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  • Attorneys David Meyer and Matthew Wilson have been selected to the list of Super Lawyers since 2011 and 2015 respectively.

  • Attorney David Meyer is a member of the Million Dollar Advocates Forum, an organization recognizing attorneys who have secured million dollar cases.

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  • Attorney David Meyer was selected as the 2015 Lawyer of the Year for Professional Malpractice Law – Plaintiffs for Columbus, OH by Best Lawyers®.

  • Meyer Wilson was ranked as a Tier 1 Best Law Firm for both Mass Tort Litigation / Class Actions – Plaintiffs and Professional Malpractice Law – Plaintiffs by U.S. News.

  • Attorney David Meyerhas been selected to the list of the Best Lawyers in America® for Mass Tort Litigation / Class Actions – Plaintiffs and Professional Malpractice Law – Plaintiffs every year since 2011.

Auction Rate Securities (ARS)

ARS Investment Risks & Help for Investors

Did you invest in auction rate securities (ARS)? No investment is guaranteed, but particularly with ARSs, auctions can fail and cause investors to lose money. According to the Financial Industry Regulatory Authority (FINRA), auction rate securities are "long-term investments that have a short term twist." That short-term twist FINRA refers to is periodically resetting interest rates. From every 7 to 35 days through the auction, the interest rates on ARSs change.

If you invested with an ARS hoping to secure cash relatively quickly, but lost money on your investment, you may be able to take legal action. Investors who were wrongfully advised by their stockbrokers or misled by a brokerage firm can contact Meyer Wilson to discuss their case.

ARS Liquidity Issues

Auction rate securities become illiquid when supply exceeds demand. "Supply" refers to securities offered while "demand" refers to bids for those securities. If an auction fails, an investor cannot get rid of their securities, and when this happens, they usually get stuck with higher interest rates.

In some cases, ARS issuers offer a way out for the investor in the event that the auction fails. You may be able to continue to hold your securities, borrow on margin, liquidate your other investments, and more. If your broker failed to properly advise you on an auction rate security and you lost money, you may be able to recover your losses with the help of our firm.

Regulators Focus on Auction-Rate Securities

Prior to the recent financial crisis, auction-rate securities were often perceived by investors to be as safe and as liquid as cash. In February of 2008, however, that impression was shattered when the $330 billion U.S. auction-rate securities market collapsed.

The collapse came primarily as a result of a destabilized credit market. Auction-rate securities are long-term bonds, issued by corporations and other entities, with interest rates tied to the short-term market. The interest rates are determined during auctions held at 7, 28 or 35-day intervals.

Early into the crisis, there weren't enough bidders to reset the interest rates at auction and so the auctions failed. Investors were then forced to retain their securities until conditions normalized. In some cases, this forced retention meant that investors had to pay as much as 20%.

Since 2000, the major underwriters of auction-rate securities have included:

  • Citigroup
  • UBS
  • Goldman Sachs
  • RBC
  • Morgan Stanley
  • Lehman Brothers
  • JPMorgan
  • Wachovia
  • Merrill Lynch
  • Bank of America

Over the past two years, regulators (including the enforcement arm of the Commonwealth of Massachusetts and the N.Y. Attorney General) have begun focusing on the securities, primarily out of concern that broker-dealers and other sales agents failed to properly disclose the risks.

Get the Help That You Need Now

To learn more about ARS investments, visit FINRA's page on Auction Rate Securities: What Happens When Auctions Fail. We also encourage you to contact an investment loss lawyer at Meyer Wilson. David P. Meyer was voted "Lawyer of the Year" in his region for professional negligence. He and his firm have what it takes to fight to recover your losses.

Call us today at (888) 390-6491 for your initial consult!

Need More Information?

Investment misconduct can be complex and confusing. That’s why we’re here to help you. Visit our Common Questions page to find in depth answers directly from our attorneys. Get More Answers
Have You Been a Victim of Investment Fraud?

You trusted your financial advisor with your money, but now you're left wondering what went wrong. If you or a loved one suffered losses because of investment misconduct, Meyer Wilson can step in and fight to recover your losses. The team of investment fraud lawyers at the firm has been helping people like you since 1999 by winning judgments, settlements and verdicts worth hundreds of millions of dollars against brokerage firms, financial advisors and banks.

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