NY Attorney General Cuomo Sues Charles Schwab Over Auction-Rate Securities

August 17, 2009 by · Leave a Comment
Filed under: Legal News 

Business Journal, Dayton – New York Attorney General Andrew Cuomo sued Charles Schwab & Co. on Monday over alleged misrepresentation to clients on the liquidity of auction-rate securities.

Auction-rate securities, which are repriced on a daily, weekly or monthly basis, were among the first casualties of the credit crisis. The securities were designed to allow large borrowers to take out long-term loans at more attractive short-term rates, with Wall Street firms pocketing huge fees along the way.

Several banks and brokerages have already settled fraud claims by repurchasing the auction-rate securities at face value, including Fidelity Investments and TD Ameritrade Holding Corp., who, like Schwab, sold the securities but did not underwrite them.

The lawsuit comes as little surprise since Cuomo said last month that he would sue the San Francisco brokerage if a settlement could not be reached.

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