More Names Added to Auction-Rate List

Additional Wall Street firms have been added to the lengthening list of auction-rate securities violators, according to The Wall Street Journal.

Recently, Morgan Stanley agreed to buy back $4.5 billion in securities it sold to retail clients, charities, and small business, beginning September 30, according to WSJ.

New York Attorney General Andrew Cuomo’s office sent letters to Morgan Stanley, JP Morgan Chase, and Wachovia demanding that they make their investors whole for auction-rate securities that they sold to them, according to WSJ.

Despite Morgan Stanley’s offer to buy back auction-rate securities, Cuomo’s office will continue with their investigation into Morgan Stanley. UBS AG, Citigroup, and Merrill Lynch received letters after they had agreed to buy back more than $36 billion of illiquid securities from various customers as regulators heightened their investigation, according to WSJ.

Approximately 30 financial institutions have been subpoenaed about their involvement in the auction-rate securities market. Goldman Sachs Group, Bank of America, Wells Fargo, and Lehman Brothers Holdings have also been brought under the spotlight in the ongoing investigation.