By JOE BEL BRUNO
Associated Press

NEW YORK - The New York attorney general's office said Wednesday it is investigating whether Fidelity Investments was given incentives by Goldman Sachs Group Inc. to sell auction-rate securities to investors.

Investigators are examining if Fidelity pitched auction-rate securities that were underwritten by Goldman Sachs because it received other services from the investment bank. A spokesman for New York Attorney General Andrew Cuomo confirmed the probe was under way but declined to provide further details.

The attorney general is leading an investigation into how major Wall Street investment banks and smaller financial companies sold auction-rate securities to customers. The securities were marketed as being as safe as cash until the market froze up amid the credit crisis, causing investors to lose money.

Fidelity said about 600 to 700 accounts out of some 8 million customers held auction-rate securities. Ann Crowley, a spokeswoman for the company, said there was "no financial incentive for Fidelity to promote auction-rate securities as opposed to other short-term investments."

A spokesman for Goldman Sachs declined to comment.

Cuomo, leading the investigation on behalf of state and federal authorities, has gotten investment banks to agree to buy back more than $50 billion worth of auction-rate securities from eight global banks. Goldman Sachs agreed to buy back about $1.5 billion in securities still held by private clients that were purchased through the firm before Feb. 11. It also agreed to pay a $22.5 million fine.

Auction-rate securities resemble corporate debt, but the interest rates on the investments are reset at regular auctions, some as frequently as once a week.

The market for the securities collapsed in February amid the downturn in the broader credit markets. Regulators have been investigating the collapse to determine who was responsible and whether banks knowingly misrepresented the safety of the securities when selling them to investors.