JPMorgan Chase & Co. is offering to repurchase $480 million in auction-rate securities from investors in Michigan. The full buybacks are for investors who bought ARS between 2006 and early 2008. JPMorgan’s offer is part of a settlement that it reached with the Michigan Office of Financial and Insurance Regulation.
The broker-dealer is also paying the state of Michigan $664,000 to settle allegations that it misled clients into thinking that the ARS they were buying were liquid like cash. 90% of the settlement went to the state’s general fund, while 10% was deposited in the OFIR’s Michigan Investor Protection Trust.
OFIR also reached similar agreements with Citigroup, Banc of America Securities, Merrill Lynch, Comerica, and Wachovia. The state of Michigan has negotiated over $3.5 billion in payments for investors and received over $6.5 million.
Many investors were caught off guard when their ARS accounts froze after the market collapsed. Many broker-dealers were accused of misleading clients and making it seem as if auction-rate securities were as liquid as cash.
Michigan is not the first state that JPMorgan Chase & Co. has settled with over allegations that it misled clients about ARS. In August 2008, JP Morgan Chase, along with Morgan Stanley, agreed to give back more than $7 billion to ARS investors as part of the settlement they reached with New York State Attorney General Andrew M. Cuomo.
Related Web Resources:
OFIR Announces $480 Million Auction Rate Securities Settlement with JPMorgan Chase, MichNews.org, October 8, 2009
Cuomo Settles JP Morgan, Morgan Stanley ARS Claims, CFO, August 14, 2008
Michigan Office of Financial and Insurance Regulation
Our securities fraud lawyers are representing numerous clients with ARS claims against their broker-dealers. We are committed to helping our clients get back what they lost because investment banks had misled them about auction-rate securities.