NY AG Accuses Charles Schwab Of ARS Fraud

Law360, New York (August 17, 2009, 4:04 PM EDT) -- New York Attorney General Andrew Cuomo has sued Charles Schwab & Co. Inc., alleging that the financial services firm improperly misrepresented to customers the true risks of investing in auction rate securities.

According to the complaint, filed Friday in the Supreme Court for the State of New York for New York County, Schwab brokers fraudulently touted the securities as liquid, short-term investments without discussing the risks.

Those representations gave investors a false sense of security that their investments would always be liquid when ARS, in fact,...
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