The SEC announced today (click here) that it has finalized settlements with Citigroup Global Markets, Inc. and UBS Securities LLC and UBS Financial Services, Inc. that will provide nearly $30 billion to tens of thousands of customers who invested in auction rate securities before the market for those securities froze in February. The SEC stated that the settlements “resolve the SEC’s charges that both firms misled investors regarding the liquidity risks associated with auction rate securities that they underwrote, marketed and sold.” In mid-February 2008, according to the complaints, Citi and UBS decided to stop supporting the ARS market, leaving tens of thousands of Citi and UBS customers holding tens of billions of dollars in illiquid ARS.
SEC Chairman Christopher Cox stated that “Today’s settlements are the largest in SEC history, and represent the largest return of customer money in the agency’s 75 years.” The SEC said the settlements will restore approximately $7 billion in liquidity to Citi customers who invested in ARS, and $22.7 billion to UBS customers who invested in ARS.
