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More banks to buy back securities

October 09, 2008|From Times Wire Services

Bank of America Corp. and Royal Bank of Canada will bail out customers stuck with $10.3 billion in auction-rate securities and pay fines to settle state and federal claims that they misled investors in selling the products.

Bank of America will buy back $4.5 billion of the securities and pay a $50-million fine in agreements with the Securities and Exchange Commission and New York Atty. Gen. Andrew Cuomo that "closely mirror" a deal last month with Massachusetts. The bank will help clients dispose of an additional $5 billion, the SEC said. Royal Bank of Canada said it agreed to buy $850 million of the debt and pay a $9.8-million fine.

Companies including Citigroup Inc., UBS and Merrill Lynch & Co. have agreed to repurchase more than $50 billion in debt to settle claims they touted the instruments as safe, cash-like investments.

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