Auction Rate Securities

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Many investors who put their money in Auction Rate Securities (ARS) did so because they believed that the securities were liquid and that they were a safe investment. However, they are now finding out that their Auction Rate Securities are not liquid and have very little value. Some companies involved in the Auction Rate Securities market are now under investigation for allegedly misleading investors as to the liquidity and stability of Auction Rate Securities.

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Auction Rate Securities a "Frozen" Asset

Conservative, income oriented investors in Auction Rate Securities (ARS) are now discovering that these "just like cash" investments are not liquid and may have little or no value unless they take legal action.

ARS investors thought they had a money market or CD-like securities that they could cash out when needed. As early as last summer, the $330 billion auction rate market began locking up. As the global credit crunch continued, it has been increasingly hard to resell the securities.

Investment Money

A few companies, like Nuveen and Eaton Vance, are making attempts to cash out holders of ARS, but so far none of the investors have received a dime.

Investors checking their portfolios online may be shocked to see the value of their securities listed as "N/A" (not available), and showing a worth of zero. Others see values of 75 to 95 cents on the dollar.

The fund issuers are telling investors they should sue the brokers such as E Trade, Ameritrade, UBS, Morgan Stanley, Merrill Lynch, Schwab, Fidelity, etc. who sold them the ARS.

Since September 2008, some companies, including Citigroup, Merrill Lynch, UBS and Morgan Stanley have settled claims with their clients. UBS has now repaid everyone it agreed to repay. If you had money in Auction Rate Securities and have not received a settlement it is unlikely that you will receive one without filing a FINRA arbitration.

ARS Values Drop

UBS cut the value of the average ARS by 5 to 15 percent on March 28th. Morgan Stanley was valuing the securities at par as of March statements, but included a notice stating that investors may not realize par value when selling the shares.

In the mean time, investors are left with securities that are being devalued, or are unsalable. Investors are hiring attorneys in order to get priority status and treatment for their individual losses.

Because many institutions issued these bonds, and many brokerage firms sold them, ARS investors should take prompt legal action to protect their savings.

Auction Rate Securities Legal Help

If you have purchased Auction Rate Securities from a brokerage firm or dealer, please click the link below to send your complaint to a lawyer to evaluate your claim at no cost or obligation.

Please click here for a free evaluation of your ARS case

Last updated on Feb-3-10

ARS ARTICLES AND INTERVIEWS

Auction Rate Securities Settlement as Anniversary of Market Failure Nears

Raleigh, NC: Yet another bank has agreed to buy back auction rate securities from investors who say they were misled about the liquidity and safety of the securities. The move comes almost two years after the failure of the auction rate securities market in 2008. [READ MORE]

Auction Rate Lawsuit Launched Against Charles Schwab & Co.

New York, NY: The auction rate securities debacle of 2007 has made a return to the public conscience with the recent filing of an auction rate securities market lawsuit against Charles Schwab & Co. (Schwab) by the Office of the Attorney General for the State of New York. In his lawsuit, filed August 17th, New York Attorney General Andrew M. Cuomo alleged that the discount brokerage firm falsely represented auction rate products as liquid, short-term investments without disclosing the risks [READ MORE]

Group Arbitration Beneficial to Auction Rate Securities Investors

Kansas City, MO: If you are still undecided about action to take concerning your auction rate securities, a new option has opened up to you. Although some people have chosen the class action lawsuit route, others have decided to file individual arbitrations, alleging they were told that the auction rate securities market was safe. However, it is possible to file a group arbitration regarding Auction Rate Securities losses, and that is exactly what 1 law firm is doing [READ MORE]