New Hampshire wins $20M settlement from UBS
New Hampshire wins $20M settlement from UBS


The New Hampshire Bureau of Securities Regulation announced Thursday that it has won a $20 million settlement from UBS Securities LLC to benefit a state student loan program.

In 2008, the bureau had charged UBS with violating state securities laws and a breach of fiduciary duty to the New Hampshire Higher Education Loan Corp. The nonprofit loan corporation is the state's leading issuer of student loans to college students.

The settlement is over the events leading to the 2008 collapse of the auction rate securities market, which had been the prime market for bonds issued by the loan corporation. In its complaint, the state said while UBS was steering some clients out of the auction-rate securities market because of signs it would collapse, it was advising the loan corporation to offer higher investment rates so it could stay in. UBS had denied defrauding anyone.

Securities Director Mark Connolly said students and parents alike had depended on the loan program for more than 80 percent of the student loans made to New Hampshire residents. When it was harmed, "so were they," he said.

He said UBS will pay the corporation $20 million and will pay the state $750,000 to cover its costs.

Rene Drouin, president and chief executive of the loan corporation, said the organization is pleased with the security bureau's work to arrive at the settlement.

Back in 2008, Drouin had said the organization had to shut down two loan programs affecting about 6,500 students because of the market collapse. Following UBS' advice to offer higher interest rates cost the lender about $25 million, he had said.

In a statement released Thursday, UBS said it was pleased to have concluded the matter with the state as it "continues its efforts to address the unprecedented industrywide collapse of the auction rate securities market."
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