UBS, pressured by state and federal authorities, has agreed to buy back $19.4 billion in risky auction-rate securities that were widely sold as cash-like and safe, the Boston Globe reports. The market for the securities, which are a type of bond sold by non-profits, art institutions and local governments, collapsed in February. The Swiss bank will also pay $150 milion in fines, split between New York and Massachusetts.
Regulators in several states have filed actions against firms dealing in auction-rate securities, charging that they kept selling them even when they knew the bottom was dropping out of the market. Yesterday, Citigroup agreed to buy back almost $20 billion of the bonds, and Merrill agreed to buy back $10 billion.