New York Attorney General Andrew Cuomo is reportedly investigating Fidelity Investments and Charles Schwab over auction-rate securities, although it is unclear at this point over whether the probe is into sales or investment strategies.

 

Thus far, disciplinary actions concerning the $330 billion market have involved banks and retail brokerages for misrepresenting the risky debt, with the government collecting $360 million in fines related to $30 billion of ARS.

 

Banks are quickly stepping up to the plate to buy back the debt. Wachovia is taking back $9 billion worth of auction-rate bonds and Merrill Lynch $10 billion. Citigroup isbuying back $7 billion and UBS $19 billion, and Morgan Stanley and JPMorgan Chase are taking back $7 billion. The A.G. is also in talks with Goldman Sachs and has subpoenaed 25 firms.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.