FOR IMMEDIATE RELEASE 
May 26, 2010
Contact: Jason Moon 517-335-1700
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LANSING – The Office of Financial and Insurance Regulation (OFIR) today announced that it has reached an Auction Rate Securities (ARS) settlement with UBS Securities, LLC and UBS Financial Services, Inc. The settlement requires UBS to offer full buybacks of up to approximately $875 million to any eligible Michigan customer who purchased an ARS from the brokerage firm. The settlement also required UBS to make a settlement payment of approximately $2.2 million of which 90 percent was deposited immediately in the State of Michigan’s general fund, as required by law, and the remaining ten percent went to OFIR’s Michigan Investor Protection Trust.

The settlement with UBS is in addition to OFIR’s previous ARS settlements with Banc of America, Citigroup, Comerica, Deutsche Bank, JPMorgan, Merrill Lynch, Morgan Stanley, RBC Capital Markets and Wachovia. In total, OFIR settlements have resulted in offers for full buybacks of more than $4.3 billion to Michigan consumers and settlement payments of more than $9.4 million to the State of Michigan.

“In addition to providing over $875 million to Michigan investors, this settlement puts more than $2 million in the general fund,” OFIR Commissioner Ken Ross said.  

The settlement resolves a multi-state investigation into allegations that UBS misled investors regarding the liquidity risks associated with investing into ARS. The investigation alleged that the firm misled investors by representing ARS as a safe and secure investment option to buyers and were said to have the same liquidity as cash. When the market for ARS collapsed, investors were stunned to learn their accounts were frozen and they no longer had access to their money. The direct result for many investors was that their money was no longer available to support ongoing business operations.

The Michigan Investor Protection Trust is funded entirely by securities settlements and is used to educate Michigan consumers on investment issues and how to avoid financial scams. OFIR has used these funds to expand the “Investor Education in Your Community” program that educates Michigan investors on how to avoid falling victim to investment fraud. The fund was used to support OFIR’s investment scams training for local law enforcement and aid the agency’s “Free Lunch Seminar Monitor” program that gives individuals an opportunity to fight back against unscrupulous promoters by reporting questionable investment practices to OFIR. The fund has also financed public service campaigns warning consumers on risks of investment fraud.  

If Michigan investors have any questions about an investment firm, professional or product, they should contact OFIR toll-free at (877) 999-6442 or online at www.michigan.gov/ofir.

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