Legal News

Breaking News: Cuomo Announces Big Suit Against UBS

By Ashby Jones

This just in: as anticipated, New York Attorney General Andrew Cuomo said at a press conference just a few minutes ago that he has sued two UBS AG units for allegedly misrepresenting to clients the risks of auction-rate securities before the $330 billion auction-rate seized up earlier this year.

Cuomo said his office has filed a lawsuit against UBS Securities LLC and UBS Financial Services Inc. for falsely selling and marketing auction-rate securities as safe and liquid investments.

“Not only is UBS guilty of committing a flagrant breach of trust between the bank and its customers, its top executives jumped ship as soon as the securities market started to collapse, leaving thousands of customers holding the bag,” Cuomo said in a statement.

Cuomo said his probe revealed executives allegedly sold off $21 million in personal holdings of auction-rate securities as the market started to collapse but continued to sell the securities to customers at the time. UBS clients hold about $25 billion of those securities.

A statement from UBS was not immediately available. But earlier this week, Karina Byrne, a spokeswoman for UBS told the Journal: “A filing of a complaint at this point would be disappointing, given that we are working with regulators, peers, and industry groups to develop solutions addressing the liquidity issues in the ARS market.”

Full post as published by Law Blog - WSJ.com on July 24, 2008 (boomark / email).