Three top Wall St. banks to buy back billions in auction rate securities

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Three top Wall St. banks to buy back billions in auction rate securities


Three top Wall St. banks to buy back billions in auction rate securities

Reuters
Friday, August 22, 2008
NEW YORK: Three of Wall Street's top investment banks agreed to pay millions of dollars in fines and buy back billions of dollars in frozen, illiquid securities after U.S. regulators reached settlements over the way the firms sold auction-rate securities.

In the settlement announced Thursday, New York's attorney general, Andrew Cuomo, said Merrill Lynch, Deutsche Bank and Goldman Sachs have agreed to the settlement.

The banks agreed to pay the fines and buy back securities from investors who were left holding the notes earlier this year when the auction rate market collapsed.

As part of the settlement, Merrill will pay a fine of $125 million and buy back between $10 billion and $12 billion in securities from investors. Goldman Sachs will pay a $22.5 million fine and buy back about $1.5 billion in auction rate notes, while Deutsche Bank will pay a $15 million penalty and buy back about $1 billion of notes.

Cuomo said Merrill's penalty and the terms of the settlement took into account evidence of conflicted research at the bank.

"Part of our theory on the case dealt with Merrill's research," he said.

Cuomo said Merrill's settlement is separate from an agreement the firm made earlier with Massachusetts's top securities regulator, William Galvin....>

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