New York AG Hits UBS with Auction-Rate Securities Suit
Yesterday, New York Attorney General Andrew Cuomo filed a civil fraud lawsuit against UBS alleging the banking behemoth knew the auction-rate securities market was on the verge of collapse when they told investors the securities were as safe as cash.
The suit, filed in state court in Manhattan, alleges that bank executives yanked their personal investments from the auction-rate securities market when they realized it was in trouble, the Associated Press reports. At the same time, they allegedly reassured customers that the market was solid.
Cuomo said in a press release issued by his office:
“Not only is UBS guilty of committing a flagrant breach of trust between the bank and its customers, its top executives jumped ship as soon the securities market started to collapse, leaving thousands of customers holding the bag.”
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
