By Rachel Lippmann, KWMU
St. Louis – Missouri Secretary of State Robin Carnahan and other regulators have reached a multi-billion dollar settlement with Wachovia Securities.
Under the agreement, Wachovia will pay back nine billion dollars to 40-thousand investors across the nation. They will also pay 50 million in fines.
Those investors purchased financial products known as auction-rate securities. Wachovia told them they could be used like cash for medical expenses or college tuition.
Carnahan says Wachovia's statements were accurate until the market froze up in February. After that, investors could not access cash.
"What happened was, they had failed to mention to many of their clients that this was a possibility," Carnahan said. "For six months, these Missourians and other investors have not been allowed to access their money for medical bills, for loan payments, or business costs, to pay tuition."
In a statement, Wachovia says it is pleased with the settlement. It is the fifth bank to reach similar settlements in the last two weeks.
Carnahan says her office is conducting investigations into other banks.