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As part of a deal announced by Massachusetts Attorney General Martha Coakley, UBS agreed to pay the state $750,000 to cover expenses of the lawsuit and $250,000 to local governments impacted, Legal Newsline reported Wednesday.

The Swiss company has also agreed to repurchase $3.4 million of auction-rate securities sold to the 17 towns and cities.

In settling, UBS has not admitted to any wrongdoing, a statement said.

"We are pleased with the results in this case", Coakley said. "Our primary interest was to promptly return to these towns and cities the investment monies they placed with UBS. However, another important goal was to find a way to prevent this from happening to towns and cities in the future."

The attorney general said UBS duped local governments into thinking that auction-rate securities were as liquid as cash by describing the holdings as cash equivalents on their brokerage statements.

Legal Newsline said authorities in New York and Texas also are investigating UBS for how it managed auction-rate securities.

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