The Financial Industry Regulatory Authority on Thursday announced that it has settled charges with two more firms relating to the sale of auction rate securities that became illiquid when auctions froze in February 2008 — HSBC Securities (USA) and US Bancorp Investments Inc.
HSBC was fined $1.5 million. According to a FINRA release, by July 2008 the company had repurchased more than 90 percent of its then-current customers’ ARS holdings and in October 2008 offered to repurchase all remaining ARS held in those customers’ HSBC accounts. HSBC in total repurchased more than $562 million of ARS held by its customers, FINRA charged.
As part of the settlement, HSBC agreed to offer to repurchase additional ARS sold to certain customers who transferred accounts before its previous buy-backs and to customers who chose not to participate in its prior offers.
US Bancorp Investments was fined $275,000, and already has completed a repurchase of more than $150 million of ARS held in customer accounts.
To date, FINRA has concluded ARS-related settlements with 14 firms, imposing a total of nearly $5 million in fines. Firms that have reached settlements with FINRA have returned more than $2 billion to investors. Investigations into a number of additional firms remain pending.