|
When
you first hit this site, hit
REFRESH. Your browser often remembers old
sites. There is little "logic" to the layout
of this site, except I try to put newer stuff on top.
There is also information on my other site
InSearchOfThePerfectInvestment.com.
Wachovia's
redemption iis under "Redemption Agreements in
the left column.
UPDATE:
Bank Of America 'Ready' To Settle Auction-Rate Probe
September 4, 2008: 7:39 PM EST
By
Chad Bray Of DOW JONES NEWSWIRES
NEW
YORK -(Dow Jones)- Bank of America Corp. (BAC) said
Thursday that it is " ready and willing" to
enter into a settlement with regulators to buy back
auction-rate securities from its customers.
In
a statement, Shirley Norton, a Bank of America spokeswoman,
said the bank has been in discussions for nearly a month
with regulators in New York, Massachusetts and other
states and the U.S. Securities and Exchange Commission
in hopes of reaching an agreement to provide "liquidity
relief" to its customers who hold the complex securities.
The
Charlotte, N.C., banking giant said it wants to reach
an agreement "that follows the same basic terms
of previously announced settlements" with other
banks to buy back auction-rate securities from retail
clients and small businesses.
"We
understood that we had reached such an agreement in
principle nearly two weeks ago," Norton said. "We
hope that all of the parties will work towards completing
a settlement for the benefit of investors who have been
affected by unprecedented market disruptions."
New
York Attorney General Andrew Cuomo sent subpoenas on
Wednesday and Thursday to eight Bank of America executives,
according to a person familiar with the investigation.
Norton
declined to comment Thursday on whether the bank had
received the subpoenas.
Cuomo's
office indicated last month it was stepping up its probe
of sales of the complex securities by Bank of America
and two other banks that ultimately settled with his
office and other state regulators.
In
its Thursday editions, the Boston Globe reported that
Massachusetts Secretary of State William F. Galvin said
talks with Bank of America on buying back auction-rate
securities from its clients had stalled and his office
might sue the company.
Last
week, Bank of America agreed to buy back $43 million
of the securities from government agencies in Massachusetts,
state regulators said.
Norton
declined to comment Thursday on what might be holding
up an agreement with regulators or how much in auction-rate
securities the bank might buy back from customers.
In
recent weeks, regulators have reached settlements with
Citigroup Inc. (C), UBS AG (UBS), JPMorgan Chase &
Co. (JPM), Morgan Stanley (MS), Wachovia Corp. ( WB),
Merrill Lynch & Co. (MER), Deutsche Bank AG (DB)
and Goldman Sachs Group ( GS) who will buy back more
than $50 billion worth of the securities.
Auction-rate
securities are debt instruments whose interest rates
are reset periodically at daily, weekly or monthly auctions.
Several auctions failed in February, driving up interest
rates for auction-rate securities issuers, while leaving
investors locked into investments that had been promoted
to them as safe and liquid.
Cuomo
has previously said his office is investigating a number
of banks and hopes to reach similar resolutions with
them. Last month, Cuomo said his office is looking at
about 25 firms.
The
attorney general has said his office is investigating
individuals at banks about their actions in marketing
the securities and the settlements announced so far
don't preclude his office or other regulators from taking
actions against those individuals.
-By
Chad Bray, Dow Jones Newswires; 212-227-2017; chad.bray@dowjones.com
September
4
Eight
From Bank of America Subpoenaed in NY Auction-Rate Probe
By
Karen Freifeld
Sept.
4 (Bloomberg) -- Eight Bank of America Corp.
executives were subpoenaed by New York Attorney General
Andrew Cuomo, adding pressure on the bank to settle
a probe of auction- rate securities, said a person familiar
with negotiations.
Cuomo's
office sent the subpoenas yesterday and today, the person
said. Bank of America also must settle with Massachusetts
or face legal action, Secretary of State William Galvin
said yesterday.
UBS
AG, Citigroup Inc., Morgan Stanley, JPMorgan Chase &
Co., Wachovia Corp., Merrill Lynch & Co., Goldman
Sachs Group Inc. and Deutsche Bank AG all settled claims
in the last month that they fraudulently marketed the
long-term securities as cash equivalents. The $330 billion
market collapsed in February, leaving thousands of investors
unable to sell auction-rate securities.
"We
don't comment on whether we receive subpoenas or not,''
Bank of America spokeswoman Shirley Norton said today.
She has said the bank is cooperating with regulators
and doesn't comment on communications with them.
Reuters
reported earlier today that Cuomo was issuing subpoenas
to "several'' Bank of America executives as part
of his probe of auction-rate securities.
Galvin,
leading a 12-state task force in the Bank of
America investigation, said yesterday his office has
been unable to complete a settlement after negotiating
with the Charlotte, North Carolina-based bank. Cuomo
has said he, too, seeks an agreement with the bank,
one of the largest underwriters of auction-rate securities.
The
eight banks that settled agreed to buy back a total
of at least $44 billion of the securities from individuals,
nonprofits and small businesses and help their institutional
clients find markets for the debt. They also agreed
to pay fines totaling more than $520 million to state
and federal regulators.
To
contact the reporter on this story: Karen Freifeld in
New York state Supreme Court at 1590 or kfreifeld@bloomberg.net.
September
4
Auction-Rate
bailouts bypass some investors
Smaller
Firms Aren't Settling With Clients Who Bought Now-Moribund
Securities
By SHEFALI ANAND and JENNIFER LEVITZ, Wall
Street Journal
Large
Wall Street firms have announced plans to buy back billions
of auction-rate securities from aggrieved investors.
Yet hundreds of thousands of individuals who bought
these same products from midsize and online brokerage
firms are still in the lurch.
Among
them is Michael Davis, of Fort Lauderdale, Fla. He invested
$400,000 in auction-rate securities after a representative
from online brokerage TD Ameritrade Inc. called him
in 2003, suggesting he move his money from a money-market
account to safe but slightly higher-yielding "seven-day
paper."
But
since February this year, the market for auction-rate
securities has been frozen, a casualty of turmoil in
the credit markets. Mr. Davis hasn't been able to sell
his securities. The experience, he says, has "really
shaken me up -- the fact that this could happen to someone
like me who is so conservative."
Mr.
Davis's problem is that he didn't buy his auction-rate
securities from any of the big Wall Street underwriters
of the market. Under regulatory pressure, UBS AG, Citigroup
Inc., Merrill Lynch & Co. and other companies that
both sold and underwrote these securities have agreed
to buy back around $70 billion of them. However, their
agreements don't include buying back securities underwritten
by them but sold by smaller brokers.
These
smaller brokers, who were primarily "resellers,"
haven't yet announced any plans to buy back the securities
they sold. They include Oppenheimer & Co., Fidelity
Investments, Stifel, Nicolaus & Co., Northern Trust
Corp. and H&R Block Financial Advisors Inc.,
a unit of tax firm H&R Block Inc. These companies
are keeping mum or saying they didn't underwrite or
sponsor these securities, and thus the onus to buy them
back doesn't fall on them. They also say they were unaware
of the problems in the auction-rate market that surfaced
last year. In all, tens of billions of dollars in auction-rate
securities were sold by these firms, often to individual
investors.
Mr.
Davis has joined a lawsuit seeking class-action status
against TD Ameritrade, filed in federal court
in the Southern District of New York, and alleging that
investors were misled into believing auction-rate securities
were safe, liquid investments. A spokeswoman for TD
Ameritrade says the company is cooperating with regulators
but wouldn't discuss the cases of specific customers.
Auction-rate
securities are a type of long-term debt in which interest
rates reset every seven to 35 days. They are typically
issued by municipalities and student-loan agencies,
and until the market froze, they were widely peddled
to the public as safe investments.
Regulators
are already making noises about persuading the resellers
to settle with investors. Last week, Massachusetts Secretary
of State William F. Galvin urged Fidelity to buy back
all the auction-rate securities it sold. Michigan Attorney
General Mike Cox says he hopes to work with Detroit-based
bank Comerica Inc. to find a way to "make
investors whole, short of litigation." A Comerica
spokesman says the firm doesn't discuss communications
with regulators. Fidelity's representatives say that
a vast majority of its customers are self-directed investors
who make their own investing decisions, and that the
firm didn't actively market auction-rate securities.
Investors
dispute that. Judith Regan, the well-known book publisher,
says she has $1 million still tied up in auction-rate
securities, and she blames Fidelity, her broker.
"I'd never heard about auction-rate securities;
they actively marketed that to me," says Ms. Regan,
55. She has been railing about the securities on her
Sirius Satellite Radio show in recent weeks.
Ms.
Regan says she first opened an account with Fidelity
in the late 1990s, and initially kept a lot of her cash
in money-market funds. "I have a gypsy mentality.
I want to get up and go, and with money, I like liquidity,"
she says. But she adds that her broker persisted that
she invest in auction-rate securities, calling them
"as good as cash."
Over
the last few years, Ms. Regan says, she put a little
more than $9 million of her cash into these securities.
Suddenly, earlier this year, she couldn't access any
of it. Ms. Regan says she had planned to buy a house
in Los Angeles earlier this year, but didn't go through
with it partly because of the uncertainty around the
stuck cash. "At the time, we didn't know if we'd
ever get it," she says.
Since
then, around $8 million of her securities has been redeemed
by issuers. "It's really not about hardship,"
she says of her situation. "I'm more indignant
about the deceit." She adds that she's still potentially
facing a loss on the remaining $1 million.
(Ms.
Regan, the former publisher of ReganBooks, was formerly
employed by News Corp., which owns The Wall Street Journal.
She subsequently filed a wrongful-termination lawsuit
against News Corp., which has since been settled.)
Fidelity
spokeswoman Anne Crowley declined to comment on Ms.
Regan's case. In general, however, she says, "there
is no financial incentive for a Fidelity representative
to have mentioned this product over another security."
For
some small-business owners, the morass caused a cash
squeeze. Doug May, the 44-year-old owner of a small
printing company in Port Byron, Ill., says he has $300,000
stuck in auction-rate securities bought through his
longtime bank, Wells Fargo & Co.
Mr.
May, who is part of an auction-rate-securities lawsuit
seeking class-action status against Wells Fargo
in federal court in the Northern District of California,
says his banker at Wells Fargo had encouraged him to
invest in the securities instead of paying off a loan.
"He told me it would be kind of silly to pay off
my loan, when I could make just as much interest and
have the liquidity every 35 days," he says.
When
the auctions failed this year, "they took away
my liquidity and basically jeopardized the jobs of 20
people," he says. To help with cash flow, Mr. May
says, he has taken out a loan from a credit union.
Kathleen
Golden, a spokeswoman for Wells Fargo, says the company
"acted in the best interests of its clients when
its financial consultants recommended auction-rate securities
based on what we believed at the time to be a deep and
liquid market." She says it is "cooperating
with regulators" and working "to resolve the
liquidity issues for our clients."
Investors
say that the midsize brokers should own up for having
sold these securities without explaining all the risks.
"They
really should be responsible for what they sold,"
says Ed Dowling, 53, who runs a clothing manufacturer
in New York. Mr. Dowling says he's stuck with more than
$2 million in auction-rate securities he bought on the
advice of a broker at Oppenheimer. Oppenheimer spokesman
Brian Maddox says the company takes "all client
concerns seriously" and is "in the process
of reviewing options available to help us with this
very difficult situation."
Write
to Shefali Anand at shefali.anand@wsj.com and Jennifer
Levitz at jennifer.levitz@wsj.com
September
3
Two
types of ARPS holders -- update 3
by
Harry Newton
There
are two types of ARPS holders:
1.
Those of us who have been promised our money back by
the issuer and/or the brokerage firm.
2.
Those of us who haven't been told anything about having
our auction rate securities redeemed by either our issuer
or our brokerage firm.
For
the first ARPS holder, your game is a waiting one. If
you need your money, you can borrow against your holdings.
Just be careful about the terms of the loan. You do
not want to be obligated to repay your loan before
your ARPS are redeemed for cash.
For
ARPS holder who has heard nothing, you have to assume
you will not hear anything unless you do
something. And it's not something small. You have to
figure that getting your money back is your full-time
job from now until you get your money back.
Repeat
after me: The squeaky wheel gets the most attention.
Here are some keys to becoming the squeakiest wheel
around:
1.
Do you know which state Attorney-General is investigating
the brokerage firm which pushed the ARPS on you?
2. Have you been in touch with that Attorney-General
and given him your full story with copies of emails,
letters, conversations, etc.
3. Were
your ARPS sold to you out of your brokerage firm's inventory?
(This makes a huge difference.)
4. Is your old broker still with your old firm? What
will he / she tell you in confidence? Has your broker
moved to another firm? What will he tell you in confidence
outside the office, away from the phones and the emails?
5. What pressure is your financial adviser putting on
the issuers?
6. How much money does your brokerage firm have in their
"stand ready" fund? Is it sufficient to pay
you out?
7. What did their Compliance Officer tell you?
8. How many of their fibs, misstatements and outright
lies have you documented?
9 . Are you ready to appear before Barney Frank's committee,
which starts hearings on September 18? Have you been
in touch with Congressman Frank?
10. How much have you bugged your state regulators?
Have you contacted them several times. By phone, by
letter, etc.
11. Have you written more than 25 letters?
12. Have you employed a lawyer with knowledge of securities
law?
13. Have you threatened to sue your broker personally
and /or taken him to FINRA and held him / her personally
liable? (See below.)
14. How much marketing material do you have from your
brokerage firm or issuer which is clearly incriminatory?
(Email me a PDF.)
Remember
several things: You were told these things were cash
equivalents. They weren't. That's a lie. It's your money.
No one is going to give it back to you because you happen
to be a nice guy, retired, or have a serious hard-luck
story. It's your job to get your money back.
While
you're at it, send me your story. Let me publish your
story. Stop with this anonymous stuff. Stop whining.
You need to get proactive NOW.
August
27
Answers
Needed
by Harry Newton
Now
we have some "settlements," there are questions
to ask your broker:
1.
"I'd like to continue holding my ARPS, but be redeemed
out of them when I need the money. Will this be possible?
Or will I be redeemed on your timetable?"
2.
If I sold the ARPS you sold me at a loss -- say through
RTN -- will you make my loss whole?
3.
If I suffered pain, anguish and opportunity loss, will
I get compensation?
Now
you'd think that as the writer of the leading blog on
ARPS, I'd be able to get answers to questions as simple
as these. But I can't. No one in management will basically
talk to me.
This
is not because I don't wash (I do) or am ugly (we could
argue that one) it's because we're dealing with frightened
investment banking managers who find the easiest course
of action is to listen to their attorneys instead of
their clients.
I
do, however, get unsolicited calls from brokers
who tell me one of two things:
1.
Their firm is a piece of shit and they're leaving it,
ASAP, or not leaving it, but will continue "to
do the best they can for their clients."
2. Their firm has had a bad rap in the press and on
this blog. And I ought to be nice to it.
In
both cases they won't let me quote them or mention them
by name. And they usually feed me information I can't
substantiate.
One
called me today and said he was staying with his present
firm, despite its inadequacies. He summed his situation
up: "You're going to dance with the devil - no
matter which firm you work with."
I
felt sorry for him.
August
27
Favorite
email exchange
Reader:
Why isn't Morgan Stanley listed on your Hall of Shame?
Harry:
Give me three reasons it should be and I'll add it.
Reader:
1. I am legally bound not to reveal any details.
2. I am legally bound not to reveal any details.
3. I am legally bound not to reveal any details.
August
22
Deutsche
Bank, Merrill and Goldman Settle
Update
3:- Three more firms -- Deutsche Bank, Merrill Lynch
and Goldman Sachs settled with AG Cuomo today. They'll
each pay a fine and redeem all their clients' ARPS.
For now:
The stupid part of all this is that these firms are
all now paying huge fines when they should have
been there for their clients in the beginning.
They should not have waited until their arms got well
and truly twisted by Cuomo and their reputations made
to look like mud.
I remember saying to several firms months ago, "Redeem
your clients' money. Look like heroes. Look like you
truly care about your clients."
Instead they delayed and delayed, fought the AGs, and
waited until they all looked like untrustworthy idiots.
God knows much client goodwill these firms have lost.
God knows how many clients they will lose when their
poor suffering clients get cashed out.
In contrast, HSBC shines. I hope HSBC wins itself lots
of new customers, which it really deserves. See the
column on the right.
There's
a recent CNBC interview with Andrew Cuomo. You can watch
the video here.
Here's the news, as reported by Reuters today:
Firms
settle auction-rate probes;
but more to come
NEW
YORK (Reuters) - Three of Wall Street's top investment
banks agreed to pay millions of dollars in fines and
buy back billions of dollars in frozen, illiquid securities
after U.S. regulators reached settlements over the way
the firms sold auction-rate securities.
Despite
the settlements, the industrywide investigation into
auction-rate securities looks far from over as regulators
said that, starting next week, they will review about
40 firms' practices, sources familiar with the investigation
said.
In
Thursday's settlement, New York Attorney General Andrew
Cuomo said Merrill Lynch & Co Inc, Deutsche Bank
AG and Goldman Sachs Group Inc have agreed to the settlement.
The
banks agreed to pay the fines and buy back securities
from investors who were left holding the notes earlier
this year when the auction rate market collapsed.
As
part of Cuomo's settlement, Merrill will pay a fine
of $125 million and buy back between $10 billion and
$12 billion in securities from investors. Goldman Sachs
will pay a $22.5 million fine and buy back about $1.5
billion in auction rate notes, while Deutsche Bank will
pay a $15 million penalty and buy back about $1 billion
of notes.
"After
meeting personally today with Attorney General Cuomo
and NASAA President (Karen) Tyler, I am pleased to report
that we have reached an amicable resolution and global
settlement of this matter," Merrill Chief Executive
John Thain said in a statement.
Cuomo
said Merrill's penalty and the terms of the settlement
took into account evidence of conflicted research at
the bank.
"Part
of our theory on the case dealt with Merrill's research,"
he said.
Cuomo
said Merrill's settlement is separate from an agreement
the firm made earlier with Massachusetts' top securities
regulator, William Galvin.
The
Securities and Exchange Commission said late on Thursday
it expects to make an announcement "very shortly"
on the terms of the proposed settlement with Merrill.
While
the New York settlement represents the biggest money
payouts to date, more investigations will be starting
soon.
Attorneys
and investigators will be undertaking the on-site review
for the 40 firms during the weeks of August 25 and September
8 to target firms with large amounts of auction rate
securities in accounts.
The
probe to enforce the rules of the Financial Industry
Regulatory Authority -- the group formed following the
merger of the regulatory arms of the National Association
of Securities Dealers and the New York Stock Exchange
-- comes as authorities nationwide are pressing the
big investment banks into settlements.
Regulators
say brokerages misled investors into believing that
auction-rate debt, which has rates that reset in periodic
auctions, was safe and the equivalent of cash.
Much
of the $330 billion market has been frozen since February
when brokerages abandoned their traditional role as
buyers of last resort.
A
letter to the firms from FINRA and obtained by Reuters
said the investigators were asking firms to provide
electronic lists of auction rate securities issues,
auction failures and identify employees on their auction
rate securities desks.
"If
applicable, identify all individuals who were involved
in determining when the firm would place supporting
bids or placed such bids," the letter sent to the
firms said.
It
also asks "whether the firm participated in surveying
investor interest and providing 'price talk' guidance
to customers."
For
Merrill Lynch's part, the New York settlement was the
second major deal they reached this week.
On
Wednesday, Merrill agreed to buy back about $12 billion
of the securities to settle its claims with the Commonwealth
of Massachusetts.
On
Thursday, Galvin said that Fidelity Investments had
replied to him after he urged it earlier in the week
to buy back frozen auction-rate securities the company
had sold.
Galvin
told Reuters that Fidelity dropped off a letter at his
Beacon Hill office on Wednesday.
Fidelity
left open the door to possibly helping on the auction-rate
securities matter, Galvin said on Thursday.
Fidelity,
which is privately held, has long said it neither issues
nor aggressively markets these securities and that it
expects underwriters who issued the securities to stand
behind them.
"We
do not comment on communications with regulators,"
Fidelity spokesman Vincent Loporchio said.
(Reporting
by Dan Wilchins, Elinor Comlay and Grant McCool in New
York and Svea Herbst-Bayliss in Boston; Writing by Patrick
Fitzgibbons; Editing by Andre Grenon))
August
20
Finally
someone listened;
Where are the brokers? Where are their firms?
What are they doing, if anything?
by Harry Newton
OK.
Let me reiterate for the thousandth time. Our best strategy
is to put pressure on our brokers -- the ones who sold
us our auction rate securities. We must tell the issuers
that they, the brokers, will never, ever sell the issuers'
securities again if they don't get us our money back
ASAP.
I've
been pushing this approach for months. But most brokers
are too scared of their brokerage firm management to
take an independent stance. And their brokerage firm's
management is too scared of its own shadow to come out
publicly and say, "Get our clients their money
back or we don't deal with you ever again."
But
finally a bunch of Merrill Lynch brokers have had the
guts to come out publicly and do the right thing. I
applaud them. I wish more would.
If
you're a gutsy broker and agree with me, send me a copy
of your emails to the issuers. I'll publish them on
this column. That will add even more pressure, since
a lot of people reading this column -- more than I ever
imagined.
If
you're an owner of ARPS, call your broker tomorrow and
ask him why he's not doing what the Merrill Lynch brokers
are doing. See the next story. My email address is 
August
20
Merrill
Brokers Press Pimco, BlackRock to Buy Auction-Rate Debt
By
Bradley Keoun and Christopher Condon
Aug.
20 (Bloomberg) -- Merrill Lynch & Co. brokers are
pressing fund managers Pacific Investment Management
Co. and BlackRock Inc. to buy back auction-rate securities,
aiming to speed up client bailouts in the frozen market.
More
than 300 brokers have e-mailed Pimco saying its executives
may "no longer be welcome in our offices'' unless
they redeem the securities, according to Erick Ellsweig,
a Merrill financial adviser in North Carolina who spearheaded
the e-mail campaign. Will Fuller, head of distribution
for Merrill's U.S. brokerage arm, wrote to BlackRock
on Aug. 15 saying its failure to offer redemptions in
the past two months has created "dissatisfaction
in our financial advisers and clients.''
Merrill's
brokers, who make up the biggest U.S. financial advisory
network, say they're trying to help clients stuck with
more than $10 billion of securities in the $200 billion
auction-rate market. Pimco, which manages the world's
biggest bond fund, and BlackRock, the largest publicly
traded U.S. fund manger, used the market to finance
their closed-end mutual funds, and Merrill brokers sold
the investments to its customers.
"The
brokers at Merrill are very upset about the lack of
access to capital for their clients, and they have been
rattling the cage,'' said Geoffrey Bobroff, a mutual-fund
consultant in East Greenwich, Rhode Island.
The
auction-rate market seized up in February with $330
billion in securities when the credit crisis prompted
Wall Street firms to stop supporting the periodic auctions
in which the securities were bought and sold. New York
Attorney General Andrew Cuomo has accused Merrill and
other brokers of improperly peddling them as investments
that were as liquid as cash. Merrill has said it's cooperating
with government probes.
Five
banks, including Citigroup Inc. and UBS AG, have reached
settlements with Cuomo and other regulators, agreeing
to pay $360 million in fines and repurchase about $35
billion of auction-rate securities. Merrill, the third-biggest
U.S. securities firm, has offered to buy back $10 billion
starting in January, a proposal Cuomo said was inadequate.
Purchases
of auction-rate securities by BlackRock and Pimco would
benefit Merrill by reducing the amount of the investments
it may have to repurchase.
"The
only thing we care about is getting our clients redeemed
as quickly as possible,'' Ellsweig, who has worked at
Merrill since 2001, said in an Aug. 16 e-mail in response
to a request for comment by Bloomberg News. Bloomberg
obtained copies of the correspondence between Merrill,
BlackRock and Pimco, which was confirmed by officials
of the companies.
"This
was a grassroots effort reflecting the opinion of a
group of financial advisers,'' Merrill spokesman Mark
Herr said in an e-mailed statement. "The firm continues
to work with all interested parties at resolving the
liquidity challenge caused by the unprecedented freezing
of the auction-rate securities market.''
Merrill,
based in New York, has a "long track record of
working with Pimco and BlackRock,'' he said.
The
flare-up with New York-based BlackRock is notable because
Merrill owns 49 percent of the firm and is
the largest distributor of its funds. BlackRock
has a "leadership position within our company,''
Fuller wrote in the e-mail to BlackRock President Robert
Kapito, so it faces higher expectations from Merrill's
brokers.
"We
continue to work constructively with all major market
participants to address the unprecedented issues in
the auction-rate market,'' said BlackRock spokesman
Brian Beades in an e- mailed statement.
Closed-end
funds, which trade on exchanges, sold auction-rate securities
to finance asset purchases and increase returns for
common shareholders. The funds had $64 billion outstanding
when the market froze, according to research firm Thomas
J. Herzfeld Advisors Inc. in Miami.
Fund
managers including Nuveen Investments Inc., Eaton Vance
Corp. and BlackRock have redeemed or scheduled the redemption
of $24.1 billion of auction-rate preferred shares, according
to Herzfeld, which specializes in closed-end funds.
Following
the Cuomo announcements, some funds dropped plans to
assist in the buybacks. On Aug. 14, three funds managed
by Hartford, Connecticut-based Phoenix Cos. announced
they were suspending efforts to obtain bank credit lines
to finance auction-rate redemptions.
Daniel
Sontag, who oversees Merrill's U.S. retail division,
wrote in a memo last week that the firm's buyback offer
doesn't let closed-end funds off the hook. "We
fully expect'' fund managers to "work with us even
more actively,'' he wrote.
Nuveen,
which had $15.4 billion of the securities outstanding
as of February, has announced redemptions of $5.53 billion,
or 36 percent, according to Herzfeld. Eaton Vance's
buybacks total $3.8 billion, or 76 percent. BlackRock's
repurchases stand at $2.5 billion, or 25 percent. BlackRock
hasn't announced any redemptions since June 2, Merrill's
Fuller wrote in the memo to Kapito.
"We
fear that our financial advisers view BlackRock as conspicuous
by its absence,'' Fuller wrote.
Munich-based
Allianz SE, which owns Pimco, hasn't redeemed any of
its $5.3 billion of outstanding auction-rate securities,
according to Herzfeld.
Pimco,
based in Newport Beach, California, is the home of manager
Bill Gross's $130 billion Total Return Fund, the world's
biggest bond fund. On Pimco's Web site in February,
Gross called the unraveling auction-rate market Wall
Street's latest twist on "Old Maid'' -- a card
game in which players try to avoid getting stuck with
a lone queen.
"That
really annoyed me,'' Ellsweig, 41, who's based in Greensboro,
North Carolina, said in the Aug. 16 e-mail to Bloomberg.
On
Aug. 7, Ellsweig sent an e-mail to Tammie Arnold, co-
head of Pimco's product management group, stating that
"Pimco is the only major partner that has not
had one single redemption of their auction market-preferred
securities.''
Ellsweig
asked fellow Merrill brokers to send similarly worded
e-mails to Pimco, and at least 300 did, he said.
In
an Aug. 8 letter to Ellsweig, Arnold wrote that "the
best we can do is to report that we will continue to
work very hard to find a solution.''
Any
redemption has to avoid imposing "unfair costs''
on holders of common shares in the closed-end funds,
she wrote. In an e-mailed statement to Bloomberg, Pimco
said it is "looking at solutions that are consistent
with our fiduciary duty.''
BlackRock
has applied for permission from the U.S. Securities
and Exchange Commission to replace its auction-rate
preferreds with a new type of financing, Liquidity Enhanced
Adjustable Rate Securities, or Lears, Kapito wrote last
week in a letter last week to an advisory council of
Merrill financial advisers.
Kapito,
50, wrote that the firm hopes to announce "our
proposed solution and any additional redemptions within
the next 30 to 90 days.''
"Contrary
to your suggestion that BlackRock has allowed the liquidity
problem to `age,' BlackRock has been actively pursuing
potential solutions,'' Kapito wrote.
The
credit crunch remains in full swing, and it hasn't been
easy to find banks willing to provide backup financing
for the Lears, Kapito wrote.
"The
normal sources of liquidity, including broker-dealers
such as Merrill Lynch, Morgan Stanley and Lehman Brothers,
are not available to us as they are dealing with their
own well-publicized liquidity issues,'' Kapito wrote.
To
contact the reporters on this story: Bradley Keoun in
New York at bkeoun@bloomberg.net; Christopher Condon
in Boston at ccondon4@bloomberg.net.
August
15
"My
broker's firm belongs in your hall of ARPS shame.
Should I move my account?"
by
Harry Newton
Every
day I get a zillion emails and calls about moving their
account from the firm that sold them the mess to another
"clean" one. The short answer is NO.
The long answer is all the brokers and all the brokerage
firms are all the same. (I used "all" three
times deliberately.) They're all unresponsive. None
will return your emails or your voice mails.
They
don't care about you. They never have. Face the facts
If they were competent, they wouldn't need you. They'd
be rich and living on their own Carribean island. The
fact that 99% are poorer than you must tell you something.
Dah!
The
lawyers are now well and in truly in charge. They've
told everyone to "Shut up. You've done enough
damage already. Don't say anything until we have something
concrete to say. Until then, Shut Up. You want to pay
more fines? You want to be forced into using your money
for ARPS redemptions when the money could be better
used for employees bonuses and legal fees?"
If
you do move your account, you could lose some of your
redemption rights. I'm not saying you will. But... were
talking complex plea bargains here between the Attorneys-Generals
and some very large firms.
You
can bet a whole bunch of auction rate securities holders
are going to be seriously screwed. Don't cloud your
case up by getting cute. I can categorically tell you,
the grass is NOT greener on the other side.
In
short, stick with the disaster you know. Down below
I outlined one sure-fire way of getting their attention.
August
15
State
Names UBS
In Auction Complaint
By
JENNIFER LEVITZ, the Wall Street Journal
August 15, 2008; Page C2
New
Hampshire securities regulators accused a division of
UBS AG of urging a nonprofit student lender to continue
issuing auction-rate securities even though the Swiss
bank knew the market for them was on the verge of collapse.
Auction-rate
bonds are a kind of long-term debt used by many student
lenders to raise money for loans. Since the collapse
of the auction-rate market in February, a number of
lenders, including the New Hampshire Higher Education
Loan Corp., have had to suspend many college loans.
In
an administrative complaint that was filed Thursday
with the state Bureau of Securities Regulation, New
Hampshire regulators alleged that as UBS saw investor
demand for auction-rate securities drying up last fall,
it sought to unload its own inventory and developed
a fraudulent scheme to reduce its own position. The
Swiss bank denies this.
To
entice more investors, New Hampshire regulators and
student-loan officials said UBS advised the lender to
temporarily increase the monthly interest it pays --
in some cases to nearly 18% from about 3.4%.
The
New Hampshire loan corporation estimates it paid an
extra $25.5 million in interest, contributing to a liquidity
crisis that has forced the nonprofit to suspend loans
for 6,500 students. "We thought UBS was looking
out for our own interest," said Stephen Weyl, the
attorney for the loan corporation. "It's our understanding
that UBS in fact had a separate agenda, undisclosed
to us, of reducing its market exposure."
In
a statement, UBS said "we will vigorously defend
ourselves against this complaint as we believe we worked
in the best interests of our investor and issuer clients."
The
complaint highlights another alleged victim of the auction-rate
crisis: issuers of the securities. Last week, following
complaints by state and federal regulators over their
auction-rate-securities sales practices, UBS, Citigroup
Inc. and Merrill Lynch & Co. agreed to buy back
a combined $36 billion in the investments.
But
those buybacks offer relief to institutional and investor
clients, not issuers such as student lenders, who pay
the investment banks millions in annual fees for broker-dealer
services and guidance on how to structure and market
debt offerings.
"This
complaint attempts to link a single client interaction
with overall market conditions which affected all student
loan issuers," UBS said.
While
not part of the New Hampshire complaint, student-loan
officials in Vermont and Illinois said in interviews
Thursday that UBS had also persuaded them to raise interest
rates temporarily as a way to bring in more buyers.
Vermont and Illinois regulators haven't filed any related
complaints.
The
New Hampshire student lender said it still is paying
UBS $2.5 million a year in broker fees. The Vermont
lender said it is paying $3 million annually for investment-banking
fees related to auction-rate securities. "It's
hard to overstate our unhappiness with this," said
Mike Stuart, chief financial officer at the Vermont
Student Assistance Corp.
Mr.
Stuart said other investment banks, including Citigroup,
also encouraged his agency to raise interest rates.
"They were all trying to increase demand,"
he said. "It made sense to us at the time."
Citigroup
didn't directly address that claim but said in a statement
it has "worked diligently with issuers, investors,
and regulatory authority authorities to obtain liquidity
for holders of illiquid ARS."
Auction-rate
securities are designed to have short-term features.
Their interest rates reset at weekly or monthly auctions
run by financial firms.
The
auctions depend, however, on there being enough buyers
bidding on the products. During the fallout from the
credit crunch, these buyers dwindled. When the $330
billion market for auction-rate securities failed in
February, customers couldn't sell the investments, which
plunged in value.
As
auctions began to falter, UBS's own inventory of auction-rate
securities began to pile up, according to New Hampshire's
complaint. "Clearly, student loans are the problem
pushing us over inventory limits," Ross Jackman,
a UBS official wrote to colleagues Sept. 5 in an email
the complaint included.
August
14
Goldman
Balks at Helping Rich Clients
Recover From 'Auction Rate' Securities
By
LIZ RAPPAPORT, Wall Street Journal
August 14, 2008; Page C1
For
once, Wall Street isn't bending over backward for its
richest clients.
That
is causing new controversy for investment banks, which
have already committed to reimburse mom-and-pop investors,
charities, and small businesses for more than $40 billion
in illiquid "auction rate" securities. Wealthy
clients, institutions and corporations have been largely
left out of those pacts.
The
quandary is acute for Goldman Sachs Group Inc., which
caters only to the wealthy. While a string of large
Wall Street brokers announces daily settlements in the
billions, Goldman has been mum about its plans, so far
refusing to buy back clients' auction-rate paper.
Goldman
was a key player in the auction-rate markets, as the
No. 5 underwriter of the securities by dollar amount
between 2003 and 2007. The firm is regarded as a key
contributor to halting the market in February, after
it pulled out of auctions supporting the securities.
Goldman's well-heeled clients also bought up auction-rate
paper, which today has virtually no buyers save for
red-faced issuers looking to make good with their customers.
Carl
Everett, an adviser to venture-capital firm Accel Partners
and a former Dell Inc. and Intel Corp. executive, has
been a Goldman private-client group client for several
years, and has been satisfied with the firm's service
until now. Mr. Everett has investments in auction-rate
securities that became illiquid with the rest of the
market in February, some of which have been marked down
to below their face value.
"The
firm has been working with clients to address their
liquidity needs," said Goldman spokeswoman Andrea
Raphael. Regulators say Goldman could come to the negotiating
table in coming weeks. Goldman says it is cooperating
fully with regulators.
But
as recently as Friday, Goldman Sachs told Mr. Everett
that it will not buy back his auction-rate securities,
Mr. Everett said.
"That's
disappointing to me -- my expectation is for the Goldman
Sachs brand," said Mr. Everett. "My expectation
for that is they would honor their position and statement
of these securities as cash and cash equivalents."
That
has been the recent posture of many Wall Street firms
and banks, including Merrill Lynch & Co., Citigroup
Inc. and UBS AG, which after months of legal wrangling,
agreed to settle most customer claims. New York Attorney
General Andrew Cuomo, however, was keyed on the claims
of small investors. That left the wealthy, institutions,
and corporate buyers of the auction-rates out in the
cold.
"Regardless
of the settlements, the reality is the investment banks
owe equal fiduciary obligations to both retail and institutional
investors," Ron Geffner, a partner Sadis &
Goldberg LLP, and former enforcement attorney with the
Securities and Exchange Commission.
Auction-rate
securities are a type of short-term debt that gained
popularity because they offered investors slightly higher
yields than money-market funds or other fixed-income
investments. They also allowed issuers, including municipalities,
student-loan organizations, corporations and charities
to borrow for the long term, but at lower, short-term
interest rates.
The
rates reset in weekly or monthly auctions conducted
by Wall Street firms. What swelled to a $330 billion
market stopped functioning in February when Wall Street
firms stopped supporting it with their own bids.
"The
image of firms being dragged to the table is destabilizing,"
said Arthur Levitt, adviser to Carlyle Group and a former
SEC chairman. "Very few issues have shaken public
confidence in the integrity of our markets as much as
this."
August
12
Nuveeen
Conference Call
Wednesday,
August 13. 10:30 AM EST.
A replay
of the call is through August 20, 2008 on the web. Or
listen to the replay by phone -- (800) 642-1687 or (706)
645-9291, conference ID number 59334221.
August
12
This
is a heck of a lot of legal bills for Wachovia. You'd
think they'd want to settle with their customers and
save the money. Who are they in the business of pleasing
-- their lawyers or their customers? Is Wachovia the
prime sponsor of the 2008 Lawyers' Full Employment
Act? -- Harry Newton
Wachovia adds $500M
to legal reserves, boosts 2Q loss
Charlotte Business Journal
Wachovia
Corp. has recorded an additional $500 million in legal
reserves related to settlement discussions over the
sale of auction-rate securities.
According
to a company filing with the Securities and Exchange
Commission, that increase has boosted the Charlotte-based
company’s second-quarter loss to shareholders to
nearly $9.1 billion, or $4.31 per share.
On
July 22, Wachovia had reported a loss of nearly $8.9
billion, or $4.20 per share, for the period.
Wachovia
says it is discussing potential settlements with various
state regulators and the SEC related to investigations
into the underwriting, sale and subsequent auction of
auction-rate securities. The bank says it recorded a
$500 million pre-tax increase to legal reserves in the
second quarter, based on the probability of such settlement.
That brought Wachovia’s total increase in legal
reserves to $1.2 billion during the quarter.
On
Monday, New York Attorney General Andrew Cuomo expanded
his office’s investigation into the sale of auction-rate
securities to include Wachovia, JPMorgan Chase &
Co. and Morgan Stanley.
Last
week, Cuomo’s office secured agreements with UBS
AG and Citigroup Inc. that will return more than $20
billion to investors.
Auction-rate
securities are debt investments issued by municipalities,
student-loan agencies, closed-end funds and others,
with interest rates that are reset at weekly or monthly
auctions run by the investment firms.
The
$330 billion market collapsed in February when investors
became alarmed at the prospects of corporate borrowers
covering debt service on the securities.
In
a letter to Wachovia, Cuomo’s office said it would
like to “enter into immediate talks about resolving
the investigation, as that would be in the best interests
of both consumers nationwide, as well as Wachovia customers.”
The letter said any resolution would have to address
the same concerns as those in last week’s settlement.
In
related developments, Wachovia Securities has been in
discussion with Missouri Secretary of State Robin Carnahan
to reach an agreement that would address the auction-rate
securities held by Wachovia customers.
Last
month, the Missouri secretary of state’s securities
division conducted a special inspection at Wachovia
Securities’ headquarters in St. Louis concerning
its handling of auction-rate securities.
Meanwhile,
crosstown rival Bank of America Corp. and its subsidiaries
have received subpoenas and requests for information
from state and federal governmental agencies on auction-rate
securities.
BofA
faces several class-action lawsuits contending the bank
misled investors about the nature of the securities
and their market.
August
12
ARPS
Scandal: Banks Must Rebuild Investors' Trust
By
SmartMoney's James B. Stewart, the only reporter who
actually owns ARPS.
NOW
THAT NEW YORK Attorney General Andrew Cuomo and other
regulators have put a gun to their heads, the big Wall
Street firms are finally coming clean about the collapse
of the auction rate securities market.
The
truth is even uglier than I suspected, and I've been
beating the drum over this issue for months.
Auction
rate securities were sold by nearly all the big firms
as a slightly higher-yielding, but safe, alternative
to money-market funds. They proved anything but when
the auction markets froze in February, stranding thousands
of investors with more than $300 billion in illiquid
holdings. As readers of this column know, I was among
the victims. I've since heard from hundreds of others,
many of whom suffered hardships when the cash they counted
on to pay taxes, to finance home purchases and college
educations, and to meet payrolls proved inaccessible.
Wall Street's reaction, as I've reported, was to offer
to loan investors their own money — using our other
assets as collateral and charging us market rates. It
was insult on top of injury.
It's
not like we were clamoring to buy these securities for
the modest interest rate premium they offered. Like
the other victims I've heard from, I got a call out
of the blue urging me to take advantage of an offer
that was being extended to valuable clients.
My
pleas to Wall Street firms to simply do the right thing
and reimburse their clients (see my May
2008 magazine column) went unheeded. Representatives
of firms I spoke to either refused to comment or said
their balance sheets, already under strain from the
credit crisis and their own lending practices, couldn't
support such a move. They also maintained that they,
too, were victims of an unforeseeable crisis.
Now
we know that none of this was true for at least some
of the biggest firms. Thanks to a wave of subpoenas,
lawsuits or threatened lawsuits, and the prospect of
public disclosure, three of the biggest sellers of auction
rate securities agreed last week to reimburse the clients
they purported to value so highly. Citigroup led the
pack by reaching an agreement with Cuomo and the Securities
and Exchange Commission last week to stave off a lawsuit.
Merrill Lynch also under investigation, announced that
it would reimburse clients. And UBS settled a pending
lawsuit by agreeing to reimburse clients and pay a $150
million fine. Those firms said they will buy back a
total of nearly $40 billion in the securities, a sum
that, while large, can indeed be absorbed by their balance
sheets.
What's
really shocking are the allegations and evidence that
UBS and Citigroup executives knew that the auction rate
market was about to collapse even as they pressed their
brokers to push the product on unsuspecting clients.
Put more bluntly, the evidence suggests they weren't
the victims of unforeseen events — they perpetrated
them.
The
New York Attorney General's complaint (available
here) against UBS is a withering portrayal of
what Cuomo calls a "multibillion-dollar consumer
and securities fraud." At UBS, top bank executives
unloaded over $21 million of their own personal holdings
of auction rate securities as they realized the market
was in trouble, the complaint alleges. In December 2007,
UBS's trading desk manager sent an email to the global
head of municipal securities saying "The auction
product does not work." Other emails referred to
the auction rate securities as a "huge albatross"
for the firm and a "scary and delicate" situation.
Yet the firm kept peddling them to clients. Within "hours"
of learning of trouble in the auctions, one UBS executive
instructed his personal broker that "I want to
get out of arcs [auction rate certificates]," and
sold off all $250,000 of his holdings. Over 50,000 UBS
customers ended up owning more than $37 billion of the
illiquid securities, according to the complaint. Cuomo
characterized UBS's actions as a "flagrant breach
of trust."
Katrina
Byrne, a spokeswoman for UBS, responded: "We categorically
reject any claim that the firm engaged in any widespread
campaign to move auction rate securities inventory from
our own books into private client accounts." As
for the emails, she said, "We were disappointed
the New York Attorney General released details on certain
transactions when we conducted our own internal investigation
with the assistance of external counsel. We found no
evidence of unlawful conduct by any employees."
She added that "there may have been cases of poor
judgment," and said UBS is evaluating what, if
any, disciplinary actions might be appropriate.
While
an embarrassing email trail chronicles UBS's moves,
other firms may be just as culpable. "UBS is not
alone in this scheme," Cuomo maintained. Evidence
apparently shows that Citigroup executives, too, were
aware of the impending crisis, but didn't tell its customers
buying the securities.
In
response to the settlement, Citigroup issued a statement
saying "Our most important focus continues to be
on helping our clients," and added that it would
neither confirm nor deny that its officials knew about
troubles with the auctions even as it continued to sell
the securities as cash equivalents.
Merrill
Lynch won't comment on whether it continued to sell
auction rate securities after its officials knew the
market was in trouble, but an official there told me
that he hasn't heard any such allegations. Merrill remains
under investigation, and although Cuomo said he welcomes
its offer to reimburse clients, the terms fall short
of the Citigroup and UBS standards. This week Cuomo
said his probe had also been extended to include Morgan
Stanley, J.P. Morgan and Wachovia and there's no indication
it will stop there. Late Monday, Morgan Stanley announced
it would buy back $4.5 billion in ARPS — a move
that Cuomo calls "too little, too late."
In
this generally dismal picture, at least one firm, HSBC,
deserves credit for acting more proactively to protect
its clients. The firm said that because of "the
high value we place on our customer relationships,"
it offered to buy back its clients' auction rate securities
on June 20 and completed the purchases by the end of
July. HSBC said some customers didn't participate, and
the firm is "continuing to address the needs of
the few remaining customers." HSBC hasn't disclosed
the total amount involved.
Now
that the logjam has been broken, investors at firms
that haven't agreed to reimburse them need to keep the
pressure on, especially now. Competitive pressure and
the prospect of investors moving their accounts, if
not continued threats by regulators, should force them
to follow suit.
Of
course I'm glad that I and thousands of other unwitting
investors appear likely to get back our money, albeit
not for months. But that's not going to restore the
trust that's been destroyed. We need to know the unvarnished
truth. We need to know who is taking responsibility.
We need to know there has been accountability. And we
need to know how we can be sure it won't happen again.
Also
See:
Stewart: The
Troubles of Auction Rate Preferred Shares
Stewart: More
Assets Frozen at Big Banks
Get
Better Yield Without ARPS-Like Risk
August
11 -- breaking news
Morgan
Stanley says it will buy back
$4.5 billion
SAN
FRANCISCO (MarketWatch) -- Morgan Stanley said late
Monday it plans to buy back about $4.5 billion in auction-rate
securities. Earlier in the day, Morgan Stanley, J.P.
Morgan Chase & Co. and Wachovia Corp. were alerted
by New York Attorney General Andrew Cuomo that he would
probe the firms' role in the $330 billion auction-rate
securities market, which collapsed in February. Morgan
Stanley said it will buy back the securities "held
by all individuals, all charities and those small to
medium-sized businesses with accounts of $10 million
or less" at par value if they were purchased before
Feb. 13. The offer is open until Nov. 30.
August
12
Our
collective pressure is working.
But don't ease up yet -- update 5
by Harry Newton
The
Wall Street Journal calls the ARPS freeze-up "one
of the messiest Wall Street scandals in years."
And it is. The deceit (also called lying) and blatant
dishonesty is mindblowing. We learn that one part of
the brokerage firms knew the auctions were collapsing
and our securities were about to freeze. But that part
deliberately didn't tell the other part -- the brokers
who dealt with you and me and sold us our auction rate
securities. And that part also encouraged the brokers
with straight-out lies and huge commissions to
sell us auction rate securities.
Fortunately
some regulators -- Galvin of Massachusetts and Cuomo
of New York -- have chased the culprits, found them
guilty and are now in the process of working out the
plea bargains.
This
is where we need your help. You need to argue
your case. For example, did you move your account from
UBS after your ARPS froze? You should be part of the
UBS plea bargain. Do you want your money back now,
not in 2010, or next January, 2009? Are you not
a "retail investor," but rather did you buy
your ARPS for a family trust or for an IRA (or for a
401(k) plan for a sole proprietor with no employees).
Are you eligible for repurchase under the Citibank settlement?
Are there other "quirks" which the regulators
need to write into the plea bargain deals they writing?
I don't know what other concerns you have. But the plea
bargain deals are being written as you read my words.
If you have special concerns, call, email, write and
FedEx the regulators. O.K.? Do it now.
As
to the other lessons from all this:
1.
Don't trust your local broker, unless he's done
his homework. Most don't have the time. They rely on
their firm's specialist "desk" back at headquarters
in New York (or wherever). A quick one minute phone
call is the sum total of all their "research."
Accept it: No broker has the time to research the crap
he's selling you.
2.
Don't ever buy a structured product, i.e. one Wall
Street manufactured with the express intent of peddling
it to investors at huge commissions.
3.
Don't chase yield. The higher the yield, the riskier
the security. I could write a whole book on "yield
hogs." Suffice, in the old days "junk"
securities paid maybe 14%-17% -- way above treasuries.
That yield gap signaled the securities were "junk."
But auction rate securities were maybe half of one per
cent higher than other short-term places to put your
money. That didn't signal they were "junk."
But they were. Yield margins have gotten more complex.
4.
Don't confuse security and marketability. Let me
explain. Our brokers told us that our ARPS were backed
by triple A rated muni bonds. They harped on this. But
they didn't talk about "marketability." They
mumbled about regular auctions. But those auctions were
for the purpose of determining next week's yield. At
least that was the rubbish I was fed. I was never told
that if the auctions fail, I might never be able to
sell my securities.
5.
If something happens, bitch loudly. What has worked
for some: Threaten to sue your individual advisor personally,
especially if you develop some causes of action specifically
against your advisor -- letting them know that plenty
of lawyers are willing to take the case on a contingency
basis, including damages. Individual brokers
do not want their names showing up anywhere as being
sued for cause.
6.
If something happens, go public and do your own research.
I
spend a lot of time (for which I don't get paid) updating
this site. I know there are thousands of you reading
this site. I know there are thousands of you still frozen
in these things and still facing intransigent brokerage
firms. I also know that many of you have uncovered stuff.
And I know some of you have bludgeoned monies out of
brokerage firms. Frankly, it would be nice if you allowed
me to publish some of your stories.
Read
the articles below. I've highlighted some of the more
juicy parts, including the commissions paid to brokerage
firms/brokers on selling you and I our auction rate
securities.
Oh
yes. Some brokerage firms (like Wachovia and Oppenheimer)
haven't been sued by regulators, but should.
And
none of the independents issuers have been chased by
the regulators, but should. Some -- like Nuveen and
Eaton Vance -- are cashing their ARPS holders out, though
the process is slow and painful (to you and me ARPS
holders).
In
short, just because we've had some nice victories --
UBS, Merrill and Citigroup -- doesn't mean an end to
your emails, phone calls, letters and FedEx letters.
Keep them flowing. My goal is 100% of our monies back
at par.
Send
me emails telling me of your bad experiences with brokerage
firms or issuers. This web site is being read by a lot
people.
August
9, Front page Wall Street Journal
UBS
to Pay $19 Billion
As Auction Mess
Hits Wall Street
By LIZ RAPPAPORT and RANDALL SMITH
A
once-obscure corner of the bond market is triggering
one of the messiest Wall Street scandals in years --
and potentially the largest mass bailout of American
individual investors ever.
On
Friday, facing allegations of wrongdoing over its sales
of so-called auction-rate securities, UBS AG agreed
to buy back from investors nearly $19 billion of the
investments as part of a settlement with federal and
a group of state regulators. It will start buying from
individuals and charities in October and from institutional
clients in mid-2010.
UBS
was the third major firm this week to vow to buy back
the securities, which allegedly were improperly sold
as higher-rate equivalents for super-safe money-market
funds.
UBS,
Merrill Lynch & Co. and Citigroup Inc. have committed
to taking back a total of more than $36 billion of the
instruments. Other financial firms are expected to follow
suit.
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