Money world

Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) became the latest Wall Street investment bank to offer to reimburse buyers of auction-rate securities, as New York’s attorney general sought settlement talks with it and two other banks.

Morgan Stanley said it would offer to buy back at face value some $4.5 billion in auction-rate securities held by individuals, charities and small to medium-sized businesses and provide liquidity to institutional investors in the securities.

State and federal regulators have been investigating whether brokerages and banks falsely told clients that auction-rate securities — a $330 billion market of long-term debt instruments that pay yields reset through weekly or monthly auctions — were as safe and liquid as cash.

Instead, auction-rate securities have been impossible to sell since late January, when investment banks stopped propping up auctions that were being abandoned by investors.

New York Attorney General Andrew Cuomo, one of the most aggressive regulators pursuing the issue, on Monday told JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz), Morgan Stanley and Wachovia Corp (WB.N: Quote, Profile, Research, Stock Buzz) that it wants to begin settlement talks immediately.

JPMorgan was the third-largest auction-rate municipal bond underwriter since 2000 after Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz) and UBS AG (UBSN.VX: Quote, Profile, Research, Stock Buzz), according to ThomsonReuters data, while Morgan Stanley was the fourth.

New York, the Securities and Exchange Commission and other states announced settlements last week with Citi and UBS no checking account payday advance. Combined, the banks agreed to pay $250 million in fines and repurchase about $27 billion of the debt from their clients.

‘CASH-LIKE’ SECURITIES 

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