Massachusetts Secretary of State William F. Galvin Thursday charged UBS Securities LLC and UBS Financial Services Inc. with fraud and dishonest conduct in connection with UBS’s sale of auction rate securities.
After filing the complaint, Galvin’s office issued a statement saying UBS told investors “the investments were safe, liquid ‘cash alternatives’ when UBS knew they were not.”
The securities could only be redeemed at auctions conducted by UBS, usually held weekly. Galvin’s office accused UBS of continuing to sell the securities even as the company planned to suspend the auctions. In February 2008, it stopped selling them.
Many investors have been left with securities they can not convert to cash.
“UBS pushed the sales of these instruments as ‘cash alternatives’ without telling their customers of their vulnerabilities,” Galvin said in a prepared statement.
“The game was fixed,” Galvin said. “Only the customers were in the dark.”
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