Massachusetts files fraud charges against UBS
Massachusetts regulators filed civil fraud charges against UBS Financial Services on June 26 for allegedly claiming that risky auction-rate securities were as safe as cash.
The 101-page lawsuit filed by the Massachusetts Securities Division claims that the financial services arm of the company knowingly let brokers represent auction-rate securities as safe to investors so that the company could reduce its stake in the instruments.
The complaint asserts that even though UBS insiders were calling the program an “albatross” and knew it was likely to collapse early in 2008, it continued selling the auction-rate securities to individual investors.
The state wants UBS to return all of the funds to Massachusetts investors and to pay a fine.
Auction-rate securities are municipal or corporate debt securities or preferred stocks that pay interest at rates set through periodic auctions. The instruments typically have long-term maturity dates or no maturity date.
In mid-February, the auctions for the investment instruments failed. That meant investors were unable to sell their securities. To this day, auction-rate securities investors find themselves owning frozen assets.
On May 8, Carey & Danis filed a class action lawsuit in the U.S. District Court for the Southern District of New York on behalf of persons who purchased auction rate securities from UBS AG (NYSE: UBS), UBS Securities LLC and UBS Financial Services Inc. between May 8, 2003 and Feb. 13, 2008 and who continued to hold the securities as of Feb. 13, 2008.
Auction-rate securities investors who wish to discuss their rights against any broker-dealer may contact Carey & Danis toll-free at 800-721-2519 or fill out our online contact form
