MIAMI, April 1, 2008 (PRIME NEWSWIRE) -- The securities law firm of Dimond Kaplan & Rothstein, P.A. (DKR) (http://www.dkrpa.com) informs auction rate securities investors that UBS Financial Services, Inc. ("UBS") has confirmed DKR's allegations that auction rate securities are subject to principal risk. Specifically, on March 28, 2008, UBS announced that it would be marking down the value of auction rate securities in its customers' brokerage accounts by as much as 20 percent.
For weeks now, UBS has told its customers that auction rate securities were only suffering from a liquidity problem and that investors' principal was not at risk. But in a $5.2 million FINRA arbitration claim filed on behalf of UBS clients on February 26, 2008, DKR alleged that those instruments were not merely illiquid, but were subject to actual loss of value. Now, UBS finally has admitted that investors will lose principal in their auction rate securities investments.
UBS' admission concerning principal losses follows closely on the heels of its prior apparent admission that the representation that auction rate securities were equivalent to cash was grossly inaccurate. Specifically, within days of DKR filing its suit, UBS removed information concerning auction rate securities from its website. UBS' website had represented that auction rate securities were "highly liquid, cash alternatives" that gave investors the ability to quickly convert investments into cash when they need it. But only four days after DKR filed its claim and attached the website page as an exhibit, UBS removed the representations from its website. DKR believes that UBS removed the page from its website because the information grossly misrepresented the investments, and the website page served as an ongoing admission that UBS had defrauded investors. In a similar circumstance, Oppenheimer recently changed the way it lists auction rate securities on account statements, previously listing them as Cash Equivalents and now listing them in the Other category.
In addition to the case against UBS, DKR represents a number of other clients in auction rate securities cases against other major brokerage firms, including Merrill Lynch, Wachovia, and Morgan Stanley. Now that one of the largest underwriters of such securities has admitted that these instruments have lost value, DKR believes that investor claims against brokerage firms that sold auction rate securities have gotten even stronger.
Dimond Kaplan & Rothstein, P.A. is an AV-rated law firm that represents investors nationwide in stockbroker misconduct and investment fraud cases. They have represented investors against most major Wall Street brokerage firms in claims involving stocks, options, variable annuities, hedge funds, mutual funds, bonds, auction rate securities and collateralized mortgage obligations (CMOs). If you suffered securities investment losses, please contact Jeffrey Kaplan, Esq. of Dimond Kaplan & Rothstein, P.A. at (888) 578-6255 or jkaplan@dkrpa.com for a free case evaluation. You also may visit Dimond Kaplan & Rothstein, P.A. on the web at www.dkrpa.com or www.auctionratesecuritieslawyer.com.
The Dimond Kaplan & Rothstein, P.A. logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=4684