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Archive for December, 2008


UBS ARS Investors Consider Legal

Dec. 19, 2008 was when the settlement offer forcing UBS to repurchase auction-rate securities that it sold to investors prior to the collapse of the ARS market in February 2008 officially expired.

For investors who did not participate in the repurchase program, there are still some options available, however. They can continue to hold the illiquid securities until their maturity dates or they can file an arbitration claim to recover access to their funds.

Earlier this summer, state and federal investigations into UBS over sales of auction-rate securities revealed that the Swiss-based firm had misrepresented the securities as cash equivalents to investors. Regulators also discovered that UBS intentionally ramped up its corporate marketing efforts to dump auction-rate securities onto investors so that the company wouldn’t be left holding the bag when the ARS market eventually imploded in February.

In August 2008, in a deal struck with New York Attorney General Andrew Cuomo, Massachusetts Secretary of State William Galvin, the Securities and Exchange Commission (SEC), and other state regulators, UBS agreed to buy back nearly $20 billion in failed auction-rate securities from investors and pay a fine of $150 million to Massachusetts and New York.

UBS also faces additional allegations that seven of its executives sold approximately $21 million in personal auction rate holdings while continuing to push the instruments to investors.

Proposed FINRA Rule Change Relating to Expungements

Proposed Rule Change to Adopt Rule 12805 of the Customer Code and Rule 13805 of the Industry Code to Establish New Procedures for Arbitrators to Follow when Considering Expungement Relief

Financial Industry Regulatory Authority, Inc. (“FINRA”) is filing with the Securities and Exchange Commission (“SEC” or “Commission”) a proposed rule change to adopt Rule 12805 of the Code of Arbitration Procedure for Customer Disputes (“Customer Code”) and Rule 13805 of the Code of Arbitration Procedure for Industry Disputes (“Industry Code”) to establish new procedures that arbitrators must follow when considering requests for expungement relief under Rule 2130.

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