New Jersey gets $1M payout from major investment bank
Anne Milgram (D)
NEWARK, N.J. (Legal Newsline)-New Jersey Attorney General Anne Milgram has agreed to a $1 million settlement with Deutsche Bank Securities, Inc, after the company was found liable of fraudulent auction-rate securities practices.
Deutsche Bank Securities, an investment bank that provides security brokerage services, had been under investigation by the state of New Jersey's Bureau of Securities since last year.
The investigation found the company had promised safe and low risk cash investments as well as lower interest rates to customers. The bank, however, failed to inform investors on the risks of buying auction-rate securities.
"I commend our Bureau of Securities for its leadership in investigating Deutsche Bank Securities' business practices," Milgram said in a statement. "The New Jersey investors whose auction-rate securities investments were frozen during last year's meltdown will now have free access to their funds, under terms of this settlement."
Under the agreement, New Jersey investors are qualified to receive $60 million in repurchased auction-rate securities.
The consent order also mandates Deutsche Bank Securities to pay more than $12 million in civil penalties, as part of a $15 million settlement negotiated by the North American Securities Administrators Association.
Marc Minor, New Jersey Bureau of Securities chief, said his office's goal was to secure "much needed relief" for investors who had been stuck with bad investments.
"I am pleased that Deutsche Bank Securities has agreed to do what's right by offering to repurchase clients' positions," Minor said.
In early April, a dozen states, including New Jersey, formed a task force to tackle the issue of fraudulent investment advice from major Wall Street firms.