Banking & Capital Markets

Four Firms Settle NASD Bond Allegations

The regulator had alleged that the four firms marked up bonds by as much as 32 percent.
Ed ZwirnJuly 29, 2004

The National Association of Securities Dealers announced that it has obtained a settlement with Citigroup, Goldman Sachs Group, Deutsche Bank and Miller Tabak Roberts Securities LLC in which the four firms agreed to pay a total of $20 million to settle allegations they overcharged investors in high-yield corporate-bonds.

”NASD rules require that firms sell all securities, including corporate high-yield debt, at fair prices,” said vice chairman Mary Schapiro in a statement. ”NASD markup policy has been clear that markups and markdowns generally should not exceed 5 percent and, for most debt transactions, that figure should be lower.” The NASD had alleged that the four firms marked up bonds by as much as 32 percent.

The companies will pay $5 million each, without admitting or denying wrongdoing, said the NASD. In addition, Citigroup agreed to pay restitution of $486,000; Deutsche Bank will pay $422,000; Goldman, $344,000; and Miller Tabak, $182,000.

Officials at Citigroup, Goldman, and Deutsche Bank said they were satisfied with the settlement and declined further comment; Miller Tabak chief executive officer Robert Schoenthal declined to comment, Bloomberg reported.