N.H. accuses UBS of misleading student lender
Written on August 18, 2008
New Hampshire securities regulators on Thursday accused banking giant UBS of defrauding the state’s leading issuer of student loans.
In a civil complaint, the Bureau of Securities Regulation said UBS (UBS) Securities LLC knew the auction-rate securities market was on the verge of collapse in February, but was "actively encouraging" the lender to sell more of the bonds.
The company, UBS’ investment banking branch, has been the longtime financial adviser and underwriter to the New Hampshire Higher Education Loan Corporation.
"Our investigation revealed that UBS had knowledge that a market collapse was looming but did not disclose that information to NHHELCO," said Jeff Spill, the bureau’s deputy director.
Collapse ended two loan programs
The lender had to shut down two loan programs because of the market collapse faxless cash advance. Last week, it asked UBS for a line of credit so it could get loans flowing normally again.
Student-loan issuers in other states also relied on the auction-rate market, so lenders and students in many other states are affected, bureau Director Mark Connolly said.
UBS had no immediate response but said it was preparing a statement.
Filed in: term.