New York Attorney General Andrew Cuomo said he is suing UBS AG for misleading investors into buying auction-rate securities just five months before the market collapsed.
"Not only is UBS guilty of committing a flagrant breach of trust between the bank and its customers, its top executives jumped ship as soon as the securities market started to collapse, leaving thousands of customers holding the bag," Cuomo said at a press conference.
He said his investigation revealed that UBS sold $21 million in securities just prior to the collapse.
The announcement put New York as the third state to bring charges against the Swiss investment bank, with Massachusetts and Texas leading the charge earlier this year.
By Erik Kevin Franco and edited by Cristina Markham