Comments on: Will Ignorance Defense Continue to Screw Auction-Rate Securities Investors?

By: Larry Doyle

Larry Doyle — Sat, 19 Dec 2009 18:11:24 +0000

Having spoken with dozens and dozens of ARS investors, the one common theme is that the security was ALWAYS marketed as cash, cash-like, or a cash surrogate.

In regard to mortgage securitizations,perhaps you can refresh my memory as to when we met so we can review the particulars of my career. If you care to critique my thoughts and opinions on mortgage securitizations or any other aspect of the market, come on over to Sense on Cents. Read away and comment frequently. All opinions always welcome. Including cheap rants from readers.

By: Kathy

Kathy — Sat, 19 Dec 2009 17:56:01 +0000

Tramposo, you are the one who is ignorant about the facts of auction rate securities. ARS were sold to small investors specifically for their LACK of risk. Marketing materials trumpeted that ARS were for the extremely conversative, risk-averse investor. ARS appeared on statements as “cash alternatives” or “money markets”, and they were in all cases sold as being “as good as cash.” The fact that these investments were long-term or perpetual bonds was never disclosed.

These firms DID NOT ACT WITHIN THE RULES. They misrepresented the nature of the investment. That fraud was committed is evident in the fact that, by the end of 2007, top executives were selling their own holdings after inside communication that the end was near, while increasing the commission to their brokers for pushing this rotten investment out the door onto unsuspecting small investors.

So get your facts straight.

By: Tramposo

Tramposo — Fri, 18 Dec 2009 15:06:02 +0000

What an ignorant, cheap rant. You write under the presumption that these firms marketed ARS as cash, which has not been proven. In fact, plaintiffs are down to trying to find any internal e-mail that might be perceived as supporting that claim after having found no marketing pieces. Rather, investors simply went on the notion that because ARS had always been liquid, it made sense that it would be that way in the future. Also, investing involves RISK!!! Illiquidity is one of those risks. There are no guarantees when you seek to make money off of someone else’s entrepreneurship. Period. I agree that FINRA’s disclose-away-the-liability approach is deeply flawed, and this episode provides plenty of evidence. But to chastise firms who operated within the rules, regardless of what you think about those rules, is to make cheap points at the expense of those who made you what you are today. Look around, people aren’t too enamored with the “professionals” behind mortgage securitization these days, either.

By: Jenny Johnson

Jenny Johnson — Fri, 18 Dec 2009 14:49:19 +0000

It’s amazing that the criminals out there like Raymond James and Oppenheimer can for this long get away with screwing their customers this badly. How can theyre management allow this to happen? Don’t they care that the customers got KILLED by this stupid investment?