National Bank Financial has agreed to pay a penalty of $70 million to the Autorite des marches financiers du Quebec in connection with the asset-backed commercial paper meltdown.
The agreement, announced on Monday, is one of a series of agreements reached between securities regulators and financial institutions involved in Third Party ABCP.
National Bank’s settlement totals $75 million, including an administrative penalty of $70 million, and $1 million in investigation costs that will be paid to the Autorite des marches financiers du Quebec. As part of its communication programs, National Bank has also agreed to invest $4 million in a financial education campaign for the benefit of public investors. This program will be a complement to the AMF’s own efforts at investor education.
The settlement amount will be included as a charge applied to the bank’s first quarter financial results for the current fiscal year ending January 31, 2010.
The bank said the settlement recognizes the concerns expressed by the securities regulators regarding certain compliance matters and saves the bank the cost and time of a full administrative hearing process.
The agreement acknowledges several contributions made by the bank in response to the Third Party ABCP market freeze in August 2007. For instance, promptly following the market shutdown, the bank voluntarily repurchased $2.1 billion of ABCP held by its individual retail clients and certain money market mutual funds.
National Bank also participated in establishing the Montreal Proposal and the Pan-Canadian Investors Committee for Third Party Structured ABCP for the restructuring of ABCP. As part of the restructuring plan, National Bank provided $911 million of margin funding facilities to make the restructuring financially viable.
Following the creation of the restructuring plan, the bank also extended aggregate credit lines of more than $800 million to its commercial and corporate clients holding Third Party ABCP.
National Bank Financial faces $70 million ABCP penalty
Settlement includes $4 million investment in financial education campaign
- By: IE Staff
- December 21, 2009 December 21, 2009
- 17:53