FINRA Probes Thomas Weisel Over Auction-Rate Securities
Auction-rate securities are once again in the news - this time, the spotlight is on Thomas Weisel Partners Group. Specifically, the San Francisco-based investment bank faces a regulatory probe by the Financial Industry Regulatory Authority (FINRA) in connection to sales of $15.7 million in auction-rate securities.
According to a May 18 story in Investment News, a former employee of Thomas Weisel Partners sold auction-rate securities to three clients in January 2008, just before the ARS market collapsed. That employee, Stephen Brinck, allegedly was “stuffing” auction-rate securities into client accounts without getting their permission, according to FINRA. The actions allegedly were done to pay corporate bonuses.
The Investment News story also states that the ARS sales occurred “only days” after Brinck and Thomas Weisel told customers they were selling auction-rate securities because of concerns about the ARS market.
Thomas Weisel says it intends to “defend the FINRA proceeding vigorously.”
Following the demise of the auction-rate securities market, financial firms have bought back more than $50 billion in auction-rate securities from investors and some small businesses in order to settle claims with federal and state regulators.
Brinck worked for Thomas Weisel from August 1999 until August 2008.
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