Auction market probed
New York’s attorney general and securities regulators in nine other states are probing auction-rate securities and the role Wall Street firms had in enticing investors into the troubled $330-billion market.
New York Atty. Gen. Andrew Cuomo’s office launched an investigation this week, sending subpoenas to 18 broker-dealers and banks, people familiar with the probe said Thursday.
The securities were long touted as cash-like investments, attracting both individual and institutional investors, until the credit crunch led to a breakdown in the market.
Cuomo’s subpoenas seek information about what municipalities or other issuers were told about the securities and whether investors were told they were buying safe, highly liquid securities.
Among the major companies getting subpoenas this week, sources said, were Merrill Lynch, Goldman Sachs, Citigroup and Bank of America.
Officials from the 18 banks could not be reached immediately for comment.
Securities regulators in nine other states also have launched probes and formed a task force to coordinate efforts, the North American Securities Administrators Assn. said Thursday.
Start your day right
Sign up for Essential California for news, features and recommendations from the L.A. Times and beyond in your inbox six days a week.
You may occasionally receive promotional content from the Los Angeles Times.
