Seven broker-dealers have agreed to pay a total of $3.65 million to settle charges that they failed to disclose payments they received for providing research coverage of certain public companies, securities regulators said on Wednesday.
The seven — Needham & Co.; Janney Montgomery Scott LLC; Morgan Keegan & Co.; Prudential Equity Group; Adams Harkness Inc.; Friedman, Billings, Ramsey & Co.; and SG Cowen & Co. — settled with the Securities and Exchange Commission without admitting or denying the charges.
Between 1999 and 2002, the seven accepted payments from securities firms underwriting stock offerings in exchange for publishing research reports on the stocks, according to the SEC. The securities firms were not named.
The broker-dealers failed to disclose that they had been paid or reveal the amount of the payments, a violation of securities regulations.
Prudential, for example, received three payments ranging from $50,000 to $200,000 for issuing research reports in 1999 and 2000. Needham received four payments ranging from $75,000 to $100,000 for providing coverage between 1999 and 2001.
The SEC said four of the firms were also fined for failing to retain certain business-related e-mail between July 1999 and June 2001. The fines are included in the $3.65 million figure.
The four — Adams Harkness, Janney, Morgan Keegan and Needham — consented to a cease-and-desist order without admitting or denying wrongdoing.
Morgan Keegan & Co. is a unit of Regions Financial Corp., and SG Cowen & Co. is a unit of French bank Societe Generale.