What's Going On With Auction-Rate Securities Investigations?
After a rush of activity in the first three weeks of August, there has been almost a deathly silence about auction-rate securities investigations and settlements over the past several weeks leaving investors to question what’s going on. No settlements have been formalized, no new settlements have been reached and no additional actions have been taken. Just where do things stand?
In the first three weeks of August 2008, state regulators announced eight settlements, in principle, with major Wall Street firms arising out of their misconduct in marketing and selling auction-rate securities. Specifically, regulators announced settlements in principle, with UBS, Citigroup, Merrill Lynch, Morgan Stanley, Wachovia, Goldman Sachs, JP Morgan and Deutsche Bank. At that time, regulators were vocal about their ongoing investigations into the activities of other firms that participated in the auction-rate securities debacle. Regulators announced that the various remaining firms would either quickly resolve their auction-rate securities problems or face imminent action by the regulators. Since that time, virtually nothing has happened. There have been no new settlements reached or announced. There have been no additional actions filed.
The lack of apparent activity and the silence surrounding the same, raise questions about whether problems have arisen in the ultimate consummation of settlements which were previously announced. Given the amount of time that has passed without formal settlement agreements, it would seem that, at best, there are still many details being worked out regarding the auction-rate securities mess. The ultimate impact of these settlements on investors remains unknown.
Similarly, the lack of additional actions by the regulators suggests that various firms are resistant to adopting the settlement guidelines established by the regulators in earlier settlements. Such guidelines have generally required the firms to repurchase auction-rate securities sold to small investors (defined as individuals, charities and small businesses having $10 million or less in investments), reimburse such investors for losses they sustained if they sold their auction-rate securities, and use their best efforts to assist larger investors in liquidating their auction-rate securities.
Investors are encouraged to closely monitor this situation. It appears that there are definitely going to be gaps in the ultimate settlements which leave some investors to fend for themselves. For example, it is already apparent, that larger corporations and institutions are not being assured of any affirmative relief in the settlements and will be forced to fend for themselves in protecting their own economic interests. Other investors may find themselves in a similar situation.
Page Perry, LLC is an Atlanta-based law firm with over 125 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 30 occasions. Page Perry’s attorneys are actively involved in representing institutional and individual investors in auction-rate securities cases. For further information, please contact us.
