The roughly $300 billion market for auction-rate securities resulted in hundreds of investors holding the bag when buyers vanished and auctions failed early in 2008.  Now, the financial giant UBS has been sued for fraud by the Commonwealth of Massachusetts on the basis that in the run up to the crisis, it recommended auction-rate securities to investors not because they consisted of good investments, but rather, to lower UBS's own inventory and thereby avoid losses.  UBS underwrote roughly 15% of the total market in auction-rate securities. The lawsuit alleges that while UBS was pushing auction-rate securities on its clients, a top insider at the firm was liquidating his entire position in them. Internal emails obtained by the state regulators show that UBS put pressure on its sales force to unload the securities at a time when insiders at UBS expressed anxiety over the deteriorating market conditions that forebode the time in February of 2008 when it became practically impossible to sell the securities at auction.

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