Wachovia to Pay Penalty to Settle Charges Surrounding First Union Merger

WASHINGTON – Wachovia Corp., the No. 4 U.S. bank, agreed to pay a $37 million penalty to settle charges that it and First Union Corp. failed to disclose certain stock purchases before their 2001 merger, U.S. securities regulators said on Thursday.

The U.S. Securities and Exchange Commission said Wachovia and First Union failed to properly disclose Wachovia’s purchase of $500 million of First Union stock when First Union and SunTrust Corp. launched competing bids for Wachovia.

The information was not disclosed in quarterly financial reports or in a joint proxy statement prospectus in connection with the merger, but it was disclosed after shareholders voted on the merger, the SEC said.

In August, Charlotte, North Carolina-based Wachovia said the SEC was investigating certain purchases of First Union shares before the 2001 merger, and the disclosure of the purchases made by both banks.

The SEC said Wachovia agreed to a settlement without admitting or denying the SEC allegations.

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