By Jonathan Stempel 1 hour, 26 minutes ago NEW YORK (Reuters) - Morgan Stanley (MS.N) and JPMorgan Chase & Co (JPM.N) agreed to buy back billions of dollars of illiquid auction-rate securities and pay fines to settle charges that they misled investors about the debt's risk.The settlements, announced Thursday by New York Attorney General Andrew Cuomo, call for Morgan Stanley to buy back $4.5 billion of debt and pay a $35 million fine and for JPMorgan to buy back $3 billion of debt and pay a $25 million fine.
Regulators say brokerages misled investors into believing that auction-rate debt, interest rates of which reset in periodic auctions, was safe and the equivalent of cash. Much of the $330 billion market has been frozen since February, when brokerages abandoned their traditional role as buyers of last resort.
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