Fifth Third Bancorp (NASDAQ: FITB) and the Securities and Exchange Commission settled on Wednesday allegations the bank failed to adequately notify all investors of a material event, which could affect decisions investors make about buying or selling the company's stock, according to an SEC filing.
The diversified financial services company accepted a cease-and-desist order from the SEC following an improper disclosure to investors, but was charged no penalty in the case because of its cooperation.
In May 2011, Fifth Third Bankcorp selectively disclosed to certain investors that it would be redeeming a class of its trust preferred securities for about $25 per share. At the time, the securities were trading for about $26.50 per share.
Fifth Third did not issue a Form 8-K or other public notice of the redemption until it became aware that investors who appeared to have learned of the redemption had been selling the securities to buyers who appeared to be unaware of the redemption.
The trading volume on the trust preferreds had spiked after the limited exposure, from fewer than 38,000 shares traded each day to over 2 million shares traded in two hours, the SEC said. Fifth Third noticed the spike and rushed out a public disclosure on the redemption in those few hours, the SEC said.
The Ohio bank said in May it was compensating any investors who had purchased the securities at the open trading prices after the partial disclosure was made.
In a filing Wednesday, the bank neither admitted nor denied the allegations but agreed not to violate disclosure rules.