July 7, 2009 / 5:44 PM / 9 years ago

New York state settles with Merrill, Credit Suisse

NEW YORK, July 7 (Reuters) - 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 cash.

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)

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