Exhibit 10.1

 

Comerica Securities, Inc. (“Comerica”) (20080130555)

 

FINRA Settlement Term Sheet

 

This Settlement Term Sheet (the “Settlement”) sets forth the principal terms of
Comerica’s agreement with the staff of FINRA to resolve FINRA’s Auction Rate
Securities Investigation of the Firm. The Settlement is subject to reaching
agreed upon language in a Letter of Acceptance Waiver and Consent (“AWC”) as
well as acceptance of such AWC by FINRA’s Office of Disciplinary Affairs.

 

I.                                         Buyback of ARS

 

Comerica or an affiliate will offer to purchase at par Auction Rate Securities
(“ARS”) that are subject to auctions that have not been successful as of the
date of this Settlement Term Sheet and are not subject to current calls or
redemptions (“Eligible ARS”) from all investors in the Relevant Class.  For
purposes of this Settlement, the “Relevant Class” shall be comprised of all
Individual Investors who purchased ARS through Comerica at any time between
May 31, 2006 and February 28, 2008 into accounts maintained at Comerica.

 

a.                                       Promptly upon execution of the
Settlement, Comerica or an affiliate shall offer to buy back the Eligible ARS
from Individual Investors, as defined below, who are in the Relevant Class (the
“Buyback Offer”). Following the Buyback Offer, the actual buyback of Eligible
ARS (the “Buyback”) will commence no later than thirty (30) days following the
date an AWC in this matter is accepted by FINRA’s Office of Disciplinary Affairs
(the “Buyback Date”) and be completed no later than sixty (60) days thereafter. 
For purposes of the Settlement, in addition to natural persons, the following
entities will also be treated as “Individual Investors”:

 

i.                                          Any account with the following
beneficial owner:

 

1.                                       non-profit charitable organizations;
and

2.                                       religious corporations or entities.

 

ii.                                       Any accounts with the following
beneficial owner the value of which at the time of any ARS purchase made through
Comerica did not exceed $10 million:

 

1.                                       trusts;

2.                                       corporate trusts;

3.                                       corporations;

4.                                       employee pension plans/ERISA and Taft
Hartley Act plans;

5.                                       educational institutions;

6.                                       incorporated non-profit organizations;

7.                                       limited liability companies;

8.                                       limited partnerships;

9.                                       non-public companies;

10.                                 partnerships;

11.                                 personal holding companies; and

12.                                 unincorporated associations.

 

b.                                      Commencing no later than six (6) months
following the date an AWC in this matter is accepted by FINRA’s Office of
Disciplinary Affairs, Comerica shall make its “best efforts” to provide
liquidity to all other investors not in the Relevant Class but who purchased
Eligible ARS at any time between May 31, 2006 and February 28, 2008 from
Comerica. Such best efforts, which may include, but are not limited to, offers
to purchase Eligible ARS and/or offers of low or no-interest loans, shall be
completed no later than sixty (60) days following commencement thereof.

 

1

--------------------------------------------------------------------------------

 

c.                                       Comerica will provide notice to the
Relevant Class of the settlement terms set forth in the Settlement no later than
ten (10) days  after FINRA’s acceptance of the AWC. Such notice shall not be
unacceptable to the FINRA staff.  Comerica will contemporaneously establish a
dedicated telephone assistance line, with appropriate staff, to respond to
questions from investors concerning the terms of the settlement.

 

II.                                     Relief for Investors Who Sold Below Par

 

No later than the completion of the Buyback, any Individual Investor in the
Relevant Class that Comerica can reasonably identify who sold ARS below par
between February 28, 2008 and the date the Settlement is accepted by FINRA (the
“Settlement Date”), will be paid the difference between par and the price at
which such Individual Investor sold the ARS.

 

III.                                 Consequential Damages Claims

 

No later than the Buyback Date, Comerica shall notify Individual Investors in
the Relevant Class that an independent arbitrator selected under the auspices of
FINRA, will be available for the exclusive purpose of arbitrating any Comerica
Individual Investor’s consequential damages claim.  Arbitration shall be
conducted, at the Individual Investor’s election, by a single non-industry
arbitrator and Comerica will pay all applicable forum and filing fees.

 

Any Individual Investor in the Relevant Class who chooses to pursue such a
consequential damages claim shall bear the burden of proving that it suffered
consequential damages and that such damages were caused by its inability to
access funds consisting of such Individual Investor’s ARS purchase(s) through
Comerica.  Comerica shall be able to defend itself against such claims provided,
however, that Comerica shall not contest liability related to the sale of ARS;
and provided further that Comerica shall not be able to use as part of its
defense an Individual Investor’s decision not to sell its ARS holdings prior to
the Settlement Date.

 

IV.                                Violations

 

FINRA and Comerica will settle this matter through the submission by Comerica of
an AWC.  Comerica, without admitting or denying the allegations or findings of
the AWC, will agree to the findings in the AWC that it violated NASD Rules 2110,
2210, 2211, and 3010 and Rules G-17, G-21, and G-27 of the Municipal Securities
Rulemaking Board insofar as Comerica (a) sold ARS using advertising or marketing
materials and/or other communications with the public regarding ARS that were
not fair and balanced and did not provide a sound basis for evaluating the facts
in regard to a purchase of ARS, and (b) failed to establish and maintain a
supervisory system reasonably designed to achieve compliance with certain NASD
Rules and Rules of the Municipal Securities Rulemaking Board as it related to
the marketing and sale of ARS.

 

V.                                    Sanctions

 

Comerica shall submit an AWC setting forth the violations described above
pursuant to which it shall agree to the imposition of a censure as well the
payment to FINRA of a fine in the amount of $750,000. Further, Comerica shall
agree to provide FINRA with a report no later than thirty (30) days following
the completion of the Buyback setting forth (a) the names and account numbers of
all Individual Investors in the Relevant Class to whom the Buyback Offer was
made, (b) an accounting of each instance in which such Individual Investors
accepted the Buyback Offer and sold ARS holdings to Comerica, and (c) the names,
account numbers, and an accounting of those Individual Investors in the Relevant
Class paid pursuant to paragraph II hereunder . Further, Comerica shall notify
FINRA within thirty (30) days of the completion of the best efforts undertaking
set forth above in paragraph I(b) of the nature and results of such efforts. The
accuracy of such report delivered pursuant to this paragraph V shall be
certified by the Chief Compliance Officer of Comerica.

 

2

--------------------------------------------------------------------------------

 

VI.                                Additional Understandings:

 

A.                                   Comerica will cooperate with FINRA in
promptly negotiating the language of an AWC and submitting such fully executed
AWC to FINRA. FINRA will include in such AWC language evidencing credit in the
aforementioned sanctions in paragraph V (the “Sanctions”) given in respect of
Comerica’s agreement to make the Buyback Offer to the Relevant Class as well as
its previous offering and/or granting of net zero interest loans to customers
who had purchased ARS from Comerica.

 

B.                                     In consideration of the Settlement, FINRA
shall, upon acceptance of the fully executed AWC in this matter, conclude its
investigation relating to the liability of Comerica.  As in all matters, FINRA
reserves the ability to take further steps, if necessary, to determine whether
there is a basis for liability of individuals.

 

C.                                     In executing the Settlement, Comerica
consents to FINRA making public disclosure of the existence of the Settlement
and the principal terms of such Settlement, including the Buyback Offer and the
Sanctions.

 

3

--------------------------------------------------------------------------------