The Securities and Exchange Commission has suspended the brokerage license of a former First Union Corp. employee, saying he misled customers about the risks and yields of mutual funds.

The move marks the first time that the SEC has disciplined a bank-affiliated broker for deceptive mutual fund sales practices.

Colleen P. Mahoney, deputy director of the SEC's division of enforcement in Washington, said the agency is on the watch for other such violations at banks.

"We are concerned about whether or not these [deceptive] practices are widespread," she said. She said banks will receive scrutiny because of the potential that their customers won't understand the differences between insured deposits and investments.

The broker, Terrence Patrick Mulrooney, 36, of Port St. Lucie, Fla., was charged with disseminating misleading information about mutual funds during a five-month stint with First Union Corp.'s brokerage affiliate. He did not return phone calls seeking comment.

A spokeswoman for Charlotte, N.C.-based First Union said Mr. Mulrooney was dismissed last June after the problems came to light and were substantiated in an internal investigation. No customers lost money because of his actions, she added.

In the settlement announced Wednesday, Mr. Mulrooney was censured by the SEC, suspended from the brokerage business for one year, and ordered to cease all violations of securities laws. He neither admitted nor denied wrongdoing.

The SEC claimed that Mr. Mulrooney prepared and distributed "false and misleading" sales sheets -- marketing materials with the First Union logo that pitched mutual funds as alternatives to certificates of deposit and money market accounts.

The SEC said the sales sheets were not approved by the bank, and in most cases "materially" overstated the funds' yields.

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