Firm to pay $11.4 million for defrauding investors

Two units of Regions Financial Corp. have agreed to pay $11.4 million to settle an enforcement action with the Securities and Exchange Commission, which accused them of defrauding mutual fund investors by misappropriating fees.

Two units of Regions Financial Corp. have agreed to pay $11.4 million to settle an enforcement action with the Securities and Exchange Commission, which accused them of defrauding mutual fund investors by misappropriating fees.
The units of the Birmingham, Ala.-based bank — AmSouth Bank and AmSouth Asset Management — were accused of collecting approximately $16 million in rebates from Bisys Group Inc. of Roseland, N.J. to pay for AmSouth’s marketing and other unrelated expenses.
In exchange for the payout, AmSouth agreed that it would continue to recommend Bisys as an administrator for the AmSouth Funds to its board of trustees.
The SEC’s order also found that the money was used to pay expenses entirely unrelated to marketing, including the salary, bonus, benefits, and for a country club membership of the president of the AmSouth Funds.
Under the terms of the agreement, AmSouth will disgorge $7.7 million in ill-gotten gains, pay a prejudgment interest of $2.2 million, and a $1.5 million penalty.
The money that was collected will be placed in a Fair Fund that Regions Bank will distribute to the funds, which are now managed by The Pioneer Group Inc. of Boston.