Broker-dealer Raymond James has agreed to buy back $300 million in auction-rate
securities and to pay a $1.7 million fine as part of a settlement with
the SEC and eight states: Florida, Texas, Indiana, Missouri, New York,
North Carolina, Pennsylvania, and South Carolina ("Raymond James
to Pony Up $300M to Buy Back ARS,"
InvestmentNews, June 29, 2011).
This settlement is only one of many that have been reached over the past
few years. Investigations into the auction-rate securities market and
the methods of the securities' major underwriters have been underway
since February of 2008 when the $330 billion auction-rate securities market
crashed. (For more information about the crash, click here.)
Dispute documents state that Raymond James' financial advisers and
registered representatives sold auction-rate securities as "highly
liquid" "cash equivalents," according to theInvestmentNews article. Unfortunately for investors who purchased the securities, that
liquidity was an illusion. In fact, approximately $130 billion worth of
investor money remains stuck in the frozen market even today. (For more
information, click here.)
Under the terms of the settlement agreement, Raymond James has 30 days
to extend an offer to repurchase the $300 million in auction-rate securities.