California regulators have announced a final settlement in a dispute with E-Trade Securities that would allow holders of certain investments to get refunds of up to $20 million.
The California Department of Corporations late Friday said it closed an investigation that alleged that E-Trade misrepresented so-called "auction-rate securities" to buyers as "safe, cash-equivalent products, even though the products faced increasing liquidity risk.
E-Trade also will pay nearly $1.1 million to California in administrative penalities and agreed to abide by a legal order prohibiting violations of state securities laws, including not supervising brokers sellling auction-rate securities, the department said in a statement.
An E-Trade spokeswoman declined to comment.
The agreement was part of a global settlement last October between E-Trade and a number of states that could result in as much as $100 million worth of refunds for people who still hold auction-rate securities they purchased from E-Trade.