The Financial Industry Regulatory Authority (FINRA) announced today that it has settled charges involving auction rate securities (ARS) with three more broker-dealers.
The settlements are with Northwestern Mutual Investment Services LLC, of Milwaukee, which was fined $200,000; City Securities Corporation, of Indianapolis, which was fined $250,000; and Fifth Third Securities Inc., of Cincinnati, which was fined $150,000.
All three firms agreed to initiate or complete offers to repurchase ARS sold to their customers where the auctions for the ARS had failed early last year-approximately $103 million for Northwestern Mutual, about $13.1 million for City Securities and approximately $11.9 million for Fifth Third Securities.
FINRA's investigation found that each firm sold ARS using advertising, marketing materials or communications with its sales force that were not fair and balanced, or that failed to contain adequate disclosure of the risks of ARS, and therefore did not provide a sound basis for investors to evaluate the benefits and risks of purchasing ARS.
To date, FINRA has concluded final 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. Investigations continue at a number of additional firms.