TWPG Thomas Weisel Prtns Grp (MM)

Thomas Weisel Partners Group (TWPG) has set aside $4 million to pay an expected fine by the Financial Industry Regulatory Authority to settle an investigation involving auction-rate securities, the company said in a regulatory filing. Weisel said in the filing the fine could "adversely" affect the firm.

The company said it "believes that it has reached an understanding in principle" with the SEC on the fine, which "would resolve all aspects of the investigation of the company."

The company didn't return a call seeking comment.

In July, the staff of Finra, Wall Street's self-regulatory organization, recommended disciplinary action against Thomas Weisel regarding certain activities "involving potential violations of FINRA and Municipal Securities Rulemaking Board rules and certain anti-fraud" provisions, according to the 10-K, which was filed March 12.

Thomas Weisel, a San-Francisco-based investment bank, indicated in the 10-K that the "regulatory and legal developments related to auction-rate securities could adversely affect our business, financial conditions, operations and cash flow."

The auction-rate securities market collapsed about two years ago, essentially leaving investors stuck with illiquid investments. Investors, outraged over the misrepresentation of ARS by financial advisers as low-risk investments, could not sell the securities or had to take a loss.

Over the past few years, large Wall Street firms, such as Citigroup Inc. (C) and UBS AG (UBS), pushed by regulators, agreed to buy back billions of ARS.

Weisel said it didn't underwrite auction rate securities, or manage the auctions for them, but was an agent for customers buying the securities. The company also said customers or Finra could force it to purchase the securities from customers, "although we do not have sufficient regulatory capital nor do we have cash or borrowing capacity to repurchase all of the ARS held by those customers." Weisel said it's exploring potential solutions.

The $4 million fine is a comparatively large amount for Finra. Matt Farley, partner at law firm Drinker Biddle & Reath, said he's observed that big fines by Finra, instead of restitution, can mean the regulator was troubled by what it found during the Thomas Weisel investigation.

Jacob Zamansky of Zamansky & Associates said "it is a significant fine for a small downstream player in the auction-rate securities market such as Thomas Weisel."

-By Jessica Papini, Dow Jones Newswires; 212-416-2172; jessica.papini@dowjones.com

(Suzanne Barlyn contributed to this article.)

Thomas Weisel (NASDAQ:TWPG)
Gráfica de Acción Histórica
De May 2024 a Jun 2024

Thomas Weisel (NASDAQ:TWPG)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024