A top UBS lawyer has resigned in the midst of an investigation by New York State authorities into the bank's sale of auction-rate securities.

A spokeswoman for the Swiss bank confirmed that David Aufhauser, general counsel of its investment bank and of the Americas, stepped down but said he would continue as an adviser until September 30.

Aufhauser is said to be at the centre of New York Attorney General Andrew Cuomo's probe of UBS – part of a wider investigation of Wall Street's handling of the securities – but has not been specifically named.

Auction-rate securities had been considered investments as safe as cash but they are instruments at the centre of the latest squeeze in the credit markets. Investors seem to have lost confidence in the liquidity of the securities.

"The New York Attorney General did not identify the names of the executives in his complaint, and we decline to do so," said UBS in a statement.

Reuters has reported that a lawsuit by New York authorities accuses "Executive A" of having sold $250,000 in auction-rate holdings following word from bank executives about difficulties in the market.

A former general counsel to the United States Department of the Treasury, Aufhauser joined UBS in June 2004. He had previously served on the US President's Corporate Fraud and Abuse Task Force at the Department of Justice.

In July, UBS agreed to pay $4.4 million (SFr4.6 million) on similar charges in Massachusetts without admitting guilt.

The beleaguered Swiss giant is embroiled in a US federal tax evasion investigation and posted a loss of SFr11.5 billion in the first quarter of 2008.

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