Cuomo filed a lawsuit Thursday, alleging the bank owed customers the full value of the auction-rate securities they purchased and couldn't resell when the market auction market collapsed in February, The Washington Post reported.

The suit says the value is now $37 billion.

Senior executives at the Swiss bank allegedly sold $21 million of their personal ARS investments, while the bank was continuing to market the investments to customers.

The auction-rate securities market collapsed as large investors refused to bid on them at the weekly auctions where their interest rates are determined.

UBS spokeswoman Karina Byrne said the bank had been negotiating with the attorney general's office and called the suit "frustrating."

"UBS categorically rejects any claim that the firm engaged in a widespread campaign to move ARS inventory from the firm's own books and into private client accounts," the bank said in a statement.