The New York Attorney-General has commenced proceedings against Charles Schwab, the largest independent broker in the US, in relation to its marketing of auction-rate securities, according to the Financial Times.

The firm has said it will contest any civil fraud charges, saying that the “real culprits” are those that created and then walked away from the market.

ARS are long-term debt instruments issued by municipalities and other institutions with rates reset at periodical auctions. The market froze in February 2008 when liquidity dried up and banks did not support it.

The report said regulators believe firms misrepresented ARS as liquid, cash-like instruments.

Groups including Citigroup, JPMorgan, Morgan Stanley and brokers including TD Ameritrade have reached various regulatory settlements, involving over $61 billion of buy-back commitments, according to the publication.