2008-08-02 09:34:28 - The Swiss bank UBS AG has agreed to settle a lawsuit over auction rate securities and agreed to pay $4.4 million.

On Wednesday, July 30th, 2008, the Swiss bank UBS AG has agreed to settle a lawsuit brought by the Massachusetts attorney general Martha Coakley in Suffolk Superior Court over auction rate securities and agreed to pay $4.4 million. The Swiss bank agreed to pay Massachusetts $1 million ($750,000 to cover expenses of the lawsuit and $250,000 to local governments impacted)

and repurchase $3.4 million of auction-rate securities sold to the 17 towns and cities. UBS AG has not admitted to any wrongdoing. Massachusetts attorney general Martha Coakley said: "We are pleased with the results in this case," and "Our primary interest was to promptly return to these towns and cities the investment monies they placed with UBS. However, another important goal was to find a way to prevent this from happening to towns and cities in the future." The lawsuit was filed by the Massachusetts attorney general and alleged UBS AG that it misled Massachusetts municipalities and government entities, which bought the investment banks retail auction rate securities in order to finance public work projects, only to find their investments frozen. Massachusetts attorney general Martha Coakley said UBS AG misled cities and government agencies into thinking that auction-rate securities were as liquid as cash by describing the holdings as cash equivalents on brokerage statements.