Skip to: Content
Skip to: Site Navigation
Skip to: Search
SUNDAY, NOVEMBER 22, 2009
| Subscribe to Newser's RSS feeds RSS | Follow Newser on Twitter Twitter


1

NY AG Slaps Schwab With Suit Over Defrauding Clients

Share

(Newser) – The New York attorney general has told Charles Schwab he will sue the brokerage for civil fraud over its marketing of securities to clients, reports the Wall Street Journal. Andrew Cuomo alleges that Schwab's brokers had little understanding of the financial instruments and then failed to inform clients that the market for them had tanked. One broker cited by the AG said, "On whatever measuring scale my knowledge was pretty low."

The planned suit revolves around auction-rate securities, a short-term debt-backed instrument priced at periodic auctions. By early 2008 the market for them had collapsed, taking $330 billion along with it. Cuomo has told Schwab that he would consider a settlement if the brokerage bought back the securities from its clients, but Schwab said in a statement that the AG's charges "unfairly lay blame on our company for an illiquid market."

New York Attorney General Andrew Cuomo has written to Charles Schwab to inform them he will sue the brokerage for civil fraud.
New York Attorney General Andrew Cuomo has written to Charles Schwab to inform them he will sue the brokerage for civil fraud.   (AP Photo/Louis Lanzano, File)
Charles Schwab dealt in auction-rate securities, a short-term debt instrument for which the market collapsed in 2008.
Charles Schwab dealt in auction-rate securities, a short-term debt instrument for which the market collapsed in 2008.   (AP Photo/Paul Sakuma, file)
« Prev« Prev | Next »Next » Slideshow
OFF THE GRID
11.20.09
The Health-Care Wars Have Just Begun
11.19.09
Sarah Palin Deserves Some More Attention
1 comment
VIEWING:
 
nick
Jul 20, 09 6:30 AM CDT
Sooner or later, someone has to be held responsible for selling known junk securities to the public. Sorry "Chuck", but you're about to become an example. Reply
Vote up! Vote down!
+4
LEAVE A
COMMENT Comment Policy
Facebook ConnectPost this comment to Facebook?

After connecting you will have the option to post your comment on your Facebook profile.

 

Related Newser Stories

2 Stories

Cuomo Raises Pressure
on Merrill

He says company
faces lawsuit over auction-rate securities

Aug 15, 08 5:12 PM CDT
(Newser) - With Wachovia locked in to buying back $9 billion in auction-rate securities from clients, New York Attorney General Andrew Cuomo has his sights set next on finance titans Merrill Lynch and Goldman Sachs, Bloomberg reports. Cuomo says Merrill faces an "imminent" lawsuit after offering to buy back $10 billion... More »

MORE ABOUT:
Attorney General • Goldman Sachs • Wachovia • Merrill Lynch • lawsuit • Andrew Cuomo • auction-rate securities

Citigroup Will Buy Back $7B of Bad Debt, Pay $100M Fine

Deal with SEC, NY state seen as 'face-saving,' could mean more ahead

Aug 7, 08 2:12 PM CDT
(Newser) - Citigroup has agreed to buy back $7 billion in risky debt it marketed to consumers as safe and equivalent to cash, Reuters reports. Today’s deal, struck with New York's attorney general and the SEC, also requires the bank to pay fines totaling $100 million, and reimburse customers who took... More »

MORE ABOUT:
Citigroup • debt • SEC • Andrew Cuomo • New York Attorney General • fines • auction-rate securities

2 Stories


Business  •  Crime & Courts 
TwitterFollow @NewserBusiness on Twitter

 
debt • lawsuit • Andrew Cuomo • liquidity • brokerage • Charles Schwab Corp • auction-rate securities • brokers • financial crisis

from our news partners