New York Attorney General Andrew Cuomo is making fast progress with his investigation of the auction-rate securities market meltdown.
Moving quicker than other state attorneys general and federal regulators, Cuomo's office subpoenaed 18 banks and financial firms in April as part of a criminal probe into how banks and brokerages marketed auction-rate securities as cash equivalents with better yields than money market funds.
Since the auction-rate market froze in February, most individual and corporate investors have not been able to access their money. According to an ex-branch chief of the SEC, Cuomo is also talking to registered reps, reaching out to a number of customers, and handling six to seven requests his clients (anonymous for now) received from regulators.
Under the Martin Act, Cuomo's subpoenas will give New York investigators broad powers. Cuomo is already asking for information on how bankers persuaded borrowers to issue the bonds and what make the banks decide to stop bidding in mid-February.
Other regulators are also putting forth their auction-rate investigations. The North American Securities Administrators Association announced in March that regulators from Massachusetts, Florida, Georgia, Illinois, Missouri, New Hampshire, New Jersey, Texas and Washington formed a task force to investigate the collapse of the auction-rate market. Meanwhile, the SEC is partnering with the Financial Industry Regulatory Authority in their auction-rate probe. Individual investors are also seeking help via lawsuits.
These are the companies subpoenaed by Cuomo so far: Bank of America, Citigroup, Deutsche Bank AG, E*Trade Financial, First Albany, Goldman, JPMorgan Chase, Lehman Brothers Holdings, Merrill Lynch, Morgan Keegan, Morgan Stanley, Piper Jaffrey, Raymond James Financial, RBC Dain Rauscher, TD Ameritrade Holding, UBS AG, Wachovia and its subsidiary AG Edwards.
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