“California regulators said Monday that Wachovia Corp. and Citigroup Inc. have agreed to return a total of $4.7 billion to state residents who bought auction rate securities from the companies.
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Regulators had alleged Wachovia and Citigroup misrepresented auction rate securities as safe, cash-equivalent products, even though the products faced increasing liquidity risk.
The $330 billion auction rate securities markets fell apart last year amid the downturn in the broader credit markets.
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Today’s multibillion-dollar agreement is an important and timely relief for investors who lost funds in the collapse of the auction rate securities market,” said Preston DuFauchard, commissioner of California’s Department of Corporations.” [via AP]
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