FINRA Found HSBC Sold ARS After Increased Risk Became Apparent; Both Firms Voluntarily Bought Back Over $700 Million in ARS from Customers
Washington, DC — The Financial Industry Regulatory Authority (FINRA) announced today that it has settled charges with two additional firms relating to the sale of auction rate securities (ARS) that became illiquid when auctions froze in February 2008 – HSBC Securities (USA) and US Bancorp Investments, Inc.
HSBC, which was fined $1.5 million, had by July 2008 repurchased more than 90 percent of its then current customers' ARS holdings and in October 2008 it offered to repurchase all of the remaining ARS held in those customers' HSBC accounts. In total, HSBC repurchased more than $562 million of ARS held by its customers. As part of the settlement announced today, HSBC has agreed to offer to repurchase additional ARS sold to certain customers who transferred accounts before its previous buy-backs and to customers who chose not to participate in its prior offers.