Securities firms to pay big fines - East Valley Tribune: Business

Securities firms to pay big fines

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Posted: Tuesday, December 1, 2009 4:33 pm | Updated: 2:38 am, Sat Oct 8, 2011.

The Arizona Corporation Commission has approved two major securities settlements that will add more than $840,520 to the state's general fund.

The orders require Morgan Stanley to pay a $496,120 fine in connection with auction-rate securities in Arizona and Merrill Lynch to pay a $344,400 fine for allowing client assistants to sell securities without being registered.

The Morgan Stanley penalty represents Arizona's share of a $35 million settlement negotiated by a multistate task force. The agreement is the ninth settlement of an auction-rate securities case in Arizona since the widespread market failure last year, the commission said.

In addition to the fine, the Morgan Stanley settlement includes a buyback of securities from about 200 Arizona investors who purchased them for more than $41.85 million. The commission said Morgan Stanley employees misled investors about their risk.

The Merrill Lynch fine represents Arizona's share of a $26.5 million settlement negotiated by multiple state regulators.

In addition, Merrill Lynch has agreed to implement an electronic system that will prevent a salesman from accepting any client orders without being properly registered, the commission said.

Morgan Stanely and Merrill Lynch neither confirmed nor denied the findings but agreed to the orders, the commission said.

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