In addition, many money market funds and corporate treasuries held Auction Rate Preferred Securities (ARPS).
Auction rate securities are a form of bond issued by a variety of sources, including municipalities and student lenders.
Banks aren't picking up the slack in demand in the auction rate market.
Auction rate securities (ARS) are a bit of financial engineering that dates to 1984, but they are not cash.
The complaint alleges that UBS financial advisers sold auction rate securities to clients without making them aware of the risks.
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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Would brokers and banks have been pushing auction rate securities as entirely safe investments if the bureau had been around three years ago?
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The sales were made even as the market for auction rate securities froze up, rendering the holdings impossible to sell without a loss.
Corporations became heavy sellers of auction rate securities last year even before the credit crisis, because of accounting rule changes that made them less advantageous.
Prior to that there was its run-in with U.S. federal agents in a tax evasion scheme, its subprime mortgage writedowns and auction rate securities litigation.
The Swiss bank is working to repair its reputation which has been hurt by trading scandals, tax evasion schemes, subprime mortgage writedowns and auction rate securities litigation.
The immediate, under-the-radar problem for the municipal bond market is that borrowers relied on banks to backstop their credits and lower short term funding costs when the credit crisis shut the door on auction rate preferred financing.
All needed their funds to be as liquid as cash, the complaint says, and all found out just how unliquid their funds were after they tried to sell the auction rate securities they had been told were as good as cash and couldn't.
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.
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 ).
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.
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