Broker wrong to cover certain expenses: regulators

Terra Nova Financial LLC, a Chicago-based broker, has been fined $400,000 by federal regulators who say the firm made unauthorized payments to clients, including money to cover one hedge fund manager's visits to a "gentleman's club."

All told, in 2004 and 2005 Terra Nova made $1 million in improper payments to clients in a bid to keep their business, the Financial Industry Regulatory Authority said in a statement announcing the fine Monday. The regulator also fined and suspended three people at the firm for their roles in the payments.

Terra Nova didn't admit or deny the allegations, but it agreed to hire an independent consultant to review its policies, the statement said.