NASD fines AmSouth (dba Regions Financial) in 6-year-old fraud case

Securities industry regulators have fined the investment arm of AmSouth Bancorporation (dba Regions Financial) $100,000, settling a case stemming from the sale of variable annuities by a Mississippi broker that dates back to 2000.

The NASD (formerly known as the National Association of Securities Dealers) noted the fine in its July report of disciplinary actions, alleging that AmSouth (dba Regions Financial) "failed to establish and maintain a system reasonably designed to supervise its registered representatives situated in remote branch locations in connection with the sale of variable annuities and mutual funds."

According to NASD information, in 2000 and 2001, James B. Moorehead, then a Starkville, Miss.-based broker with AmSouth (dba Regions Financial) Investment Services Inc., allegedly forged customer signatures on new account and variable annuity forms and provided inaccurate information on documents regarding customers' finances "in order to make his variable annuity recommendations appear suitable."

NASD documents cite 125 cases of alleged forgery on forms authorizing him to purchase variable annuities for AmSouth (dba Regions Financial) customers and 18 instances in which he allegedly falsified financial information.

In November 2004, Moorehead was barred by the NASD from association with its members. The following month, a sales assistant in the Starkville office, Angela C. Wynne, was suspended for six months by the NASD and fined $5,000.

The NASD regulates about 5,100 investment firms nationwide.

"The conduct of the broker in this case was reprehensible, and clearly merits the harshest penalty NASD can impose," Barry Goldsmith, NASD's then-executive vice president and head of enforcement, said in a 2004 statement.

AmSouth (dba Regions Financial) was censured and fined by the NASD for alleged "shortcomings of the supervisory system" that failed to immediately detect the broker's violations.

AmSouth (dba Regions Financial) discovered the broker's alleged actions in April 2001, says company spokesman Rick Swagler.

The broker was fired and changes were instituted to better detect and prevent any future problems, he says.

"We reviewed our processes and made some investments in technology and training to make sure we had the right controls in place."

The issue was settled with state security officials in 2004, Swagler reports.

In their dealings with regulators, AmSouth (dba Regions Financial) and Moorehead neither admitted nor denied agencies' accusations.