Options for Investors Stuck in the Still-Frozen Auction Rate Securities Market

Approximately $130 billion of investor money remains stranded in the still-frozen auction-rate securities market, according to a recentWall Street Journal article. In 2008, Wall Street dealers stopped purchasing the securities at auction. Now, numerous investors are left holding illiquid assets that their brokers had pushed as high-yielding, safe alternatives to cash.

While many banks and brokerage firms have been required as part of settlements with regulators to repurchase billions of dollars in the securities from investors, some investors have been left out. For those investors, the WSJ details four options:

• Bring an arbitration claim against the broker-dealer who sold the securities, if the broker-dealer belongs to FINRA;

• Pursue a claim in court against the bank or non-FINRA broker-dealer who sold the securities;

• Sell the securities for between 70 and 90 cents on the dollar in the secondary market; or

• Wait.

As reported by the article, it is possible that issuers may be able to refinance the majority of the securities in the next two or three years. But, there are no guarantees. Those investors who can afford to wait and see what happens may be pleasantly surprised. For those who cannot afford to wait, pursuing a claim for losses - whether in arbitration or in court - or selling in the secondary market, may be the answer.
For assistance on which option may be right for you, contact the law firm of Meyer Wilson now. Our attorneys have over 50 years of combined legal experience and have achieved jury awards, arbitration awards and settlements with a combined value of hundreds of millions of dollars on behalf of our clients. Contact us toll-free at 1.866.827.6537 for more information.

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