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Portuguese bank paying $6.9M to settle SEC charges

October 24, 2011

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WASHINGTON—A Portuguese bank has agreed to pay $6.9 million to settle U.S. civil charges that it sold thousands of investments that weren't registered with the Securities and Exchange Commission.

Most of the customers who bought mutual funds and other investments from Banco Espirito Santo were immigrants from Portugal, the SEC said Monday. The investments were sold from 2004 through 2009.

The bank has agreed to pay a $4.95 million penalty and return about $2 million in fees collected on the investments plus interest. The bank will also compensate customers for losses. That amount wasn't disclosed.

Lisbon-based Banco Espirito Santo neither admitted nor denied the allegations. Most of the 3,800 customers lived in Connecticut, Massachusetts, New Jersey, New York and Rhode Island.

On Monday, Banco Espirito Santo also agreed to pay $975,000 to settle similar charges with New York Attorney General Eric Schneiderman. The bank was not registered to sell securities in New York, Schneiderman's office said.

Both the SEC and Schneiderman's office said the bank reported the lack of registration to them and cooperated with the investigations.

The bank previously reached similar settlements with the other four states.

In a statement, the bank said it had promptly informed federal and state regulators of the problem when its senior management learned of it. Banco Espirito Santo "is pleased to bring these matters to closure," it said.