Cuomo eyes cozy ARS link between firms

Attorney General Andrew Cuomo is investigating how a close business relationship between Fidelity Investments and Goldman Sachs affected auction rate securities transactions.
AUG 27, 2008
New York Attorney General Andrew Cuomo is investigating how a close business relationship between Fidelity Investments and The Goldman Sachs Group Inc. affected auction rate securities transactions, The Wall Street Journal reported today. The investigation centers around whether Boston-based Fidelity received extra services from New York-based Goldman Sachs for selling ARS, since most of these investments were underwritten by Goldman Sachs, according to the Journal story. Mr. Cuomo’s probe comes nearly a week after he announced a settlement with Goldman Sachs in which the firm agreed to buy back $1.5 billion in ARS sold to retail investors (InvestmentNews, Aug. 21). Last week, Massachusetts Secretary of State William Galvin urged Fidelity to buy back ARS sold to customers before the market froze in February (InvestmentNews, Aug. 21). Fidelity spokeswoman Anne Crowley described ARS as a “minuscule” part of Fidelity's business with many more of its clients geared toward its money market funds. “There was no reason for [Fidelity] to push ARS over another short-term product,” said Ms. Crowley. “There was no aggressive marketing of ARS by us.” The press offices Goldman Sachs and Mr. Cuomo’s office did not immediately return calls seeking comment.

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