Galvin issues subpoenas in debt securities probe
Massachusetts Secretary of State William F. Galvin said today that he has issued subpoenas to business units of three large financial services companies as he seeks more information for his investigation into auction rate market securities.
Galvin's office said he has issued subpoenas to UBS Securities LLC; Merrill, Lynch, Pierce, Fenner & Smith Inc.; and Bank of America Investment Services Inc., all of which are registered as Massachusetts broker dealers.
Galvin's investigation focuses on whether Main Street investors were properly informed by broker dealers and asset managers of the risks of putting money into these types of securities.
"The recent freezing of the auction market coincided with the decision by a number of major brokers to stop supporting the auction market and appears to be yet another after-effect of the subprime lending crisis and the subprime market meltdown," Galvin said in a statement. "Within the last couple of weeks, my office has received calls from many people who thought they were investing in safe, liquid investments only to find that they had, in fact, purchased auction market securities that are now frozen, and they cannot get their money."
A spokeswoman for Bank of America said the bank doesn't comment on whether it receives subpoenas. A UBS spokesman declined comment. And attempts to reach Merrill Lynch were not immediately successful.
Last month, Galvin's office said it sought information from nine asset managers on their "experiences with closed-end funds in the wake of auction failures in the auction rate securities market."
(By Chris Reidy and Ross Kerber, Globe staff)
