UBS AG has tentatively agreed to buy back more than $19 billion of illiquid auction-rate securities it sold to clients, in a settlement that state and federal regulators aim to formally announce Monday.


Some details of the settlement, including the possible Monday announcement, were confirmed by Brian McNiff, a spokesman for Massachusetts Secretary of the Commonwealth William Galvin, who is the lead state regulator investigating the Swiss-based bank as part of a multi-state task force.

But in an interview on CNBC this morning, Galvin said that his office had not yet reached a final agreement with the bank. “We will have a concluded, final agreement very soon,” he said.
He characterized the multi-state investigation into ARS sales practices as approaching the “seventh inning stretch.”


Under the tentative agreement, UBS customers with less than $1 million of ARS will be reimbursed by the end of October, while those with more than $1 million will get their money back by year’s end.


The settlement will mirror the one state and local regulators made with Citigroup Global Markets Thursday and will assure that retail investors get their money back as soon as possible, followed by institutional investors.


The Citi settlement involved Galvin, New York Attorney General Andrew Cuomo, the Texas State Securities Board, and other states; as well as the Securities and Exchange Commission, the Financial Industry Regulatory Authority, and North American Securities Administrators Association.

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