UBS Knew of Looming Auction-Rate Securities Market Crash
Documents reviewed by the Boston Globe reveal that UBS Financial Services knew of the looming collapse of the auction-rate securities market but it only tipped off a few select investors.
In the article “Wall Street Firm told only some about risk,” reporter Beth Healey writes that at least three months before the auction-rate securities market crashed in February, UBS warned large investment bankers of the impending problem.
And yet, UBS brokers continued to sell the instruments to individuals, businesses and small towns. Those investors were allegedly told the investments were “as safe as cash.”
Healey writes:
“It is a conflict that could mean UBS bears more responsibility for its role in the auction-rate securities debacle than it has acknowledged so far....Securities lawyers said evidence that one side of the firm knew about the impending market collapse without telling the other could pose legal trouble for UBS.”
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 UBS or any other broker-dealer may contact Carey & Danis toll-free at 800-721-2519 or fill out our online contact form
