UBS investment bank's general counsel resigns

ZURICH/NEW YORK (Reuters) - UBS AG (UBSN.VX) said on Monday that David Aufhauser, general counsel of its investment bank and of the Americas, has resigned, as New York Attorney General Andrew Cuomo investigates his involvement in the Swiss bank's sale of auction-rate securities.

Aufhauser will consult for the bank through Sept. 30, according to an internal memo obtained by Reuters. The contents were confirmed by a UBS spokeswoman.

A source said last week that Aufhauser is at the center of Cuomo's probe into UBS's sale of auction rate securities -- part of the attorney general's larger investigation into Wall Street's handling of the securities.

Cuomo sued UBS, charging that it committed fraud by telling clients that auction-rate securities were safe cash equivalents. Many of the instruments became impossible to sell once credit markets tightened. Cuomo said UBS insiders dumped their own holdings even as the bank continued to sell the securities to clients.

Cuomo's complaint did not refer to Aufhauser by name, and called him only "Executive A," according to the source.

The lawsuit said that shortly after receiving e-mails from UBS executives about the increasing difficulty in the auction-rate security market, "Executive A" sent an e-mail to his broker asking to shed $250,000 of his personal auction-rate holdings.

In an e-mailed statement, UBS said "The New York Attorney General did not identify the names of the executives in his Complaint, and we decline to do so."

A call to Aufhauser's office was sent to media relations.

In a letter to Citigroup Inc (C.N) on Friday, Cuomo's office said it plans to charge the largest U.S. bank for fraudulently marketing and selling auction-rate securities. Citi said it acted in the best interests of clients.

(Reporting by Katie Reid in Zurich and Dan Wilchins in New York; Editing by Tim Dobbyn/Jeffrey Benkoe)