The remainder of the investment charge was related to holdings the company had in auction-rate securities.
In the past few years there have been the supbrime-mortgage securities blowup and the auction-rate securities blowup.
Meanwhile, the market for auction-rate securities is a shadow of what it was.
To see the system at work, look at auction-rate securities, a sort of long-term debt invented in the 1980s.
The executive, the former general counsel of UBS's investment bank, quit UBS in August as the auction-rate probe heated up.
If the market for auction-rate securities had been a bank, you would have said that it had suffered a run.
Another possibility, says Robert Gordon, president of Twenty-First Securities, is "auction-rate preferred, " whose payout adjusts up and down with interest rates.
After over-exposing themselves to structured-investment vehicles and auction-rate securities, treasurers want to be able to blame someone else if things go wrong again.
This is a nexus of private-equity and hedge funds, money-market funds and auction-rate securities, non-banks such as GE Capital and new securities such as CDOs and credit-default swaps.
Cuomo has opened a number of investigations into Wall Street, including the auction-rate probes, which continue, as well as activities in the credit default swap market and other signs of alleged fraud.
Regulators are looking at how much UBS insiders knew about the auction-rate market problems and what they disclosed to clients who bought the securities between August 2007 and February 2008, when the auction market fell apart.
On Dec. 14, while he was riding Amtrak's Acela train from New York to Washington, he opened an e-mail that detailed problems in the auction-rate markets, which were seizing up because of the blossoming credit crisis.
In the domain of derivative contracts like credit default swaps or auction-rate preferreds (which even George Soros didn't know existed) or complex collateralized debt obligations of mortgage-backed bonds, there was a "failure to know what isn't known, " and the ramifications for not knowing were huge.
Since February 2007, 69 securities class action lawsuits have been filed related to the subprime meltdown, including 11 brought by investors in auction-rate securities, two by investors in bond funds that had losses, and two against investment banks for their hand in creating the structured product market.
From tax shelters, to auction rate securities issues and super-rogue traders UBS is no stranger to ugly press and massive fines.
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And, according to fraud charges filed Thursday by the Massachusetts securities regulator, the managing director of the UBS (nyse: UBS - news - people ) group responsible for auction rate securities in the U.S. began liquidating his own holdings just as that sales effort got off the ground.
Prosper.com employs an eBay or auction-style model and lets potential lenders both determine the interest rate and who gets funded in a several-week bidding process.
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Several other banks are the targets of a multistate probe into how auction rate securities were presented and sold to investors, including Citigroup (nyse: C - news - people ), Merrill Lynch (nyse: MER - news - people ) and Morgan Stanley (nyse: MS - news - people ).
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