Citigroup (C) 01 (May 08 - Nov 08)

[ishak]

the difference between the purchase price and the market value is estimated to be in the range of $500 million on a pre-tax basis

Since the market for this type of securities had already disappear, it is quite dubious on how Citi assess the market value of the buy back. Considering the recent ML's offer of $0.22 on a dollar, this could potentially be an additional 5.7B loss in their books.

[kennynah]

that's a point there...

[ishak]

After C, now BoA.

Regulators Subpoena Bank Of America
Auction-Rate Securities Under Probe
NewsNet5.com

POSTED: 6:33 pm EDT August 7, 2008
NEW YORK -- Bank of America has revealed that it's received subpoenas and requests for information from various state and federal regulators regarding its sale of auction-rate securities.

In a filing with the Securities and Exchange Commission, the bank said subsidiaries Banc of America Investment Services and Banc of America Securities are cooperating fully with the requests.

Auction-rate securities are bonds whose interest rates are set at periodic auctions, on the basis of bids submitted. The market collapsed in February amid turmoil in the credit markets.

Regulators have been investigating some banks' involvement in the sale of the securities. They claim banks marketed the investments as safe even when they knew of liquidity risks.

Earlier, Citigroup said it reached a settlement with the New York Attorney General and regulators to repurchase $7 billion in auction-rate securities and pay $100 million in fines.

[blid2def]

No!!! Not BoA!!! Why they sue her? She so pretty....



Oh you mean BAC... okay good, go ahead.... Good for your SKF also...

[ishak]

Not the pretty singer, my favourite too. Its not BoA, its UBS now and likely followed by ML.

UBS will buy back bonds for $19.4b
Investors misled, regulators say; Announcement expected today
By Beth Healy, Globe Staff | August 8, 2008

State and federal regulators have reached a $19.4 billion agreement with UBS Financial Services Inc. to settle charges that the firm misled investors into buying bonds that were far riskier than advertised, according to people briefed on the talks.

The deal would require the Swiss bank to buy back the investments, called auction-rate securities, which were widely sold on Wall Street as safe and cash-like until the $330 billion market collapsed in February. The firm also agreed to pay $150 million in fines, split between Massachusetts and New York.

The settlement is scheduled to be disclosed this morning by state regulators and the US Securities and Exchange Commission.

The UBS deal is the largest so far in the nationwide investigation of these investments, which have trapped thousands of investors and caused havoc among student lenders and nonprofits. The firm was facing fraud charges brought by Massachusetts Secretary of State William F. Galvin, who led the UBS investigation, and by New York Attorney General Andrew M. Cuomo. Galvin alleged that top UBS executives knew the auction-rate market was failing but did not inform many customers.

The firm has also paid about $40 million to settle findings by Massachusetts Attorney General Martha Coakley that it illegally sold auction-rate bonds to 21 towns and cities and the Massachusetts Turnpike Authority.

UBS declined to discuss the settlement talks but said in a statement, "We are consistently working with regulators toward a comprehensive solution for all auction-rate investors."

UBS customers with less than $1 million in the securities will get their money back by Oct. 31, and others by Jan. 1, according to a person involved in the case. The person requested anonymity because the deal had not yet been made public.

Auction-rate securities are types of bonds sold by nonprofits, arts institutions, and local governments, which used the money to fund their operations. They were popular because these entities could borrow money at low interest rates that re-set at regular auctions. Investors snatched up these securities because they were seen as low-risk and offered returns slightly higher than a money market account or certificate of deposit.

There has been rising pressure on Wall Street firms to deal with the locked-up auction market. Not only are customers and brokers outraged, but civil lawsuits are piling up and Congress is planning to hold hearings on the debacle next month. At the same time, regulators in several states have been filing actions against the firms, making public e-mails and other evidence that the firms kept selling the investments even after they knew the market was on the brink of failing.

Yesterday Citigroup and Merrill Lynch & Co. said they would reimburse clients who hold auction-rate securities.

In a settlement with the SEC and Cuomo, Citigroup agreed to buy back $7 billion of these investments from about 38,000 customers across the country, including individuals, nonprofits, and small businesses. The company said it would separately work with 2,600 corporations and other large clients to help them sell $12 billion of the securities.

Cuomo, in a press conference yesterday, said, "This is not just a Wall Street issue. It is a Main Street issue." He said Citigroup and other firms sold auction-rate securities as conservative investments that people easily could sell. But once the market froze up and firms stopped supporting it, "exactly the opposite was true. It turned out to be a lockbox."

Citigroup has agreed to pay $100 million in fines but neither admitted nor denied the charges. In a statement, the New York financial giant said that since the crisis started, it has "worked diligently with issuers, investors, and regulatory authorities to obtain liquidity for holders" of illiquid auction-rate securities. The company said its customers have been able to sell or redeem more than 50 percent of their total auction-rate holdings.

Merrill yesterday said it would offer to buy back its clients' auction-rate securities at full value starting Jan. 15, 2009. The announcement came a week after Galvin's office filed fraud charges against Merrill as part of his auction-rate probe, alleging that the firm put pressure on its research analysts to sugar-coat the trouble in the market. The state is also investigating Bank of America Corp.'s dealings in the auction-rate market.

The Commonwealth's June lawsuit against UBS accused the firm of "profoundly deceptive sales practices." The complaint said the firm knew as early as last fall of the risks in auction-rate securities but did not tell its brokers or smaller customers. The Globe has reported that the firm was, at that time, warning its large institutional clients, including the state treasurer's office, of the looming troubles.

The state also alleged that David Shulman, UBS's chief of municipal bonds and fixed income, sold his own auction-rate holdings starting last August, even as he was overseeing a continuing effort to sell the investments to UBS customers. Shulman is on administrative leave from the firm. He could not be reached for comment. New York's attorney general, in a lawsuit last month, alleged that UBS executives sold $21 million worth of their personal holdings in auction-rate securities as the market began to sink.

Earlier this week, the general counsel of UBS's investment bank, David Aufhauser, resigned amid the regulatory probes.

Lance Pan, director of investment research at Capital Advisors Group Inc., a Newton firm that is advising clients on how to deal with auction-rate securities, said, "We view the Citigroup settlement as a major turning point in the [auction-rate] market development, as it sets a precedent." He added, "We are happy to see the dealers beginning to step up to the plate." The firm estimates that nationally, some $210 billion is still trapped in auction-rate securities.

UBS's settlement is on top of the firm's announcement last month that it would buy back $3.5 billion of a certain type of auction securities - preferred stocks, or the debt of closed-end investment funds.

The investigations are touching virtually all the big names in the business. Yesterday, the Massachusetts attorney general, Coakley, said Morgan Stanley & Co. had agreed to buy back $1.5 million in auction-rate bonds it had sold to the city of New Bedford and the town of Hopkinton. The firm said it voluntarily repaid the funds in May, after Coakley's office said it was illegal for UBS to have sold the bonds to municipalities.

"We are pleased to settle this matter without penalty," Morgan Stanley said in a statement.

[kennynah]

Not the pretty singer, my favourite too. Its not BoA, its UBS now and likely followed by ML.

we were also talking about ML luncheon meat....


but i think you mean MER

[blid2def]

KNN over in this forum, must get the symbols correct. Else always kena suan until die c**k stand.

Correct hor, kenny? Remember AMX and American Express?

[kennynah]

HAHAHAHAHA.....yes....must get the ticker right...else...sure kena suan kuat kuat.....but no malice lah...all in good fun...

and i just love BOA picture....soooooo.....mmmm mmmm....sui ...shiok....slurp...

[blid2def]

Yeah, okay for BAC, feel free to make mistakes, so we can post BoA pictures again and again.

Fish, again go way off topic. Come back come back...

[ishak]

My mistake, should spell out in full or use its proper symbol instead,

Btw, nice picture, saved as my desktop wall picture for now.

Bank of America subpoenaed on auction-rate securities
The Business Journal of the Greater Triad Area
Friday, August 8, 2008 - 11:15 AM EDT

Bank of America Corp. and its subsidiaries have received subpoenas and requests for information from state and federal governmental agencies on auction-rate securities.

Since February, the auctions that set the rates for most of the securities have failed.

BofA faces several class-action lawsuits contending the bank misled investors about the nature of the securities and their market.

In addition, according to a company filing with the Securities and Exchange Commission, BofA has received subpoenas from the attorneys general of a number of states "requesting documents and information regarding municipal derivatives transactions from 1992 through the present."

In its filing, BofA says its recently acquired subsidiary, Countrywide Financial Corp., faces a formal investigation by the SEC.

BofA says it is cooperating with regulators.

The Charlotte, N.C.-based bank (NYSE:BAC) purchased Countrywide last month in a $2.5 billion deal that made BofA the country's largest mortgage lender.

According to the filing, the SEC probe follows media reports that Countrywide is subject to an investigation by the FBI in connection with its mortgage-business practices.

Countrywide has also responded to subpoenas from the SEC, the filing states.

State attorneys general in California, Florida and Illinois have filed suits against California-based Countrywide, accusing the company of engaging in deceptive advertising and unfair competition. They say the company put borrowers into mortgages they couldn't afford or loans with rates and penalties that were misleading.