Maybe we should send Newark a list of the other firms. (Ameriprise, Oppenheimer, Merrill Lynch, H&R Block Financial Advisors, Charles Schwab, etc.). I guess after UBS rolled over for New York and Massachusetts, the New Jersey regulators had to work real hard to get UBS to settle with New Jersey, and of course, just like the sweetheart deal they cut with New York, this probably only applies to Auction Rate Securities currently held in UBS accounts, and does not include ARS purchases at UBS that were after the debacle transferred to other firms.

Wouldn’t it be nice if the regulators posted the actual Consent Order so we can read it, rather than just issuing press releases which make it look like they are doing their job.

Attorney General, Bureau of Securities


NEWARK – The Office of the Attorney General through its Bureau of Securities has signed a final Consent Order that requires UBS to repurchase auction-rate securities (ARS) from New Jersey clients to settle allegations that the firm’s securities dealers sold ARS without disclosing known risks of the ARS market.

Under the terms of the settlement, UBS Securities LLC and UBS Financial Services, Inc. have agreed to offer the repurchase of $1.5 billion in ARS sold to retail investors in New Jersey. Although marketed and sold to investors as safe, liquid, and cash-like investments, the ARS were actually long-term investments subject to a complex auction process that failed in early 2008, revealing illiquidity and lower interest rates than investors were promised.

This is the eighth such settlement that the Bureau has reached with firms that sold ARS to New Jersey investors. More than $2.5 billion of these assets have been repurchased by the firms, under terms of the settlements.

“Investors suffered because of this firm’s failure to disclose known risks,” Attorney General Paula T. Dow said. “Disclosure of material facts to the investing public is not only the law, but is necessary for consumers to make fully informed decisions about investing their hard-earned money.”

“We continue to monitor the securities industry in New Jersey, to ensure compliance with our state laws,” said Thomas R. Calcagni, Acting Director of the Division of Consumer Affairs. “We’re ready to act, as we’ve done in this matter, to protect investors when our laws are not followed.”

“The Bureau of Securities continues to seek relief for investors who were sold these unsuitable and illiquid products,” said Marc B. Minor, New Jersey Bureau of Securities Chief. “State securities regulators continue to work together to protect investors stuck with ARS and to hold the firms accountable for violating state investor protection laws.”

The order also requires UBS to pay $3,790,487 in civil penalties to New Jersey. This amount represents the state’s pro-rata share of a settlement negotiated by a multi-state task force of state regulators formed by the North American Securities Administrators Association (NASAA).

The Investigation


During the investigation, regulators discovered that UBS securities dealers failed to adequately inform customers of the risks associated with buying ARS, or the firm’s participation in creating artificial demand in auctions when demand faltered.

The investigation into UBS’ role in the sale of these securities is part of a larger state-led effort to address problems in connection with ARS investments. Early in 2008, state offices began receiving complaints from investors throughout the country. As a result, 12 states, including New Jersey, formed a task force to investigate whether certain Wall Street firms had systematically misled investors when placing them in auction rate securities.

The Consent Order sets forth the findings and conclusions by BOS and the terms previously agreed to in principle.

BOS Investigating Attorney Peter C. Cole led New Jersey’s efforts in securing this settlement and protecting Garden State investors.

Guiliano Law Firm

The practice of Nicholas J. Guiliano, Esq., and The Guiliano Law Firm, P.C., is limited to the representation of investors in claims for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost to unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.

Comments are closed.