New York Launches Auction-Rate Securities Probe
Earlier this week, New York Attorney General Andrew Cuomo subpoenaed some of Wall Street’s biggest financial institutions including UBS, Merrill Lynch and Goldman Sachs as part of an investigation into auction-rate securities.
The Wall Street Journal reports that the attorney general’s office is “devoting a lot of resources” to the probe which will include a review of the claims the broker-dealers made about the securities such as whether they were cheap and easily sold investments.
The North American Securities Administrators Association also announced in a news release dated April 17 that state regulators have formed a task force to coordinate an auction-rate securities investigation. The task force includes members from Florida, Georgia, Illinois, Missouri, New Hampshire, New Jersey, Texas and Washington.
Bryan Latagne, the Massachusetts Securities Division director who is leading the task force, stated:
“Investors are telling state securities regulators that they did not know that their money was being held in auction-rate securities, and were not advised about the liquidity risks. States have heard complaints from a wide range of investors – young families saving for a first home, small business owners, retirees, and people with parents in nursing homes – whose lives have been detrimentally impacted because the money they thought was liquid is now tied up in this frozen market. Based on these investor complaints, this appears to be a pervasive problem.”
If you hold auction-rate securities, contact Carey & Danis.
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