The Colorado Division of Securities has settled with a second company that has agreed to buy back $79.4 million worth of auction rate securities from Colorado investors.
Credit Suisse Securities LLC made the agreement with the division just days after a similar settlement with J.P. Morgan Chase & Co.
The settlement ended an investigation by state securities regulators into allegations that Credit Suisse failed to make sure all its sales representatives made appropriate disclosures to customers regarding the nature and risks of auction rate securities. Customers were told that the securities were highly liquid, highly rated alternatives to money market investments and other cash-equivalent investments.
When the auction rate securities market froze during February 2008, states received complaints from a wide range of investors who suffered significant financial damage because they could not get their money out of the market.
“Securing a liquidity solution for investors in Colorado has been the primary objective of our investigations of firms who sold auction rate securities, and this agreement reached that goal,” said Colorado Securities Commissioner Fred Joseph.
The settlement is part of a multi-state agreement in which Credit Suisse has brought back or agreed to resolve more than $3.5 billion of auction rate securities from all its customers.
State regulators are continuing to address problems in connection with the offer and sale of auction rate securities.