* FINRA may take disciplinary action
* Thomas Weisel says to contest any discipline
* Shares fall
NEW YORK, July 27 The investment bank Thomas
Weisel Partners Group Inc TWPG.O said on Monday a U.S.
financial regulator has recommended disciplinary action over
auction-rate securities transactions it made on behalf of
According to a regulatory filing, the Financial Industry
Regulatory Authority staff's recommendation against the
company's Thomas Weisel Partners LLC unit concerns potential
violations of rules imposed by FINRA and the Municipal
Securities Rulemaking Board, as well as "certain anti-fraud and
other provisions of the federal securities laws."
Thomas Weisel said it plans to vigorously contest any
formal discipline that includes a censure, fine or other
sanction. The San Francisco-based company said it learned of
the FINRA staff recommendation on July 23.
Auction-rate debt has rates that reset in periodic auctions
and was often marketed by brokers as a cash substitute.
After the $330 billion market froze in February 2008 when
dealers stopped taking part in auctions, many investors could
not sell the debt, or could sell it only at a loss.
More than 20 firms, including many of the largest U.S.
banks, have agreed to buy back in excess of $61 billion of
auction-rate debt and pay hundreds of millions of dollars of
fines, through settlements with regulators.
FINRA oversees more than 4,800. The MSRB regulates the
municipal bond market.
Thomas Weisel shares were down 21 cents or 4.2 percent at
$4.82 in late morning trading on the Nasdaq.
(Reporting by Jonathan Stempel, editing by Gerald E.