UBS has agreed to pay $4.4 million in return for a consent judgment resolving the Massachusetts Attorney General’s investigation of UBS’s sales of auction rate securities (ARS) to Massachusetts municipalities and state agencies. The payment is in addition to $35 million that UBS previously agreed to pay to the municipalities and agencies to refund them for ARS losses. (For further information on the prior payment, please click here). The latest payment will reportedly be used to fund investment education programs for agency and municipality decision-makers ($1 million) and to fund redemption of the ARS ($3.4 million).
The Attorney General’s investigation focused on representations allegedly made by UBS representatives in convincing decision-makers at various municipalities and state agencies to invest short-term funds in ARS. Among the allegations were that UBS representatives marketed ARS as “liquid” and “cash equivalents.” (For further discussion of the investigation, please click here).
The settlement with the Attorney General does not affect the ongoing suits against UBS by the Massachusetts Securities Division or the New York Attorney General, which concern sales of ARS to non-governmental clients. (For further discussion of these suits, please click here and here).