Crosby & Higgins LLP filed an arbitration claim with the New York office of the Financial Industry Regulatory Dispute Resolution Corp. (FINRA-DR) against E*Trade Securities LLC arising out of the marketing and sales of auction rate securities.  E*Trade sold auction rate preferred shares (“ARPS”) to a Massachusetts entrepreneur without disclosing the risks of those investments.  Under the guise of providing cash management services, E*Trade marketed these ARPS with the knowledge that should the market begin to fail, investors would have no way to sell their securities and since the securities E*Trade was buying carried relatively low rates of return, there would also be no secondary market.  After the auction rate securities market completely collapsed on February 11, 2008, the ARPS that E*Trade had recommended and purchased were rendered completely illiquid.  While most major brokerage firms have settled with industry regulators and agreed to redeem many of these illiquid securities, E*Trade has refused to agree to any large-scale redemption scheme.  The arbitration claim seeks substantial compensatory damages together with consequential and punitive damages as well as attorneys’ fees.