(Updates with company’s comment in fourth paragraph.)
Oct. 31 (Bloomberg) -- Charles Schwab Corp. won dismissal of the New York attorney general’s lawsuit accusing it of falsely describing auction-rate securities as liquid investments without disclosing the risks.
The independent, San Francisco-based brokerage was sued by then-Attorney General Andrew Cuomo in August 2009. New York State Supreme Court Justice O. Peter Sherwood in Manhattan granted Schwab’s motion to dismiss the case in an order signed Oct. 24 and entered into public court records today.
New York Attorney General Eric Schneiderman’s office is reviewing the decision, spokeswoman Lauren Passalacqua said in a phone interview.
Greg Gables, a spokesman for Charles Schwab, said the company is “very pleased” with the outcome.
Auction-rate securities, issued by municipalities, student- loan agencies, closed-end funds and some companies, had their interest rates periodically reset through weekly or monthly bidding processes.
Brokerages abandoned their voluntary support for the $330 billion market in February 2008, stranding investors who could no longer trade the bonds at auction and forcing banks to buy back the securities.
The case is the People of the State of New York v. Charles Schwab & Co. Inc., 453388/2009, New York State Supreme Court (Manhattan).
--Editors: Michael Hytha, Fred Strasser
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