Fidelity is in the news again Wednesday morning, but just as in a few days ago (see The MFWire, August 18, 2008), the news does not concern its mutual fund business. Massachusetts Secretary of State William Galvin penned a letter to Fidelity Chairman Ned Johnson, urging his company to buy back auction-rate securities that its brokerage unit sold to investors, Bloomberg reports.

"It is my hope that Fidelity will follow the industry trend and promptly repurchase these securities that it has sold to its customers, many of whom now find themselves unable to access money that they thought was as liquid as cash," Galvin wrote.

Fidelity spokesman Vin Loporchio pointed out that Fidelity is "neither the issuer, underwriter or the sponsor" of auction-rate securities, adding: "We believe the underwriters should stand behind their securities."

Galvin's letter comes just days after New York State Attorney General Andrew Cuomo said he was widening his investigation of the auction-rate market to include Fidelity and Schwab. 

Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE