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Banks pay up on 'worthless' security sales
22.08.08
Investment banks Merrill Lynch, Goldman Sachs and Deutsche Bank have caved into pressure from New York attorney general Andrew Cuomo to settle the dispute over their sale of auction rate securities.
They and other banks have been accused of selling the securities as the credit crunch closed in, even though they knew they were essentially worthless.
The three firms will buy back about $15billion (£8.04billion) of the failed securities and pay $160million in fines.
Eight firms have settled claims in the last two weeks that they misled investors by fraudulently marketing the long-term securities as easy to buy and sell.
