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NY Sues Banking Giant UBS

Thursday, July 24, 2008

New York is suing banking giant UBS for fraud, saying the company promoted auction-rate securities to its clients, even as the $330 billion ARS market was collapsing last fall.

REPORTER: Eric Corngold is a deputy with State Attorney General Andrew Cuomo, and says bank executives were pulling their own personal investments out, but continued to tell customers all was well.

CORNGOLD: They knew what was happening to the market, they knew what was happening, but the buyers of these securities, their customers, didn't have a clue.

REPORTER: UBS says it had attempted to support the auctions "longer than any other major firm" and would defend itself vigorously against claims that it abandoned customers. The Swiss banking company is facing similar charges in Massachusetts. Cuomo's office says UBS was not alone in acting this way, and that it's looking at several other banks.

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