(Bloomberg) — Charles Schwab Corp. and New York agreed to settle a 2009 lawsuit in which the state accused the firm of promoting auction-rate securities as safe while failing to disclose the risks before the market for them froze.
New York claimed Schwab engaged in "fraudulent and deceptive conduct" in promoting the investments. Auction-rate securities are municipal bonds, corporate bonds and preferred stocks whose rates of return are periodically reset through auctions. Andrew Cuomo, then attorney general, brought the suit.
The settlement was disclosed in a filing in state Supreme Court in Manhattan. No terms were provided. Schwab and New York said in a November filing that they were in talks to end the case.
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