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UBS Agrees to $19.4B Auction-Rate Bond Buy-Back

By Clay Dillow,  Newser Staff

Posted Aug 8, 2008 10:56 AM CDT
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(Newser) – 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.

Citigroup will pay $7 billion to investors who bought auction-rate securities from the firm even after the market began its collapse.
Citigroup will pay $7 billion to investors who bought auction-rate securities from the firm even after the market began its collapse.   (AP Photo)
Dark clouds over UBS; the firm agreed to a $19.4 billion buy back of auction-rate securities after regulators filed actions against it.
Dark clouds over UBS; the firm agreed to a $19.4 billion buy back of auction-rate securities after regulators filed actions against it.   (AP Photo/Keystone, Alessandro Della Bella, file)
Rainy days for Merrill; the company will begin reimbursing clients for investments in auction-rate securities in January.
Rainy days for Merrill; the company will begin reimbursing clients for investments in auction-rate securities in January.   (AP Photo/Brian McDermott)
Citigroup will pay $7 billion to investors who bought auction-rate securities from the firm even after the market began its collapse.
Citigroup will pay $7 billion to investors who bought auction-rate securities from the firm even after the market began its collapse.   (AP Photo/Mary Altaffer, file)
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Citigroup, Merrill to buy back securities
Los Angeles Times

Bank of America subpoenaed, securities sales questioned
MarketWatch

Credit Suisse sued in auction-rate meltdown
Bloomberg

 
Citigroup • UBS • Merrill Lynch • bonds • auction-rate securities • investment banks

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