Finra Settles With Four More Firms On Auction-Rate Securities

   DOW JONES NEWSWIRES 
 

The Financial Industry Regulatory Authority entered settlements regarding auction-rate securities with four more firms, but said two SunTrust Bank Inc. (STI) units decided not to complete their tentative settlements.

Investors were trapped early last year when the market for the securities, typically marketed as being as liquid as a bank account, froze. Since then, numerous financial firms have been reaching settlements that allow the holders to cash out while dealing with allegations that investors were misled.

"Firms have an obligation to use fair and balanced marketing materials when selling any security, including Auction Rate Securities," said Finra Chief of Enforcement Susan L. Merrill. "This includes full disclosure of liquidity risks, which unfortunately became a reality in the ARS market last year."

Thursday's settlement includes NatCity Investments Inc., which was fined $300,000; M&T Securities Inc. and Janney Montgomery Scott LLC, both fined $200,000; and M&I Financial Advisors Inc., fined $150,000. All four also agreed to begin or complete offers to repurchase the securities from investors. M&T and M&I are units of M&T Bank Corp. and Marshall & Ilsley Corp. (MI), respectively, while NatCity is now part of PNC Financial Services Group Inc. (PNC).

Finra, which to date has imposed a total of $2.6 million in fines and secured the return of $1.2 billion to investors from nine firms, said two SunTrust Banks Inc. (STI) units decided not to complete their tentative settlements. Finra will continue to investigate both firms' activities related to ARS.

-By Jay Miller, Dow Jones Newswires; 201-938-2331; [e-mail]