Auction-Rate Probe Grows Over Clarity From Brokers

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Federal prosecutors, ramping up criminal probes stemming from the credit crunch, are investigating whether two former Credit Suisse Group brokers lied to investors about how they placed their money into short-term securities, according to people familiar with the matter.

At issue is the $330 billion market for "auction rate" securities, which allow issuers such as municipalities and student loan companies, closed-end mutual funds or financial institutions to borrow money for the long term but at short-term, or lower, interest rates.

Weekly or monthly auctions conducted by Wall Street firms reset those rates, but the ...