UBS, Citigroup, Merrill Lynch to buy back up to $40B in bonds

In a sign that the nation's biggest banks want to remove any reputational hangover from the collapse of the auction-rate securities market, UBS have pledged to buy back almost $40 billion worth of bonds that their retail clients have been unable to sell. The Swiss bank UBS has reached a $19.4 billion agreement to buy back bonds in the biggest settlement yet over claims that banks misled investors to buy auction-rate securities, the Massachusetts Secretary of State's office said Friday. As part of the deal, UBS customers with less than $1 million in auction-rate securities will get their money back by Oct. 31, while others will get their refund by Jan. 1, said Brian McNiff, a spokesman for Secretary of State William Galvin. UBS also agreed to pay $150 million in fines, to be divided between Massachusetts and New York, he said.... [read full story]