November 18, 2008 – Crosby & Higgins LLP Files $6.1 Million Arbitration Claim Against Oppenheimer & Co. Arising Out of the Sale and Marketing of Auction Rate Securities
November 18, 2008
Crosby & Higgins LLP has filed a $6.1 million dollar arbitration claim with the Financial Industry Regulatory Dispute Resolution Corp. (FINRA-DR) on behalf of a client against Oppenheimer & Co. Inc. in connection with the marketing and sales of auction rate securities. Oppenheimer, a major retail brokerage firm, purchased approximately $12 million in auction rate securities on behalf of the client, a California real estate developer. Oppenheimer consistently misrepresented auction rate securities to be highly liquid “cash equivalents” and also failed to disclose material risks associated with the purchase of these financial instruments leading up to the collapse of the market in February 2008. This week, regulators charged that Oppenheimer knew of growing ARS inventories held by the financial institutions that supported the auction rate securities market, and knew of the growing problems in the auction market, yet failed to advise its customers or brokerage sales force of the impending collapse. Incredibly, top executives at Oppenheimer, including the CEO and the head of the Auction Department, even sold large amounts of their personal holdings of auction rate securities in the two months leading up to the collapse of the market. Notwithstanding this, Oppenheimer refuses to redeem the auction rate securities of their customers and make them whole for any losses, even after the recent redemption actions by the other major financial institutions and the various regulatory investigations.
The arbitration claim filed this week by Crosby & Higgins LLP in the Los Angeles offices of FINRA seeks $6.1 million in compensatory damages together with consequential and punitive damages.