Oppenheimer Settles with MA over Auction-rate Securities

February 25, 2010 (PLANSPONSOR.com) – The Massachusetts securities regulator announced that Oppenheimer & Co has agreed to redeem auction-rate securities sold in the state before that market locked up in February 2008, Reuters reports.

Secretary of the Commonwealth William Galvin said in a statement that the company, a unit of Toronto-based Oppenheimer Holdings Inc., will redeem the securities from 85% of Massachusetts customer accounts. In addition, New York State Attorney General Andrew Cuomo said on Tuesday the broker-dealer has agreed to restore $31 million to U.S. customers with illiquid auction-rate securities in their portfolios, according to the news report.

Last May, UBS Financial Services Inc. reached an agreement with Massachusetts Attorney General Martha Coakley to return $37 million to 17 cities and towns, as well as to the Massachusetts Turnpike Authority, for allegedly misleading them about the safety of the investments (see UBS Securities Faces Charges of Fraud by MA Authority).

Galvin’s office has also charged Merrill Lynch & Co. with fraud alleging it marketed auction-rate securities while not accurately disclosing the potential market risks (see MA Charges Merrill with Fraud over Auction-Rate Securities Sales).