TD Ameritade settles with Cuomo, Schwab determined to fight


Charles Schwab & Co. (SCHW) decided to take a stand and fight New York Attorney General Andrew Cuomo over how it marketed auction-rate securities. Many others have already settled, as TD Ameritrade did today. Citigroup (C), UBS (UBS) and Goldman Sachs (GS) settled last year.

Auction rate securities were sold as liquid investments that were safe, cash-like investments. Few brokers who sold them understood the risks of the investments. Auction-rate securities (ARS) are short-term debt instruments whose prices are set at auctions. When the $330 billion market collapsed in February 2008, investors lost billions because they could no longer sell them.