Wachovia, Raymond James agree to settlements over high-risk securities

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The state Division of Consumer Affairs announced Tuesday its Bureau of Securities settled with Wachovia Securities LLC, Wachovia Capital Markets LLC, Raymond James & Associates Inc. and Raymond James Financial Services Inc. on separate allegations of firms selling…

The state Division of Consumer Affairs announced Tuesday its Bureau of Securities settled with Wachovia Securities LLC, Wachovia Capital Markets LLC, Raymond James & Associates Inc. and Raymond James Financial Services Inc. on separate allegations of firms selling auction rate securities to New Jersey clients without properly disclosing the risk involved with ARS.

Wachovia will repurchase $441 million of securities from New Jersey investors, and pay the state $3.2 million in civil penalties under the agreement. According to the announcement, at the time of the ARS market failure, Garden State residents had nearly $900 million invested in Wachovia ARS products.

Raymond James will repurchase $16.7 million of ARS, and pay $35,000 in penalties.

The Bureau of Securities has now reached 14 settlements with investment firms based on allegations of nondisclosure of risk. Since the bureau first began investigating ARS-related allegations, $4 billion in securities have been repurchased, or offered to be repurchased, from New Jersey investors, and $22.4 million has been collected in penalties.

“Consumers work hard to build up their savings. Their monies shouldn’t be placed at unnecessary risk through nondisclosure of all known facts,” said Thomas Calcagni, Consumer Affairs director, in a statement. “These settlements put the financial industry on notice that we will act to protect investors and hold firms accountable when our securities laws are violated.”