Auction Rate Securities

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 claim

Last updated on Jan-29-10

ARS LEGAL ARTICLES AND INTERVIEWS

Auction Rate Securities Settlement as Anniversary of Market Failure Nears

January 30, 2010

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.

August 21, 2009

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

May 13, 2009

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

MORE ARS LEGAL NEWS

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ARS SETTLEMENTS

$16 Billion Auction-Rate Securities Buy Back Settlement with New York State

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READER COMMENTS

Posted by
Mississippi
on May 16, 2008

I am a 55 year old disabled individual in the middle of building a home. I had liquidated funds our of stock so it would be accessible for the cost of building. I am a parapalegic in a wheelchair and needed a home that would better suit my needs in the chair. I have now halted construction as this is a large part of the money for the building. The broker says they can do nothing even though they are the ones who convinced me this was a better alternative to money market accounts and totally safe.

Posted by
Connecticut
on May 14, 2008

Last May we invested $75k in what was described as "a safe as cash investment". We were basically looking for a very liquid investment. This money would serve as a downpayment for a home. Our financial advisor (who happens to be my brother-in-law) recommended Auction-Rate Securities. We were told that there was no risk involved and that we would be able to withdraw the cash at any point in time (every 7 days it would be available). So, in late February 2008 we found a house that we were going to place an offer on. I called the financial advisor to let him know that there was a high possiblity that we would need to withdraw the cash soon. That's when he informed me of the failed market. We lost out on a great opportunity. The house that we were going to bid on was a foreclosed home that was priced to sell. It was listed for approximately $100k below market value. So we lost out on the investment opportunity of a lifetime because of mispresentation of these auction-rate securities. Our assets are still froozen and we are continuously seeing opportunities come and go. We have no control over the situation. We are so fed up at this point. We would greatly appreciate any advice/ recommendations offered. Thank you.