UBS Securities agrees to returns $35 million to Mass. municipalities, agencies

Associated Press

05/07/2008- The Republican

BOSTON - The Massachusetts attorney general has reached a $35 million settlement with UBS Securities over risky investments by 17 local governments and the Massachusetts Turnpike Authority trying to raise cash for public projects.

Affected Western Massachusetts communities include: Holyoke, Chicopee, East Longmeadow, Warren and Belchertown.

Attorney General Martha Coakley said today that the Switzerland-based investment bank will return more than $35 million to 21 Massachusetts towns, cities and other government entities.

Auction-rate securities

At issue are investments that UBS arranged for the governments involving bonds known as auction-rate securities. Amid the recent turmoil in credit markets, such securities have failed to yield buyers at auctions where the investments are sold.

State investigators concluded UBS steered the towns and cities into investments that were too risky for them.

A spokeswoman for UBS declined immediate comment, but said it would issue a statement.