WASHINGTON - UBS AG, the second-largest auction-rate securities dealer, agreed to purchase or provide liquidity for $22.1 billion of ARS and pay $150 million in fines, in a settlement with state and federal regulators.

The settlement was announced Friday as Massachusetts Commerce Secretary William Galvin told CNBC that he would pursue a lawsuit he filed against Merrill Lynch & Co. on July 31 because the firm's voluntary offer to buy back ARS at par next year does not go far enough. New York Attorney General Andrew Cuomo also said Friday that Merrill's buy-back program fails to contain certain investor projection safeguards. (Click here to read release)

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