Auction Rate Securities Fraud Attorney

ARS Buybacks Exclude Certain Holders

While the efforts of New York State Attorney General Andrew Cuomo have helped many auction-rate securities investors recover some of their losses, not all holders will be helped by the large-scale buybacks of auction-rate securities from big-name investment banks.

Cuomo has made a valiant effort to ensure that investment banks repay their investors for the failure of the market that caused auction-rate securities to become illiquid. During early August, Cuomo was successful in reaching agreements with JPMorgan Chase & Co., Citigroup Inc., Morgan Stanley, UBS AG, and Wachovia Corp. to buy back $42 billion of the failed auction-rate securities that they sold to investors.

Unfortunately, these agreements do not help investors who hold the $160 billion bought through mutual fund firms or brokers that did not underwrite the debt. Cuomo acknowledged the oversight and commented that “the industry is now taking responsibility for correcting a problem they helped create, and we’ll work to continue to make all investors whole.” Cuomo continues to investigate and negotiate with investment banks and is hopeful that the return of billions of dollars to investors will “inject confidence into the entire market.”

For the moment, the investigations have focused on investment banks that were the biggest underwriters of the debt. Cuomo has been joined by the U.S. Securities and Exchange Commission and other state officials in the investigation of these investment banks. He notes that he will focus his efforts on the big-name investment banks first, but will eventually work to take action against the smaller firms as well.

Smaller mutual fund companies and brokers argue that they were also misled by the Wall Street banks. They claim that they were unaware of the likely failure of the market and should not be forced to buy back failed auction-rate securities in the way that the larger investment banks were.

If you have faced financial hardships due to the failure of auction-rate securities, contact the auction-rate securities attorneys of Williams Kherkher by calling 800-220-9341.