A subsidiary of Washington Mutual is among five brokerages that will buy back more than $1.8 billion in auction-rate securities (ARS) from clients who bought the instruments before the market’s collapse, the industry’s main regulator said Thursday.
WaMu Investments and the other firms also agreed to pay $3.25 million in fines, the Financial Industry Regulatory Authority said.
The firms’ marketing and internal communications show sales weren’t “fair and balanced” and didn’t “provide a sound basis for investors to evaluate the benefits and risks of purchasing ARS,” the watchdog said.
“We are pleased that these firms have stepped up and agreed to do the right thing for their customers,” said Susan Merrill, the agency’s enforcement chief.
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Companies including Citigroup, UBS and Merrill Lynch have agreed to repurchase more than $50 billion in debt to settle regulatory claims they improperly touted the investments as safe, cashlike investments.