Auction Rate Securities Litigation



A significant amount of the firm's civil litigation practice over the last several years has involved representing clients in business and securities disputes. Most of these disputes have been prosecuted on behalf of small businesses and investors which have been victimized by larger companies' predatory conduct. Our firm has prosecuted cases involving disputes among shareholders, oppression of the rights of minority shareholders, accounting malpractice, lender liability, abusive tax shelters, banking and securities liability, and antitrust misconduct. We are also now pursuing claims against against banks, brokerage and accounting firms, and promoters for the liability associated with auction rate securities.

Auction rate securities are typically bonds that have a periodically adjusting interest rate. Banks and brokerage firms have packaged and sold the market rate security as if they were as liquid as cash. Regulators have determined however, that the securities were not liquid securities. In fact, when the securities could not be sold on the open market after the interest rate had changed unfavorably, investors were stuck with securities they could not sell.

Recent news outlets have reported that Wachovia Bank, Citigroup, Inc., UBS, JPMorgan Chase & Co., Morgan Stanley, and Merrill Lynch & co., have agreed to settle with their investors and buy back outstanding auction rate securities. Bank of America is reported to be considering similar actions. To date, tens of billions of dollars of auction rate securities have been committed to be repurchased.

Although some banks and brokerage firms have agreed to buy back limited numbers of the securities because of the misleading information provided to their investors, the price of the securities are often not the limit of damages.  Many investors suffered related monetary losses because the securities could not be sold. Additionally, not all banks and brokerage firms are agreeing to buy back all of their outstanding securities. We are pursuing these claims for investors.

At least one bank has agreed to arbitrate losses for their investors. Other banks and brokerage firms may not be as willing to settle the consequential monetary losses suffered by their investors. We are pursuing related and consequential losses for investors and those that have not been slotted into a buyback program. We have learned that both private and institutional investors have suffered significant monetary losses.

If you have suffered any loss as a result of market rate securities we may be able to assist you in recouping those losses. Please contact us to discuss your specific situation.