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SEC Bars Broker In Misleading Advertising Case

October 19, 1994

WASHINGTON (AP) _ The Securities and Exchange Commission has suspended a broker for a year for distributing misleading mutual fund sales leaflets at branches of First Union bank in Florida.

The harsh penalty announced Wednesday comes as federal regulators grapple with the rapid growth of mutual fund sales in banks and persistent allegations of sales practice violations.

″The message that the commission is intending to send is that it takes these types of sales practice violation seriously,″ said Colleen Mahoney, deputy director of the SEC’s enforcement division.

The SEC said the broker, Terence Mulrooney, 36, of Port St. Lucie, Fla., worked for First Union Brokerage Service from February to June 1993.

Mulrooney had prepared sales leaflets promoting First Union mutual funds as an alternative to certificates of deposit. The leaflets, distributed in various First Union branches in Florida, were not approved by bank management, the SEC said.

The sales sheets contained misleading yield figures for mutual funds.

″The quoted yield figures were as high as 18 percent on one sheet, and in most cases materially exceeded the yields actually generated by the funds during the previous year,″ the SEC’s order said. An investigation began after a customer complaint.

First Union, in a written statement, said it fired Mulrooney in June 1993 following an internal investigation.

″First Union Brokerage Services acted consistently with its legal obligations at all times and no losses to customers resulted from Mr. Mulrooney’s conduct,″ said spokeswoman Marianna Sheridan.

A telephone call placed to Mulrooney’s home was not immediately returned Wednesday.

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