The Corporate World - Wednesday, September 17, 2008 10:07 - 0 Comments

Wachovia settles auction-rate securities probe

Another bank, Wachovia Corp., will buy back nearly $9 billion in auction-rate debt to settle complaints that it misled investors. In the settlement, Wachovia, the fourth-largest U.S. bank, agreed to repurchase auction-rate securities totaling $8.8 billion, including $5.7 billion in securities held by over 40,000 individual investors, charities and small businesses. The $330 billion auction-rate market normally allows issuers to borrow money for the long term at low, short-term rates. But demand at the daily auctions for the securities faded earlier this year amid a broader flight from risky investments, leaving owners unable to redeem them for cash.

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