FINRA Rolls Out New Arbitration Process for Auction-Rate Securities Claims

The Financial Industry Regulatory Authority says it has set up an arbitration process designed to resolve claims involving auction-rate securities. Parties now have the option to have their claims reviewed by an arbitration panel with members that are not connected with any firm that may have recently sold the securities.

FINRA says the process was developed following the system it set up for Citigroup’s settlement with the Securities and Exchange Commission. Earlier this month, Citigroup Inc. reached an agreement with state and federal regulators to redeem $7.3 million in illiquid auction rate securities that retail investors had purchased, as well as pay $100 million in fines. The agreement was to settle charges over misconduct related to sales practices.

FINRA Dispute Resolution President Linda Fienberg says it is only fair that all investors with auction-rate securities claims be given the opportunity to resolve their disputes in the same way. She said that FINRA would work hard to put the process in place so that claims wouldn’t be delayed unnecessarily. Persons that since January 1, 2005 have sold auction-rate securities, worked for a company that sold the securities, or supervised the selling of the securities cannot be on the panels.

FINRA Creates Process for Arbitrations Involving Auction Rate Securities, Marketwatch.com, August 7, 2008
Citigroup Returning $7 Billion To Auction-Rate Securities Investors, Courant.com, August 8, 2008
FINRA

Over 170 auction securities-related claims have been filed with FINRA’s dispute resolution forum. Throughout the United States, our stockbroker fraud lawyers have helped thousands of clients recoup their investment losses through arbitration or in court. Contact Shepherd Smith Edwards & Kantas LTD LLP today.

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