JPMorgan Chase & Co and Morgan Stanley will spend more than $7bn (£3.8bn) buying buy back auction-rate securities in a settlement announced on Thursday by New York state attorney general Andrew Cuomo and Securities & Exchange Commission (SEC) enforcement division director Linda Thomsen, writes The American Lawyer.
The deal ends investigations by the SEC and several states’ attorney generals into false claims made by the two banks in marketing auction-rate securities. At issue was the banks’ continuing effort to bill the securities as a safe investment even after the unravelling credit markets made them risky, less easily liquidated bets.
