Thanks for sharing your story. Regrettably, your story is much like many other ARS investors who were not only screwed by the brokers but certainly not protected by the regulators, primarily FINRA.

This debacle has miles to go and I can only hope that all the details of FINRA’s ownership and liquidation of its own ARS position come out.

You, every other ARS investor, and the American public deserve nothing less.

I am glad you found Sense on Cents. You should be able to track many developments in ARS here and certainly please keep us apprised with news that you see and hear on this biggest of all Wall Street frauds.

My wife and I were sold ARS by H&R Block Financial in August 2007 by a broker who knew we were setting on cash to build a retirement home. He knew this because we had turned down his pitch to become caretaker of out retirement savings and IRAs a few months earlier while he was at Smith Barney. I told him construction was at least six months away and I was looking for some short-term CDs to safely put the money. He told me about these 7, 14 and 28 day auction rate securities that were just like CDs — at the end of the term, you decide whether to keep them for another term or take them out. Many other untrue answers to my questions about them that I will not go into here, such as “why haven’t I heard of them?”, “who buys them?”, and more.

Of course we know what happened when we went to get our money in early March 2008. A FINRA arbitration was filed in May 2008, one of the earliest and before the ARS “special” procedures. The hearing was finally scheduled for October, but H&R Block Financial failed to provide all of the documents we asked for in disclosure. By the way, we provided documents about subjects totally unrelated that would stack a few feet high if they would not have accepted them electronically. We manged to get them to withdraw their request for all of our credit cards bills for the past several years!

Of course, this required a postponement! We are now scheduled for a hearing in April 2010, near two full years after filing. Does this sound like the way FINRA should operate? What is everyone involved with this claim doing right know? Working on ways to convince the panel that all of these settlements against firms selling this trash could not possibly be related to them? That they were the one firm in the country that “did it right”? Baloney!

If you search for claim results prior to 2008 that contain the word AUCTION, you will find zero. If you look for claims after the ARS freeze date up to know, you will find about 10, most every claim denied, or nearly denied. FINRA claims they have a “flood” of ARS claims. Where the hell are they? What chance do people who were told these were like cash or CDs have of getting a common-sense judgement from a FINRA panel?

One more thing. When it came time to pick the panel members, I went to an attorney friend who who has sat on more FINRA arbitration hearings that almost anyone else (according to him). He recognized most of the names and had been on panels with them. He was very helpful — I think. But, and this is the big surprise, when he asked me what the claim was about and I told him, he said he had never heard of auction rate securities! This guy is a securities attorney who is near retirement age, well-respected by his peers, and he has never heard of auction rate securities.

Is it any wonder we are screwed?

http://executivesuite.blogs.nytimes.com/2009/08/14/a-tale-of-two-judges/#comment-52333

http://speculativedebauch.blogspot.com/2009/08/i-smell-bacon.html

Judge Jed Rakoff = former partner at the same firm (?)(I have yet to confirm this, but seen a reference that he was “removed” as a partner at Fried Frank, circumstances unknown)

BTW – New Weil article out today on bloomberg

Great link. Thanks for sharing it.

Unless and until we open the books and records we will not fully understand what has happened at FINRA and for that matter the SEC.

Ignorance and inexperience is never an acceptable excuse.

“Pitt said the SEC isn’t properly staffed to ferret out fraud. “You can’t take young people, two, three, four years out of college, pay them $50,000, $60,000, $70,000, and expect them to have the sophistication to assess a $20 billion hedge fund,” he said. Later, he said there is “a lack of real sophistication” at the SEC. “I can say this as a lapsed lawyer…the SEC is overlawyered in the sense that it’s heavily dependent on lawyers. There aren’t enough economists, there aren’t enough MBAs, there aren’t enough market specialists in the agency providing the kind of additional sophistication” that the SEC needs. ”

Pitts logic therefore is: Transparency is good; however, regulation by unsophisticated, overworked, ill equipped wannabe-regulators is sufficient, while still offering the protection of “private material”.

So Mr. Joe Sixpack, when all the money is on the table, what would you prefer? Transparency? Regulation? or Transparency AND Regulation?

I am working to get this video clip spread as far and wide as possible in hopes that the transparency may bring the truth along with it.

Thanks for your comments….they are deeply appreciated.

If FINRA has a conflict of interest inherited from NASD, doesn’t Harvey Pitt also have a conflict of interest as well?

In the video, it is very apparent that Pitt makes obvious attempts to either miss the point or to just flat ignore it. And his closing statement was complete BS …. something akin to “I agree we need more transparency as long as some information remains private while he are secure in the knowledge that someone is keeping an eye on things in a regulatory fashion.” Yeah Harvey, all well and good as long as that someone is not the SEC!

Another thing that struck me, which seemed to have eluded Harvey … if the SEC is the FINRA watchdog, and if the SEC wasn’t smart enough to poor piss out of a boot in regards to discovering the greatest ponzi scheme of all time, why would the SEC then come down on FINRA for being (possibly) guilty of shortcomings remarkably similar to their own? It would seem to me (and yes, I can pour piss out of a boot just marginally) that the SEC would have an obvious interest in obfuscating the investment practices of FINRA.