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Five U.S. banks fined 4.48 mln USD for improper payment to lobbyists

English.news.cn   2012-12-28 00:59:29            

WASHINGTON, Dec. 27 (Xinhua) -- Five leading U.S. banks were fined over 4.48 million U.S. dollars in total for using municipal and state bond funds to pay lobbyists, the U.S. Financial Industry Regulatory Authority (FINRA) announced on Thursday.

Between January 2006 and December 2010, Citigroup, Goldman Sachs, JP Morgan, Merrill Lynch and Morgan Stanley made payments to the California Public Securities Association (Cal PSA), a lobby association who helped the banks obtain bond issuing business in California, and requested those voluntary payments be reimbursed as underwriting expenses from the proceeds of the negotiated municipal and state bond offerings, according to the FINRA findings.

The watchdog noted that the five banks' practice was unfair as Cal PSA's activities did not bear a direct relationship to those bond offerings and were not underwriting expenses.

Also, the firms did not adequately disclose the nature of the fees to issuers and failed to establish reasonable procedures in this area, the FINRA added.

In addition, Citigroup, Goldman, Merrill Lynch and Morgan Stanley failed to have adequate systems and written supervisory procedures reasonably designed to monitor how the municipal securities associations used the funds that these firms paid.

Without admitting or denying the findings, the firms agreed to pay more than 4.48 million dollars to settle those charges, with over 3.35 million dollars in penalty and 1.13 million dollars to certain issuers in California.

FINRA is not a federal government agency but a private association that acts as a self-regulatory organization and is the largest independent regulator for all securities firms doing business in the United States.

Editor: yan
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