New York Attorney General Files Securities Fraud Lawsuit Against UBS

New York State Attorney General Andrew Cuomo filed a securities fraud lawsuit today against UBS AG related to what he is alleging was the firm’s fraudulent promotion of auction-rate securities as safe investments. He is reportedly seeking to make UBS offer to purchase back at face value approximately $25 billion in ARS instruments held by UBS clients in New York and across the United States.

Sources report that UBS is not the only entity that Cuomo may file charges against in the wake of his office’s investigation of auction-rate securities debacle. Thousands of investors have complained that they were told that the securities were like cash and would yield a little higher than a money market account.

Cuomo’s probe has focused on whether UBS and other investment firms notified investors of the risks involved with investing in auction-rate securities. He began his investigation in April when he subpoenaed 18 institutions. Since then, Cuomo has sent subpoenas to 100 individuals and 30 entities, including JP Morgan Chase & Co, Citigroup Inc., Goldman Sachs Group, Inc., and Merrill Lynch and Co.

Last week, UBS announced that it would repurchase up to $3.5 billion in tax-exempt auction rate securities from its clients. The plan includes packaging the securities and selling the new debt to money market funds. Cuomo announced today that this offer is not enough.

A UBS spokesperson said the firm plans to defend itself against the securities fraud charges.

Also today, the Texas securities regulator threatened to ban UBS from doing business in the state unless the investment firm repaid investors that bought auction-rate securities through the firm.

Related Web Resources:

UBS Faces New York Lawsuit Over Auction-Rate Sales,, July 24, 2008
Cuomo Sues UBS For Billions Over Securities Scandal,, July 24, 2008
Office of New York State Attorney General Cuomo

If you have lost an investment because of the misconduct or misrepresentation of a broker-dealer, contact Shepherd Smith Edwards & Kantas LTD LLP today.