UBS settles over securities

[Dover]

Source: AP

NEW YORK — Swiss banking giant UBS agreed Friday to buy back nearly $20 billion in auction-rate securities from investors, a day after Citigroup reached a similar settlement with regulators for $7 billion as part of a wide-ranging investigation into the collapse of the market for the bondlike investments.

UBS will repurchase all $18.6 billion of the securities it sold and pay a fine of $150 million as part of an investigation led by New York Attorney General Andrew Cuomo into whether banks misled customers about the safety of the securities.

Cuomo said in an interview that his investigation into the troubled securities is continuing. Of the two settlements reached in as many days with UBS and Citigroup, he said: "We tend to start with the largest because that can make the greatest impact."

In reaching the settlement, UBS did not acknowledge any wrongdoing. Likewise, Citigroup neither admitted nor denied wrongdoing under the settlements.

As part of its settlement announced Thursday, Citigroup will also pay fines of $100 million. Texas was the lead state designated to investigate and resolve the Citigroup matter on behalf of all states, said Commissioner Denise Voigt Crawford with the Texas State Securities Board. She could not say how many Texans are among the 40,000 affected consumers or how much of the settlement would be coming to the state.

The bond-like investments were widely held by many institutional and individual investors and were seen as highly liquid, money marketlike investments. However the market for them collapsed in February amid the downturn in the broader credit markets...cont'd




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