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.


 


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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.


 


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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.


 


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