NEW YORK, July 7 New York Attorney General
Andrew Cuomo announced final settlements with Credit Suisse
Securities LLC and Merrill Lynch & Co over their sale of debt
that became illiquid despite being marketed as being as safe as
The brokerages are the last of 11 securities firms that
agreed to buy back more than $61 billion of so-called
auction-rate debt, Cuomo said. These firms also paid hundreds
of millions of dollars of fines.
Auction-rate debt has rates that reset in periodic
auctions, but regulators accused brokerages of misleading
investors into believing the debt was a cash substitute.
After the $330 billion market froze in February 2008 when
dealers stopped taking part in auctions, many investors could
sell the debt only at a loss or not at all.
Credit Suisse is a unit of Credit Suisse Group AG
CSGN.VX. Merrill Lynch on Jan. 1 became part of Bank of
America Corp (BAC.N), whose own brokerage entered a separate
settlement with Cuomo.
Others to settle include units of Citigroup Inc (C.N),
Deutsche Bank AG (DBKGn.DE), Goldman Sachs Group Inc (GS.N),
JPMorgan Chase & Co (JPM.N), Morgan Stanley (MS.N), Royal Bank
of Canada (RY.TO), UBS AG UBSN.VX and Wells Fargo & Co
(WFC.N), Cuomo said.
(Reporting by Jonathan Stempel, editing by Matthew Lewis)