WASHINGTON (AP) — Securities industry regulators have fined brokerage Northern Trust Securities $600,000 for inadequate supervision of sales of complex mortgage securities and deficiencies in monitoring some large-volume trades of stocks and bonds.
The Financial Industry Regulatory Authority, the industry's self-policing organization, announced the fine Thursday against Chicago-based Northern Trust Securities. From January 2007 to June 2008, the regulators said, 43.5 percent of the firm's transactions weren't monitored or reviewed.
Northern Trust Securities neither admitted nor denied the allegations in agreeing to pay the fine.
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The regulators said that from October 2006 through October 2009, Northern Trust failed to monitor customer accounts for potentially unsuitable levels of concentration in so-called collateralized mortgage obligations.
CMOs are the type of pooled securities tied to mortgages that have been a focus of scrutiny by the government as it investigates Wall Street's conduct in the runup to the financial crisis. Wall Street banks packaged and sold them to investors such as banks and pension funds at the height of the housing boom. As U.S. homeowners started falling behind on their mortgages and defaulted widely in 2007, buyers of the securities lost billions.
In addition, FINRA said Northern Trust lacked adequate systems to monitor stock trades of more than 10,000 shares and fixed-income trades of more than 250 bonds. That meant the trades weren't reviewed to prevent excessive concentration or fees or other problems, the regulators said.
Shares of Northern Trust Corp., the parent of Northern Trust Securities, fell 36 cents to $47.28 in morning trading Friday.
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