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First California to Pay Penalties

April 08, 1999| From Bloomberg News

The First California Capital Markets Group Inc. and its chief executive have agreed to pay $700,000 in penalties to settle regulatory charges that they misled investors about California municipal bond risks.

The Securities and Exchange Commission alleged that the former San Francisco brokerage, now owned by Badger Technologies Inc., failed to disclose "the speculative nature of the projects being funded" by $69 million in municipal bonds. The former brokerage underwrote the bonds between 1989 and 1991 for four California municipalities: Nevada County and the towns of Ione, Wasco and Avenal.

First California and its chief executive, H. Michael Richardson, neither admitted nor denied the allegations.

The SEC, in a lawsuit filed in federal court in San Francisco, alleged First California overstated the amount of money needed to fund housing projects in Wasco and Avenal, and overvalued land appraisals in Ione and Nevada County.

The firm and Richardson agreed to jointly surrender $600,000 and pay $100,000 in fines.

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