Legal News

UBS to Cash Out of ARS Party, Will Buy Back $19.4 Billion Worth

By Dan Slater

They’re folding like cards. In the waning hours of the auction-rate securities party, UBS has agreed to buy back $19.4 billion in ARS from individual investors, charities and small businesses. Here’s the early WSJ report.

In June, Massachusetts got the ARS party started by suing UBS for fraud and dishonest conduct in ARS sales. The suit alleged that UBS reps told investors that the securities “were safe, liquid ‘cash alternatives’ when UBS knew they were not.” Then, in July, NY AG Andrew Cuomo sued two UBS units, and Texas regulators have set a hearing for September to evaluate the bank’s role in selling the securities.

“There is an agreement, but it may not be announced until Monday,” said Brian McNiff, a spokesman for Massachusetts Secretary of State William F. Galvin. “The timing is still up in the air.” Under the pact, according to McNiff, UBS will also pay $150 million in fines, which will go to regulators in Massachusetts and other states.

A UBS spokeswoman didn’t immediately return the WSJ’s call seeking comment.

Full post as published by Law Blog - WSJ.com on August 08, 2008 (boomark / email).