Morgan Stanley, JPMorgan settle ARS cases

The firms will buy back a total of about $7 billion of auction rate securities from retail investors.
AUG 14, 2008
New York Attorney General Andrew M. Cuomo said today that the state has settled investigations of auction rate securities sales with Morgan Stanley and JPMorgan Chase & Co. As part of the settlements, the New York-based firms agreed to buy back a total of about $7 billion of auction rate securities from retail investors. A breakdown of how much each firm will be repurchasing wasn’t immediately available, but on Wednesday, Morgan Stanley said that it will buy back an estimated $4.5 billion of auction rate securities beginning no later than Sept. 30. Morgan Stanley will pay a $35 million fine and JPMorgan a $25 million fine under the settlement announced today. The money will be split among state regulators, Mr. Cuomo said at a press conference this morning. New York is in continuing discussions about settling a similar case with Merrill Lynch & Co. Inc. of New York, he said.

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