ARS Lawyer

Texas Threatens UBS with Suspension of License

July 24, 2008 – As over a dozen state governments continue a cooperative investigation into the allegedly fraudulent business practices of major investment banking firms in regard to auction rate securities (ARS), Texas state regulators have threatened Swiss banking giant UBS with a suspension of its license if it does not reimburse clients for their losses in the ARS market.

In an administrative filing made by the Texas State Securities Board, the regulatory body claimed that UBS had engaged in fraudulent conduct by selling ARS to investors as "cash equivalent" debt instruments, even though the bank knew that the liquidity of the auction rate securities market was soon to collapse.

The board also said that UBS failed to inform investors of the possibility that their ARS investments could rapidly lose liquidity.

UBS and the ARS Crisis

UBS, one of the largest asset management and investment banking firms in the world, has come under fire from investors and regulators for its role in the collapse of the $330 billion auction rate securities market.

In addition to the Texas State Securities Board, officials from other states have also leveled charges against UBS in connection with the auction rate securities crisis. Both the Secretary of State of Massachusetts, William F. Galvin, and the Attorney General of New York, Andrew Cuomo, have filed fraud charges against the bank in recent months.

Authorities claim that UBS orchestrated a campaign to unload auction rate paper onto unsuspecting consumers after the bank realized that demand for the securities was rapidly waning. Despite these signs of trouble, officials say, UBS continued to aggressively – and deceptively – market ARS to investors looking for safe, liquid places to park their money.

Take Action

If you have suffered financially due to the fraudulent tactics used by UBS to sell auction rate securities, call an ARS lawyer at 800-220-9341 to discuss your legal options and learn how you may be able to recover damages through the arbitration process.