UBS to Buy Back $1.5 Billion Auction Rate Securities (ARS)
The New Jersey Attorney General, Paula T. Dow, said that UBS Securities, LLC and UBS Financial Services, Inc. agreed to a $1.5 billion buyback in auction rate securities (ARS) for failing to fully disclose the risks associated with them, as reported in Bloomberg Business Week. In addition to the buyback, the UBS units will pay New Jersey $3.7 million in civil penalties.
UBS marketed and sold the auction rate securities as safe as cash and liquid, when they were actually long term investments subject to having their rates periodically reset through auctions. When the market froze in February 2008, investors were unable to access their funds.