Authorities in the US state of Massachusetts have sued UBS Securities LLC and UBS Financial Services, claiming that the units of Swiss bank UBS aggressively sold auction-rate securities to investors while bank executives were getting rid of their own, Reuters reports.
“They were clearly taking advantage of customers to provide a benefit to the company, and that is what makes this a more significant ongoing fraud,” Massachusetts’ securities regulator William Galvinsaid told Reuters. “UBS pushed the sales of these instruments as ‘cash alternatives’ without telling their customers of their vulnerabilities.”
Massachusetts wants UBS units to compensate investors who lost on the investments.
“We will defend the specific allegations of the complaint,” a UBS spokeswoman told Reuters. “Contrary to the allegations, UBS is committed to serving the best interests of our clients. We will continue to work with the industry toward broad solutions.”
New Hampshire and the U.S. Securities and Exchange Commission are also investigating.