* 14th firm to settle with Cuomo over auction-rate debt
* Debt became illiquid when markets seized up
By Jonathan Stempel
NEW YORK, Feb 23 New York Attorney General
Andrew Cuomo on Tuesday said Oppenheimer & Co will restore $31
million to the accounts of customers who were stuck owning
auction-rate securities that became illiquid.
The unit of Toronto-based Oppenheimer Holdings Inc (OPY.N)
is the 14th broker-dealer to agree to buy back the debt in
settlements arranged with Cuomo's office. These firms have
agreed to more than $60 billion of buybacks.
Auction-rate debt has rates that reset at periodic
auctions. Regulators say many brokers marketed the debt as
being as safe as cash. Dealers, however, stopped supporting the
market in February 2008, causing much of the debt to lose value
or become illiquid.
In a statement, Cuomo called the Oppenheimer settlement "an
important first step in bringing justice to investors who were
promised a cash-equivalent investment, while helping to further
restore investor confidence."
The settlement was announced a day after Oppenheimer won
dismissal of a federal lawsuit in Lexington, Kentucky in which
Ashland Inc (ASH.N) accused Oppenheimer of fraudulently selling
it $194 million of auction-rate debt. U.S. District Judge
Jennifer Coffman said the chemical company's claims were not
specific enough to let the case move ahead.
Cuomo said Oppenheimer will use a significant amount of
available resources to buyback the debt, and has committed to
repurchase more when it has greater resources.
All individuals, charities and small businesses with
Oppenheimer accounts of less than $1 million are eligible for
$25,000 in liquidity, Cuomo said.
Other companies to settle with Cuomo are Bank of America
Corp (BAC.N), Citigroup Inc (C.N), Credit Suisse Group AG
CSGN.VX, Deutsche Bank AG (DBKGn.DE), Fidelity Investments,
Goldman Sachs Group Inc (GS.N), JPMorgan Chase & Co (JPM.N),
Morgan Stanley (MS.N), Royal Bank of Canada (RY.TO), TD
Ameritrade Holdings Corp (AMTD.O), UBS AG UBSN.VX, and the
former Merrill Lynch & Co and Wachovia Corp (WFC.N).
(Reporting by Jonathan Stempel)