Three more banks agree to auction rate fines

22 August 2008

Three more banks have reached settlement after being charged by New York's attorney-general for miss-selling auction rate securities.

Deutsche Bank, Merrill Lynch and Goldman Sachs have agreed to pay fines of up to $125 million to the office of Andrew Cuomo.

This was after they were accused of falsely representing the financial products as "risk free" to clients.

Firms accused of the miss-selling who have already settled with Mr Cuomo's office include Citigroup and UBS.

Financial watchdog the Securities and Exchange Commission is also conducting investigations into the issue, and indicated earlier this week that it would be putting at least 12 institutions' auction rate security sales under the spotlight.

Mr Cuomo said that the office had enjoyed a "great day of progress", following the settlements.

Merrill is now to pay a $125 million fine, while Goldman and Deutsche Bank have been hit with $22.5 million and $15 million penalties respectively.

All firms must also now buy back some of the auction rate securities from clients, Mr Cuomo ordered.

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