Cuomo To Investigate 3 New Banks
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Attorney General Cuomo said yesterday he is expanding his investigation into the collapse of the auction-rate securities market to include JPMorgan Chase & Co., Morgan Stanley, and Wachovia Corp.
Last week, Mr. Cuomo’s office and the Securities and Exchange Commission reached settlements that forced Swiss bank UBS to repurchase $18.6 billion in the securities, while Citigroup agreed to buy back $7 billion of the securities. UBS will also pay a fine of $150 million, while Citigroup will pay a $100 million fine.
“This is an industrywide problem,” Mr. Cuomo said in an interview. “This is not about one or two institutions. We are now working with the other players in the industry.”
Mr. Cuomo sent letters to JPMorgan, Morgan Stanley, and Wachovia telling them that his office is reviewing the banks’ behavior in the sale of auction-rate securities. The attorney general will determine if the banks knowingly misrepresented the safety of the securities when selling them to investors.
Morgan Stanley offered to buy back about $4.5 billion in auction-rate securities from retail clients, following a similar offer last week by Merrill Lynch & Co.
A Wachovia spokeswoman said the Charlotte, N.C.-based bank is meeting with regulators. JPMorgan declined to comment.
