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Hutchinson Sues UBS, Citigroup For ARS Fraud

Law360 (November 19, 2008, 12:00 AM EST) -- Burdened with $101 million in illiquid auction rate securities and $90 million in encroaching notes, disk drive component maker Hutchinson Technology Inc. has sued UBS AG and Citigroup Inc., claiming the banks sold the securities fraudulently.

The complaints, filed Friday in the U.S. District Court for the District of Minnesota, allege UBS and Citigroup, while propping up the auctions against impending failure, encouraged Hutchinson to invest millions in ARS that soon became frozen and inaccessible.

Major ARS dealers, the two banks reached billion-dollar settlements earlier this...
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