Today UBS announced plans to repurchase up to $3.5 billion of auction rate preferred shares issued by tax-exempt closed-end funds. This repurchase will permit some investors to convert their illiquid auction rate preferred shares into cash. These shares have been illiquid since February of this year when UBS and other brokerage firms withdrew their support of the auction rate markets.
UBS was recently sued by the Commonwealth of Massachusetts for urging its sales force to sell auction rate securities as safe, cash equivalents or money market-type investments while UBS insiders were simultaneously dumping their auction rate investments and UBS was planning an exit strategy from the auction rate securities markets. UBS is also alleged to have continue to sell student loan auction rate securities to its customers after it had determined that these securities were a flawed product.
Unfortunately, UBS’s actions do nothing to ease the pain of purchasers of student loan auction rate securities which have become the most illiquid securities in the auction rate markets. UBS was reportedly involved in the issuance of approximately $25 billion of the $85 billion of student loan auction rate securities issued by Wall Street.
Page Perry is an Atlanta-based law firm with over 125 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 30 occasions. Page Perry’s attorneys are actively involved in representing institutional and individual investors in auction-rate securities cases against UBS. For further information, please contact us.