Auction Rate Securities

Auction Rate Securities Collapse

During the week of February 11, 2008, the nation’s leading financial institutions abruptly ended their role in supporting the Auction Rate Securities market, causing the market to collapse.As a direct result, investors are now left holding approximately $330 billion in illiquid securities that were marketed and sold to them as “cash equivalents.”Crosby & Higgins LLP has quickly become one of the leading firms in the nation proactively enforcing the rights of investors with respect to the collapse of the Auction Rate Securities market and has filed multiple arbitration claims with the Financial Industry Regulatory Authority (“FINRA” formerly NASD) seeking millions in damages, as well as rescission and attorneys’ fees.The following is a brief overview of the Auction Rate Securities market and the claims that investors are beginning to pursue in the aftermath of the market collapse. Click here to read the full article

ARS Settlement Summaries Please click on the institution for a detailed profile
Institution	Status	Eligible Investors	Details
Oppenheimer	Under Investigation		Refusing to settle
RBC Capital	Agreement pending	Individual accounts less than $10 million; non-profit accounts less than $25 million; all investors to be redeemed by the end of 2009
Lehman Brothers	Under Investigation		$9.74 billion outstanding; filed for bankruptcy protection; some ARPS were issued by Lehman's asset management arm-Neuberger Berman- which remains solvent
Charles Schwab	Under Investigation		Refusing to settle; providing limited liquidity mechanisms to investors
E* Trade	Under Investigation
TD Ameritrade	Under Investigation		$1.2 billion outstanding; refusing to settle
Wells Fargo	Under Investigation		Wells Fargo has not agreed to a global settlement. Generally, Wells Fargo is offering non-recourse loans for up to 90% of par value of a customer's ARS holdings.
Fidelity Investments	Agreement Pending	Self-directed accounts, customers must request redemption prior to Dec. 11, 2008.
UBS	Settlement Finalized	Individuals, nonprofits, and accounts less than $1 million starting Oct.	$18.6 billion buyback; $150 million fine; approximately $31 billion outstanding
Wachovia	Settlement Finalized	Individuals, nonprofits, and small business accounts starting Nov.	$9 billion buyback; $50 million fine
Citigroup	Settlement Finalized	Individuals, nonprofits, small business Nov. 2008; institutional investors 2010	$7.5 billion buyback; $100 million fine; approximately $40 billion outstanding
Merrill Lynch	Agreement Pending	Individuals, nonprofits, and business accounts starting Oct. less than $4 million; starting Jan. 2009 less than $10 million	$7 billion buyback; $125 million fine; approximately $12 billion outstanding
Morgan Stanley	Agreement Pending	Individuals, nonprofits, and small business less than $10 million (some exceptions)	$4.5 billion buyback; $35 million fine; approximately $20 billion outstanding
JP Morgan Chase/ Bear Stearns	Agreement Pending	Individuals,nonprofits, business accounts less than $10 million; completed by Nov. 2008	$3 billion buyback; $25 million fine; approximately $27 billion outstanding
Goldman Sachs	Agreement Pending	Individuals, nonprofits, small business accounts	$1.5 billion buyback; $22.5 million fine; approximately 17.8 billion outstanding
Deutsche Bank	Agreement Pending	Individuals, nonprofits, small business accounts within 90 days of final settlement	$1 billion buyback; $15 million fine
Bank of America	Agreement Pending	Individuals, nonprofits less than $25 million, small business less than $10 million starting Oct. and completed by Jan. 2009	$4.5 billion buyback; $11 million outstanding
Credit Suisse	Agreement Pending	Accounts less than $10 million	$550 million buyback; $15 million fine
SunTrust/ Comercia/First Southwest/ WaMu	Agreement Pending	Accounts less than $10 million within 60 days of settlement	$1.8 billion buyback; $3.25 million fine
HSBC	Completed	Repurchased all outstanding ARS by Jul. 2008	$0 outstanding

Helpful Guides For Investors

Auction Rate Securities Update

In response to the building pressure exerted by both regulators and pending claims, on August 7, 2008, Citibank proposed that it would redeem approximately $7.5 billion of auction rate securities from individual investors, small businesses, and charities and also use its best efforts to liquidate the approximately $12 billion worth...More

Securities Arbitration: A Primer

The securities industry has long favored arbitration as the preferred method of dispute resolution.It has been standard practice in the securities industry for many years now for brokerage firms to mandate the use of the arbitration process to resolve investor disputes...More

An Introduction to Auction Rate Securities

Auction rate securities refer to a type of debt security with nominally long-term maturities (as long as fifty years) and variable coupon rates.Periodic Dutch auctions are held by the underwriting financial institution, usually every seven to thirty-five days, to set the coupon rate for each period and allow...More

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