US - New York State attorney general Andrew Cuomo has announced his office is expanding its investigation into the auction rates securities scandal to include JP Morgan Chase, Morgan Stanley and Wachovia.
Cuomo said: "We're expanding our investigation into the auction rate securities scandal to insure investors across New York State and the nation get their money back."
"We believe that when you protect the investor you also increase investor confidence, which helps the entire market."
Cuomo yesterday sent letters to JP Morgan Chase, Morgan Stanley and Wachovia announcing his office would look into the firms' behavior pertaining to misrepresenting auction rate securities to investors as safe and cash-equivalent products, when in fact they faced increasing liquidity risk.
The letters also said market participants selling those securities failed to disclose to their clients that, from August 2007 up until widespread auction failures in early 2008, the auction rate securities market only continued as a result of broker-dealers placing support bids.
He said the three banks would need to enter in immediate talks with the office of the New York attorney general about resolving the investigation.
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