Wachovia subpoenaed by SEC, states over auctions

NEW YORK, May 12 (Reuters) - Wachovia Corp (WB.N: Quote, Profile, Research) said on Monday it had received inquiries and subpoenas from federal and state regulators related to its auction rate securities, including the failure of the auctions.

Wachovia, the fourth-largest U.S. bank, said in the filing that it was cooperating with inquiries into underwriting and sales of the securities that had been launched by the U.S. Securities Exchange Commission and several state regulators.

The $330 billion market for auction rate securities -- municipal bonds, corporate bonds, and preferred stocks whose rates are reset periodically -- froze this winter following auction failures caused by the credit crisis.

The Charlotte, North Carolina-based bank also said it was named in a class action suit filed in March in U.S. District Court in Manhattan by holders of the securities. The suit claims the bank misrepresented the quality and risk of the auction rate securities, charges the bank said it would fight.

Sources told Reuters last month that New York's attorney general and securities regulators in several U.S. states were probing auction-rate securities and the role Wall Street firms in enticing investors into the troubled market. (Reporting by Phil Wahba; Editing by Tim Dobbyn)