Debt Securities Dealers in Consent Agreement; Pact Culminates 5-Month Probe
Cope, Debra, American Banker
WASHINGTON -- Nearly 100 dealers in government-backed debt securities agreed Thursday to pay $5.2 million in fines to settle regulatory charges that they had inflated orders and falsified records.
Thirty-eight commercial banks and at least 20 securities affiliates of bank holding companies consented to the sanctions.
The heftiest fines were levied against the securities units of Chemical Banking Corp. and NationsBank Corp.
Each must pay $100,000 -- the maximum fine levied against any single dealer -- plus $25,000 on behalf of the securities units that they acquired through recent mergers.
The sweeping settlement culminates a five-month probe by the Federal Reserve Board, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission, which jointly announced the enforcement actions on Thursday.
The agencies determined that the firms routinely exaggerated customer demand and falsified records to increase their allocations of the debt securities issued by government-sponsored enterprises such as the Federal National Mortgage Association and Federal Home Loan Mortgage Corp.
In signing the consent orders, the dealers neither admitted nor denied wrongdoing.
Dealers earn commissions for distributing the securities, which are popular because they are safe and pay higher yields than Treasuries. …