Auction-Rate Securities Investors Continue to Struggle
Glenn and Norma Linke, a retired couple living in St. Louis, thought their money had been invested safely. But last year, when they asked their broker at Stifel Nicolaus to sell their “weekly CDs” in order to pay the costs of building a first-floor bedroom, they were in for an unpleasant surprise. Their money had not been used to purchase certificates of deposits. Instead, it had been invested in auction rate securities that could not be sold.
The St. Louis Post-Dispatch reported on the plight of the Linkes last Sunday. Nearly a year after the auction-rate securities market froze the Linkes still cannot access approximately $75,000 of their money.
The Missouri Secretary of State negotiated buy-back agreements with Wachovia Securities in St. Louis and Commerce Bank. But Stifel, the third-largest brokerage based in St. Louis, wasn’t part of the deal.
According to the article, “St. Louis couples angry at Stifel Nicolaus over auction rate securities,” Stifel claims it has done nothing wrong. Other regional brokerages such as Raymond James Financial are taking a similar position.
As a result, thousands of investors like the Linkes are still unable to retrieve their hard-earned money.
Auction-rate securities are municipal or corporate debt securities or preferred stocks that pay interest at rates set through periodic auctions. The instruments typically have long-term maturity dates or no maturity date.
In mid-February 2008, the auctions for the investment instruments failed. That meant investors were unable to sell their securities. To this day, auction-rate securities investors find themselves owning frozen assets.
Auction-rate securities investors who wish to discuss their rights against any broker-dealer may contact Carey & Danis toll-free at 800-721-2519 or fill out our online contact form
