Three financial firms, including RBC Capital Markets Corp., have lived up to the terms of their settlements with the U.S. Securities and Exchange Commission concerning their sales of auction rate securities (ARS), the SEC said Wednesday.

As a result of their compliance, the SEC says that it will not seek any deferred penalties against the firms. The settlements provided for such penalties to ensure compliance.

Under the settlements, RBC, Citigroup Global Markets, Inc., and Wachovia Securities LLC were required to offer to purchase ARS at par from their individual, charitable, and small business customers. Nearly 100% of these customers have accepted the firms’ offers, resulting in approximately US$14 billion of liquidity, the SEC says; US$759 million of that was attributable to RBC.

Additionally, it found that Citigroup and RBC also implemented broad-based liquidity measures for their institutional investors, in compliance with their settlements; and that all three firms also met their other settlement obligations, including compensating investors who sold ARS below par, reimbursing investors for excess interest costs associated with loans taken out due to ARS illiquidity, and participating in special arbitration proceedings before the Financial Industry Regulatory Authority.

The firms also submitted periodic reports to, and met quarterly with, SEC staff regarding the firms’ progress on meeting their settlement obligations.

IE