There is some good new to report. Nearly one year since the auction-rate securities market collapsed and some $330 billion in what was supposed to be liquid, cash-like investments in government bonds became frozen, some $200 billion auction-rate securities are now unfrozen thanks to the efforts of Massachusetts and New York securities regulators. However, there is still a lot more work to be done.
About $135 billion in ARS remain frozen. For many individual investors, the possibility that they will recover these funds is limited. A number of non-profit groups and companies are also unable to access their frozen funds.
For example, Vicor’s $30 million in ARS are tied up until 2010, while Five Star Quality Care has $75 million in frozen ARS. Issuers and regulators have to find a way to retrieve these frozen ARS for investors so they can get their funds back.
The ARS debacle is much bigger than Bernie Madoff’s $50 billion Ponzi scam, which has been dominating the headlines. On BloggingStocks.com, Peter Cohen said that he believes the reason the Madoff scheme has gotten more media attention than the ARS collapse is because Madoff’s victims are high profile celebrities, such as Steven Spielberg and Kevin Bacon.
ARS Market Collapse
UBS, Bank of America, Merrill Lynch, Wachovia, and other large investment firms were accused of knowingly misleading investors into believing that auction-rate securities were “safe,” liquid like cash investments. When the ARS market dropped, these same investors became victims of the market collapse and could longer access these funds.
Related Web Resources:
$135b still frozen by an early ’08 debacle, Boston.com, December 31, 2008
Auction Rate Securities: $200 billion unfrozen, $135 billion to go, BloggingStock.com, December 31, 2008
Our stockbroker fraud lawyers are working with many investors to recover their frozen auction-rate securities. Contact Shepherd Smith Edwards & Kantas LTD LLP to discuss your case.