Attorney General Cuomo Announces The Release Of Assurances Of Discontinuance In Auction Rate Securities Settlements With Citigroup And Ubs
NEW YORK, NY (December 11, 2008) - Attorney General Andrew M. Cuomo today announced Assurances of Discontinuance with UBS Financial Services, Inc. and UBS Securities LLC (“UBS”) and Citigroup Global Markets, Inc. (“Citigroup”) in the auction rate securities settlements reached earlier this year. The Assurances detail how liquidity will be provided to consumers who purchased auction-rate securities. These two Assurances of Discontinuance are the next step in the agreements reached in August with Citigroup and UBS.
Attorney General Cuomo earlier this year settled allegations that Citigroup and UBS made misrepresentations in their marketing and sale of auction rate securities. As a result of these settlements and those with other regulators, Citigroup will return over $7.3 billion and UBS will return over $22.7 billion to investors across New York State and the nation.
From the beginning of his investigation into the auction-rate market, the Attorney General’s objective has been to bring relief to investors stuck with illiquid auction-rate securities. To date, regulatory settlements have provided for over $61 billion in investor buy-backs, representing the largest return on behalf of investors ever.
“From day one our mission has been to get investors their money back,” said Attorney General Cuomo. “Working with other regulators, we have been able to obtain relief for tens of thousands of investors who hold tens of billions of dollars’ worth of illiquid auction-rate securities. This is a historic victory for these investors, who have generally been so hard hit in recent months. Not only are we returning liquidity to these investors, we are also restoring investor faith in their ability to invest with the assurance that authorities will protect their interests.”
In February 2008, the auction rate securities market seized up as firms allowed auctions to fail, leaving hundreds of thousands of investors holding illiquid investments, despite having been told that their investments were cash equivalents. Attorney General Cuomo opened an investigation shortly thereafter. In July, Attorney General Cuomo brought a lawsuit against UBS, alleging, among other things, that the firm made misrepresentations in its marketing and sales of auction-rate securities to investors. On August 7 and 8, 2008, the Attorney General reached agreements with Citigroup and UBS, respectively, to settle allegations that the firms misled investors. Over the course of the next few months, the Attorney General secured buy-back commitments from an additional ten broker-dealers.
Citigroup and UBS have agreed to buyback auction-rate securities from certain customers, as set forth in greater detail in the settlement agreements. Investors either already have received or will be receiving correspondence from Citigroup and UBS regarding the settlements. Investors should take note that they need to provide appropriate notice to Citigroup and UBS in order to participate in these settlements, and could lose their rights to sell their auction rate securities if they fail to do so.
The Attorney General thanked the North American Securities Administrators Association (NASAA), the NASAA multi-state ARS Task Force, the Texas Securities Commission, and the Financial Industry Regulatory Authority (FINRA), for their efforts in achieving these settlements. In addition, the Attorney General thanked the Securities and Exchange Commission and its staff for their assistance and cooperation in the auction-rate securities investigations.
Assistant Attorneys General Vicki Andreadis, Thomas Teige Carroll, Peter Dean, Pamela Lynam Mahon, Armen Morian, Christopher Mulvihill, Daniel Sangeap, Alisha C. Smith, and Ethan Zlotchew, conducted these investigations along with Kitty Kay Chan, Economist for the Division of Economic Justice, all under the supervision of David A. Markowitz, Chief of the Investor Protection Bureau, and Eric Corngold, Executive Deputy Attorney General for Economic Justice.
Cuomo’s auction-rate securities investigation continues as to other market participants.
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