Auction-Rate Securities Lawyers

UBS and Auction Rate Securities Fraud

UBS Financial Services Inc., one of the largest investment and financial institutions in the auction rate market, is perhaps not as trustworthy as many investors had hoped. Recently uncovered information suggests serious misconduct in the way UBS sold auction rate securities (ARS) to its clients – misconduct which led to the filing of fraud charges against the financial giant by Massachusetts Secretary of State William F. Galvin on Thursday, June 26, 2008.

Though the $330 billion auction rate securities market did not collapse until February 2008, documents recovered by the Boston Globe suggest that UBS knew about the impending crisis as early as December of the preceding year.

Of course, as a conscientious, responsible investment firm, UBS would want to immediately inform its clients about the risk to their ARS investments, right? Apparently not. Records show that UBS continued to aggressively sell ARS stocks and bonds to investors up to the very brink of the market collapse, continued to tell the majority of its clients that they were buying safe, liquid securities, and continued to label auction rate securities as "cash alternatives" on its statements, even though it knew that the crucial support of broker-dealers was about to fall out from under the auction rate market.

Even more shocking was the fact that, while UBS was eagerly selling more auction rate bonds to some unsuspecting investors, it was quietly warning some of its large investment banking clients that the market was in trouble – a fact that was concealed even from some of its own brokers.

According to the complaint filed against UBS by Galvin, the firm failed to inform clients that the only ARS products being offered were what UBS had underwritten and that UBS was trying to unload at the eleventh hour.

He concluded that, "the game was fixed; only the customers were in the dark."

If that's not fraud, it's difficult to see what is.

If your finances have suffered due to the loss of value and liquidity in your auction rate securities investments, you may have a valid FINRA arbitration complaint against fraudulent investment firms like UBS. Call 800-220-9341 today to speak with an auction rate securities fraud lawyer and discuss your case and legal options.