Cuomo Looks To File A Suit Against Schwab (SCHW)

The Journal reported earlier today that New York's AG, Andrew Cuomo, is expected to file a lawsuit as soon as Monday against Charles Schwab Corp. (Nasdaq: SCHW) alleging civil fraud related to the brokerage firm's marketing and sales of auction-rate securities, according to people familiar with the situation.

Schwab has denied allegations that anyone at the firm could have foreseen the auction-rate securities market's impending calamity. Schwab has blamed its clients' losses on large underwriters of the auction-rate securities, claiming that Schwab was merely a distributor and was deceived by underwriters about the market's health.

Cuomo is expected to file as part of the lawsuit transcripts of recordings between Schwab brokers and customers that he alleges show how the brokers misrepresented of auction-rate securities as easy-to-sell alternatives to cash.

You can see Schwab's response here.
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