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Another Oppenheimer ARS Investor Unloads on New York AG Cuomo

Posted by Larry Doyle on March 8, 2010 8:12 AM |

Investors defrauded in the distribution of auction-rate securities deserve a voice. Sense on Cents is happy to provide it. Aside from feeling screwed by Wall Street banks and money managers in the distribution of auction-rate securities as a cash surrogate, investors now feel increasingly incensed by the lack of support in the judicial system and in selected attorneys general offices in our country.

The latest AG to feel the wrath of ARS investors is New York AG Andrew Cuomo for his recent settlement with Oppenheimer Holdings. Rather than reading my opinion of Cuomo’s settlement, let’s listen to an investor (who remains nameless for obvious reasons). In my opinion, this individual’s letter speaks volumes and echoes the sentiments of thousands of investors who continue to hold the $150 BILLION in frozen ARS.

Wall Street, Washington, state AGs, and to a very large extent the media have done these investors an enormous disservice in not addressing and rectifying the fraud involved in the distribution of ARS. The investor writes:

Cuomo sold us out. As an Oppenheimer ARS victim and a New Yorker and someone who was manipulated out of more than a million dollars by Oppenheimer I was thrown under the bus. First we had too big to fail now we have too small to regulate.

Can anyone in the financial sector be found guilty of anything? What other industry allows criminals, when they get caught, to give back what they took, only if they have the money, over a very long period of time, possibly pay an insignificant fine, and neither admit nor deny any wrong doing? They get to go back to their companies as if nothing ever happened. They are free to dream up the next product they can scam us with. Knowing that the cycle will just repeat itself. If Madoff didn’t basically give himself up he would still be out there pillaging and plundering investors. What chance does the average investor have out there?

The part that really sticks in my gut is this. Right before the ARS market crashed the CEO and other top executives, knowing the market was going to crash and keeping this info to themselves, were selling their own ARS. They were using their brokers to dump their own personal ARS on me, using the guise of “cash equivalent” until the very end. They got most of their money out, because they had inside information, and have full use of their money today while our money will be stuck for decades. By the summer this will all be forgotten by everyone except the victims. I can picture Lowenthal (Oppenheimer CEO) at his country club having a good laugh about this. After all, the hardest part of this settlement for Oppenheimer is to figure out how to prove to Cuomo every 6 months they have no extra money. Hardly a chore in this business environment and with their particular skills.

Some more food for thought. For the past 2 years Oppenheimer has been collecting fees daily for the auctions that still go off and fail. That’s fees on $960 million. In reality, the Cuomo settlement is costing Oppenheimer little or nothing of their own money. If you subtract the fees they collect from the amount they owe it’s close to a wash. Every AG across the country that got an ARS settlement settled for full redemption for the people of their state.

Cuomo is the only AG that got a settlement that favored the company that misrepresented the sale of ARS and did as close to nothing as you can get for the people of his state.

Remember, it’s their money. They deserve it back. They should be first in line. Fraud is fraud. Theft is theft. America is supposed to be better than this.


Related Sense on Cents Commentary

Oppenheimer ARS Investor Rails on NY AG Cuomo re: OPCO-ARS Settlement (March 3, 2010)

  • phil trupp

    As many of your readers know, especially those who are ARS victims, I have written a book on this very subject. The manuscript is complete except for a preface–and this for good reason. In the book, RUTHLESS, I hope to name each and every holdout firm before the work is released this fall. There will be plenty of public exposure. Unlike many of those who have written to “Cents on Sense” anonymously to protect themselves, I no longer have anything to fear from the kind of retribution banks and brokerages exercise against those who accuse them of fraud. As a writer, I find these threats to be especially loathsome. But then Wall Street and its clones have given loathsome a whole new meaning. The threat is: TALK AND YOU MAY NEVER SEE YOUR ARS MONEY AGAIN. How is this different from the ruthlessness totalitarian regimes use against dissidents? Ah, but this is America, we say. We play by First Amendment rules. Yes, we do, except when it comes to the Rule of Big Money. In that sordid world thieves punish the innocent if they dare speak out and sign their complaints. Wall Street acts the role of mugger, mobster, and hit man. These are a few of the points I wish to take up in the yet-to-be-written preface. As a former ARS victim, I am whole, thanks to Andrew Cuomo. Which leads me to wonder why an AG who was so active in the past is now so reluctant to come down hard on Oppenheimer and other ARS holdouts. Are Mr. Cuomo’s political ambitions scrawled on some Wall Street contributor’s hit list? All those who have been touched by the ongoing auction rate fraud may have their own suspicions and answers. I have heard many of them. In the end, it is up to Mr. Cuomo to come clean, to do the right thing, and to make ARS victims whole. And while he’s at it, he might investigate the unwritten “code of silence” that the so-called financial-service pirates use as a shield and a threat against those they plunder.

    • LD

      Everybody who reads this commentary and has an interest in the ARS debacle should be well aware that Phil Trupp was banging this drum long, loud, and consistently before everybody else (at least as far as I know).

      Phil’s lone voice in the woods does deserve to be properly recognized and championed.

      We should all welcome Phil’s work and look forward to the release of Ruthless later this year.

    • john w

      Thanks so much again. I have emailed you personally as well.

      Please be sure to include E*Trade in your preface as worthy of the Olympic Fraud medal either gold/silver/bronze. To this very date they haven’t responded to its victims as to what they indend to do about redemption. They to this day, say “no comment, and not our problem.” Even though they SOLICITED hundreds of trades.

      IMO Schwab, E*trade, Oppenheimer are all in running for a place on the Podium.

      Wall Street Gold, (plated with zinc underneath.)

  • jim

    Thank you on behalf of all of us who are victims of the ARS fraud. I hope your book is a huge bestseller. Perhaps it will finally open this up to the national scrutiny it so desperately needs and what FINRA’s role actually was.

    All ARS victims need to be made whole as this has gone on long enough. Please be sure to include Raymond James in your preface also, as they are another stubborn holdout. Good luck!

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