Wachovia Auction Rate Securities

Wachovia Corporation is named after the area of North Carolina where the company first got started in the late nineteenth century. Since 2001 the company has grown at an impressive rate, acquiring several smaller businesses. Today, Wachovia is one of the largest providers of financial services in the United States. The corporation is divided into four departments: General Bank, Wealth Management, Capital Management, and Corporate and Investment Banking.

This bank has been involved in two major controversies within the last two years. In May 2007, Wachovia was accused of negligence in overseeing their customers’ safety. Illegal companies were using stolen identification to write checks from people’s accounts without their knowledge. The Philadelphia US attorney claimed that the bank received many warnings about these checks, but chose to ignore them in the interests of profit. Wachovia settled out of court in April 2008.

Wachovia and Auction Rate Securities Fraud

On March 19, 2008, investors who had purchased auction rate securities (ARS) filed a class action lawsuit against Wachovia Corporation and Wachovia Securities LLC. The plaintiffs claim that the corporation deliberately misled them about the nature of auction rate securities and the current market. Knowing that the auction rate securities market was heading for disaster, the lawsuit says, Wachovia sought to unload their shares on unsuspecting clients.

Along with other broker-dealers, they manipulated the market to make auction rate securities falsely appear liquid. They assured their clients that the investment was a safe cash alternative, knowing this was not the case. Eventually, in February 2008, major broker-dealers pulled out of the auction rate securities market, refusing to provide bids of last resort and triggering a chain of auction failures which locked up the entire market.

Wachovia spokespeople maintain that the bank had no foresight of the collapse.

If you have lost money to a dishonest bank or broker, you may be able to recoup some of your losses. For more information, contact a Wachovia ARS lawyer at (800) 220-9341.