The New York Stock Exchange has fined Wachovia Corp. $2.25 million for failing to review and save electronic records relating to its capital markets and securities businesses.

The fine involves three units of Charlotte, N.C.-based Wachovia: its capital markets operation, which runs its institutional brokerage and capital markets business; Wachovia Securities, the bank's retail brokerage arm; and First Clearing, which provides clearing services for Wachovia Securities and other broker-dealers.

The NYSE found that from January 1999 to April 2006, Wachovia (NYSE: WB), which has South Florida's largest branch network, failed to review and retain e-mail communications at the units for at least three years, which is required by NYSE rules as well as federal securities laws.

"We are pleased to have resolved this situation," a Wachovia spokeswoman said. "Wachovia has taken steps to correct the matters identified in the settlement."

The fine grew out of a 2002 review of Wachovia Securities by the NYSE's member-firm regulation division. The NYSE said the matter is also related to a broader investigation of potential conflicts of interest between research analysts and investment bankers at certain firms that began in 2002.

In July, Wachovia agreed to a $25 million settlement with state securities regulators regarding allegations of potential conflicts of interest between its research analysts and investment bankers. Under the settlement, Wachovia did not admit or deny the allegations.

The NYSE said Wachovia did not back up files on the servers where its communications systems ran and did not review certain e-mail and instant messaging systems at the units.

In addition to the fine, Wachovia has been censured by the NYSE and must bring its policies, procedures and practices into compliance with NYSE rules and federal securities laws.

The NYSE said $1.65 million of the fine will be waived because Wachovia is paying that amount for alleged record-keeping problems as part of its $25 million settlement with the North American Securities Administrators Association.

Wachovia has retail and commercial banking operations in 16 states and is the No. 2 bank in Tampa Bay with $11.2 billion in local deposits and 17.6 percent market share.

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Will Boye

Tampa Bay Business Journal

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