3 More Wall Street Firms Agree to Buy Back Securities

Settlement reached after auction-rate securities market collapse
By Peter Fearon,  Newser Staff
Posted Aug 22, 2008 2:23 AM CDT
New York attorney general Andrew Cuomo has secured a deal with several Wall Street brokerages and banks to buy back billions of dollars in auction-rate securities.   (AP Photo/Mike Groll, file)
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(Newser) – Merrill Lynch, Goldman Sachs and Deutsche Bank have agreed to a settlement with New York's attorney general and other state regulators to buy back $14.5 billion of now worthless auction-rate securities. The brokerages will also pay $162 million in fines to settle charges that they misled investors into thinking the securities were as liquid as cash, reports the Financial Times.

The banks join five other other financial firms that  have agreed to similar deals to avoid further legal action since the collapse of the $330 billion market in auction-rate securities in February. Officials from the Financial Industry Regulatory Authority are launching investigations at nearly 40 brokerages nationwide to determine if  the firms adequately warned customers about risks in the auction-rate market, reports Bloomberg.