Three major Investment Banks announced steps to resolve bond cases with New York State

August 26, 2008 · By ProfitEdition News Filed Under Investing

As part of detach agreement arrive with New York state regulators Merrill Lynch, Goldman Sachs and Deutsche Bank – known as major Investment Banks are going to buy back minimum $12.5 billion in auction-rate securities and pay $162.5 million in penalty soon. About 30 Wall Street companies, from universal banks to discount and regional brokerage firms were tangled by state and federal investigations which based this settlement.

Investors were incapable to sell the securities in the period of market crumple previously in the year which were told that auction-rate debt was as safe and liquid as cash. Buy back of $35 billion of the securities and payment of above $360 million in fines are agreed to be paid by Citigroup, JPMorgan Chase, Morgan Stanley, UBS and Wachovia in previous settlements while some other companies are discussing agreements such as Bank of America.

According to New York State attorney General’s office about $50 billion of the expected $60 billion of the investments are entitled to be redeemed and most of the auction rate securities held by investors will be buy back. Attorney general, Andrew Cuomo stated that they addressed a volume of disaster and to resolve the problem they have established a tactic.

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