Subprime/Credit Crisis Developments

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In the wake of a lawsuit by the Massachusetts Securities Division alleging fraudulent sales of auction rate securities (“ARS”), UBS AG reportedly plans to buy back as much as $3.5 billion in ARS-impacted preferred shares issued by tax-exempt closed-end funds. 

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Read More UBS Agrees To Buy Back Up To $3.5 Billion Of Auction Rate Preferred Shares

Several news sources recently reported that the U.S. Attorney’s Office for New York’s Eastern District is conducting a criminal investigation into whether two former Credit Suisse brokers lied to investors in auction rate securities (“ARS”) about the nature of those securities.  The probe into the two Credit Suisse brokers is the first known criminal matter stemming from the troubled ARS market. …
Read More Federal Prosecutors Probe Two Credit Suisse Brokers Regarding Auction Rate Securities

In the latest adverse development in  the deepening credit crisis, federal regulators recently seized the assets of IndyMac Bank, a major mortgage lender.   IndyMac held $32.01 billion in assets as of March 31, 2008.  The Office of Thrift Supervision said it transferred IndyMac’s operations to the Federal Deposit Insurance Corporation because it no longer had confidence that IndyMac could meet its depositors’ demands. 

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Read More Government Shuts Down Mortgage Lender IndyMac: FDIC Takes Over Operations

The Enforcement Section of the Massachusetts Securities Division recently filed an administrative complaint against UBS Securities, LLC and UBS Financial Services, Inc. alleging conflicts of interest and use of misleading sales practices in the marketing of auction rate securities (“ARS”). 

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Read More Massachusetts Files Securities Fraud Suit Against UBS Regarding Auction Rate Securities

Representative Barney Frank, D-Mass., introduced a bill on June 19 that would place increased regulatory scrutiny on bond insurers and require one rating standard for both municipal and corporate bonds.  The Municipal Bond Fairness Act, as the legislation is named, would require municipal bond insurers to submit information about their operations, including their financial soundness, risk management and underwriting standards in an effort to prevent the type of exposure currently faced by the monoline bond insurers as a result of the subprime credit crunch of the last 12 months. 

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Read More Municipal Bond Fairness Act Introduced

On June 19, Moody’s Investors Service removed the triple-A financial strength rating  for bond insurers MBIA Insurance Corp. and Ambac Assurance Corp., downgrading both companies in response to their continued exposure to the struggling mortgage market.  MBIA was downgraded from Aaa to A2, while Ambac was downgraded from Aaa to Aa3. …
Read More MBIA and Ambac Downgraded by Moody’s

One of Connecticut’s wealthiest families has recently brought an attachment suit against UBS AG, UBS Securities, LLC and UBS Financial Services, Inc. in an effort to require UBS to set aside $150 million to cover a potential reward in an ongoing FINRA arbitration concerning auction rate securities “ARS”). 

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Read More Connecticut Attachment Suit Provides Insight Into Auction Rate Securities Claims

UBS Financial Services, Inc. and UBS Securities LLC entered into an agreement Wednesday with the Massachusetts Attorney General to return over $35 million to Massachusetts towns, cities and government entitities that UBS had invested in auction rate securities.  The settlement resolves an investigation initiated in February 2008 into allegations that UBS had misrepresented to state entities that auction rate securities were “a permissible investment for the municipalities under Massachusetts law.” …
Read More Auction Rate Securities: UBS Settles Massachusetts Attorney General Probe for Over $35 Million