Today Morgan Stanley agreed to buy-back, at face value, $1.5 million in auction-rate securities from the city of New Bedford, Massachusetts and the town of Hopkinton, Massachusetts. This buy-back is tantamount to an admission that the auction-rate securities were improperly sold to the municipalities.
Morgan Stanley is the third major brokerage firm to repurchase auction-rate securities sold to municipalities in the Commonwealth of Massachusetts. In January, 2008 Merrill Lynch agreed to repurchase $13.7 million of auction-rate securities from Springfield, Massachusetts. Last month, UBS agreed to buy back $3.4 million in auction-rate securities from various municipalities and state agencies in Massachusetts.