carolina agreement helps NationsBank's credibility in the thorny business of selling investment products to bank customers.

"This is a pretty good outcome," said Melanie Fein, a partner with Arnold & Porter, a law firm in Washington. "The state investigated and came up with virtually nothing."

South Carolina examiners decided to terminate their investigation after visiting bank branches and reviewing NationsSecurities' documents in the spring.

Tracy Meyers, the deputy securities commissioner who led the examination, said once the program was reviewed, most violations were tied to lax paperwork.

Some documents lacked necessary approvals from managers, others were filed without investment objectives, and some customer complaints were not adequately tracked, Ms. Meyers said.

The oversights "do not appear to be willful," she said. "Violations of this type are not unusual in less experienced firms."

Mr. Miles, the secretary of state, outlined the agreement with NationsSecurities in a four-page document dated Aug. 9.

"Satisfactory procedures now exist to assure us the company is operating in accordance with rules and guidelines of this state," Mr. Miles wrote. The agreement was signed by Charles R. King, president of NationsSecurities, and by Ms. Meyers of the state securities division.

Under the agreement, NationsSecurities will spend $100,000 over the next two years to fund an investor education program. The program will be sponsored by the South Carolina Security Dealers Association, with the assistance of the state securities division.

Some observers questioned the timing of the state's announcement. Rep. Jack Fields, R-Tex., recently introduced legislation in Congress that would virtually shut down state securities agencies - in part, according to some observers, because of concern that they have been antagonistic toward bank brokerages.

"The message may be to cool it for a while," Ms. Fein said.

A spokesman for the South Carolina secretary of state said the decision to give NationsBank a virtually clean bill of health was justified, and not politically motivated.

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