Raymond James Financial Inc
The settlements announced Wednesday with the U.S. Securities and Exchange Commission and regulators in seven U.S. states resolve charges that the St. Petersburg, Florida-based company's customers were falsely led to believe that the debt was a safe, liquid alternative to money market funds and other cash equivalents.
Florida and Texas led the states' probe, joined by Indiana, New York, North Carolina, Pennsylvania and South Carolina. Raymond James did not admit wrongdoing in agreeing to settle with the states, which imposed the fine, and the SEC.
Its chief executive, Paul Reilly, said in a statement the company is pleased to settle. Raymond James expects a $50 million pretax charge in the current quarter due to the accord. The company has more than 5,300 financial advisers.
Auction-rate debt has rates that reset in periodic auctions. The $330 billion market froze in February 2008, leaving many investors with debt they could not sell, or could sell only at a loss.
Regulators including the SEC and the New York attorney general's office previously reached similar agreements in which more than one dozen banks and brokerages including UBS AG
On Tuesday an Atlanta federal judge dismissed an SEC lawsuit accusing Regions Financial Corp's
The judge, William Duffey, said Morgan Keegan's failure to predict the market did not constitute securities fraud. The SEC said it may appeal.
In afternoon trading, Raymond James shares were up 82 cents or 2.6 percent at $32.04 on the New York Stock Exchange.
(Reporting by Jonathan Stempel; Additional reporting by Sarah N. Lynch in Washington, D.C.)