Fifth Third Securities Inc. agreed Tuesday to pay $1 million to settle a charge that two executives violated the municipal bond industry's so-called “pay-to-play” rules against political contributions.

        A federal law and additional rules prohibit influence peddling by brokerages that compete in the lucrative business of underwriting municipal and other governmental bonds.

        The Securities and Exchange Commission was investigating a charge that the executives, identified by the SEC only as officers of two Fifth Third Bancorp affiliate banks, solicited business from “certain units of state and local government in Ohio” between 1998 and 2000, the commission said. The SEC refused to identify what governments were involved.

        The agencydid not require Fifth Third to stay out of the municipal bond business. Fifth Third asked the SEC if it could avoid this potential penalty, triggered by campaign contributions by one of the bankers, and the commission agreed to settle the case.

        In the settlement, Fifth Third Securities did not admit wrongdoing. But it acknowledged that political contributions were made by employees.

        The unidentified bank officers are still employed by the bank. Fifth Third spokeswoman Roberta Jennings said the bank's executives are taking the charges seriously and that the bank would pay the fine because it respects the SEC ruling.

        “The SEC found an appearance issue, but nothing more,” Ms. Jennings said.

        Fifth Third Securities is Ohio's second-largest provider of investment banking services with about $34 billion of assets under management.

        As part of the settlement, Fifth Third's securities division has 20 days to hire an independent consultant to review its supervisory and compliance policies and procedures related to the campaign contributions. The securities firm then has three months to put the consultant's recommendations into effect.

        According to SEC documents, the two bank executives made 13 personal contributions and one from Fifth Third Bank's political action committee between 1997 and 2001 to candidates and elected officials whose offices pick underwriters for municipal securities. The executives “controlled Fifth Third Bank's political action committee under certain circumstances,” the SEC said.

        Within two years of thesecontributions, Fifth Third Securities was involved in municipal securities business with the issuers tied to candidates who received political contributions, the SEC said.

        Larry West, assistant director of enforcement at the SEC, said Tuesday that the the violations involved 24 bond deals that Fifth Third Securities made in Ohio between 1998 and 2000.

        Those deals accounted for sales to the public of about $2.3 billion. Fifth Third Securities made about $1 million in underwriting fees for handling the transactions.

        Mr. West said the SEC was not alleging that the political contributions were made to bring or generate new business to Fifth Third Securities. He also cited the appearance of impropriety.

        He added that the 24 deals for which Fifth Third Securities was cited were ones that the SEC investigated, meaning its entire business was not investigated.

        The agency added that the case is still under investigation.

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