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Calling All Auction-Rate Securities Holders

Posted by Larry Doyle on November 15, 2010 7:15 AM |

Information is everything!!

A nation of laws will prosper if and only if the adjudication of disputes is handled in a truly robust fashion. This adjudication process should theoretically lead to the drafting and implementation of new legislation if and when necessary. While industry insiders will often lobby to influence this process both in the courts and in our legislative bodies, America needs real statesmen and true heroes who will champion worthy causes and pursue total truth, real transparency, and unbridled integrity.

The media can play a large role in highlighting and exposing injustices if it cares to perform its duties. Regrettably during our economic crisis of the last few years, the media has often largely shown itself to be as much part of the problem as part of the solution. Why do I write on this topic today? For the very simple reason that tens of thousands of our fellow Americans have largely been disowned and disenfranchised by our nation. Really? Unaccustomed hyperbole, LD? I think not. Let’s navigate further.

I have been an ardent supporter of all those in our nation today who continue to be stuck holding auction-rate securities. These people number in the many tens of thousands and their holdings run upwards of $140 BILLION. Ponder that for a second. How is it that with numbers of this magnitude, the hue and cry of the accompanying injustice is not ringing loudly across our nation. It should.

I firmly believe these individuals have been done an enormous disservice by the financial industry, the financial regulatory system, most state attorneys general, most state securities regulators, the courts, and the media. On that note, I welcome continuing to bang the drum on their behalf. Is the drum being heard? Indeed it is. How so? I welcome sharing with my readers that PBS will broadcast a special show on this auction-rate securities fiasco in early 2011. I have already shared a wealth of information on the ARS travesty with the producers of this show. Anything else more specific? Yes indeed. Let’s continue.

If in fact information is everything—and it is—, I am happy to share information of a specific ARS case currently developing in the state of Colorado. If even one ARS holder benefits from this information, then this commentary will have served its purpose. I recently received the following message from an informed source.

I want to tell you how to get the “detailed” transcript from the Office of Admin Courts in Colorado to obtain the entire file on State of Colorado vs E*Trade. ¬†There is no charge.

The case number to reference is XY-2010-001 filed on or about 07/21/2010

DPA Dept of Personnel & Admin.
Office of Administrative Courts
633 17th St. Suite 1300
Denver CO 80202

Fax 303-866-5909
Phn: 303-866-2000

The statutes to reference are}

IF THEY FAIL TO COMPLY REFERENCE SS24-72-204(4) which provides for fines & penalties of $100 and 90 days in jail if a Records Clerk does NOT comply.

The struggle is so hard because the virtues and cause are so great.

Truth, transparency, and integrity are the foundation to real ‘sense on cents’.

Keep punchin’….!!!

Comments, questions, constructive criticisms always encouraged and appreciated.

Larry Doyle

Please subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook.

I have no affiliation or business interest with any entity referenced in this commentary. As President of Greenwich Investment Management, an SEC regulated privately held registered investment adviser, I am merely a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

  • Bill

    As has been noted, the reason the financial media is so mum on this is because their largest advertisers have been and are guilty of the activity in question. I’ve previously detailed how the WSJ ceased writing on the subject when TD Ameritrade started running full pages ads in the Journal and actually spun the story of the TDA’s settlement over ARS to portray TDA as some sort of heroic enterprise rather than what it actually is.

    • Hotel California


      As much as all the brokers mentioned here are basic “criminals”, some greater or lessor than others.

      TD Ameritrade basically did it ( redeemed ARPS ) holders since they are owned by Toronto Dominion, a Canadian company.
      It is my understanding the Canadian regulators ordered any US affiliated broker in Canada to redeem all ARPS.. in July 2008 ! Or they would be booted out of Canada.

      It would appear the Canadian parent company strongly recommended that TD Ameritrade ( US div. ) do the same thing and ethically correct thing.) So I will give TD a modicum of slack, albeit if they could have avoided would have I am sure. Too bad US Regulators don’t have the same juevos.. just difference in laws I suppose. In favor of the customer/consumer, instead of big business.

      Canada hasn’t been fully contaminated by the crooks on Wall Street and fat cats in USA, they just seem to have more ethics and a sense of right & wrong up in the Great White North. Kudos to them! They ordered redemptions and all licensed brokers there had to comply or get revoked.

      Maybe it is a coincidence but in late 2008 E*Trade had ” to sell ” their E*Trade Canada Ltd. division, hummmmmm, goota wonder though.

      Didn’t Oppenheimer basically sever all ties with Canada and “flee” to the protective custody of impotent US Regulators and “sancutary” in the US a few years ago, sort of like the illegal Mexicans coming up here. (OT)

      TD or Scottrade are the only brokers I would do business with, still keep one eye on them.
      E*Trade Schwab & Oppenheimer make TD Ameritrade look like Mother Theresa.

      • Floyd

        Nope, Oppenheimer just moved here last year AFTER auction rates collapsed. So that’s even worse. They ran here allegedly to qualify for tARP. Then, about 2 weeks after moving, said, “Too bad. We don’t qualify.” The real reason was to flee Canada’s laws.

        Oppenheimer & Co. is run by criminals.

  • Mike Barry

    By far the worst of the firms who have not redeemed is Oppenheimer & Co. We have beent reated like complete scum. My former broker evan manufactured a fraudulent emai in which he allegedly *warned* me the stuff was dangerous — one problem – I never got it. It was a fake.

    Oppenheimer convinced N.Y. regs they couldn’t afford to redeem much. Since then, they’ve been spending millions on new hires, opening new offices, etc. They are criminals and must be brought to justice.

  • Jimmy Williams

    Agreed that Oppenheimer is the worst. I tell everyone I meet to never invest with them, as they are either going broke and so can’t afford to redeem, or are doing well and are liars for saying that they can’t afford to redeem. Why would anyone ever invest with them, instead of with someone who took care of their clients?

  • Floyd

    I know a lot of people read Sense On Cents to figure out where to invest. I am telling you,Oppenheimer is evil. Worse than BP. DON’T DO BUSINESS WITH OPPENHEIMER. Read what the MA securities division wrote about Oppenheimer’s leader, Lowenthal, then see if that’s a firm you want to hold your money.

  • Hotel California

    I think it is a tie between E*Trade and Oppenheimer for septic tank scum winner.

    E*trade is resorting to Mafia tactics as well, so is Schwab.

  • E*Trade ARS

    Thank you, thank you, thank you…

    My lawyer will be most pleased!!

  • Rockie

    The Department of Personnel and Administration website

  • Marc

    LD, i saw this complaint online a few months ago. Is this what this article refers to or something new? if anyone knows how to get the eqivilant for NC or sc i would appreciate it.

    • LD


      The North Carolina case you are referencing involves an individual named Howard Kastel. I highlighted the case here a year ago.

      Not sure what the case may be in South Carolina.

      I would definitely request the Colorado file referenced above as I would venture to guess that there is plenty of info there that could help you.

    • Hotel California

      The SC case can be found in the FINRA broker check records under E*Trade securities.
      ( Maybe SC doesnt allow public exposure via the Court until the trial. )
      In any event it is in FINRA broker records filings under E*Trade complaint cases PENDING against them, along with CO & NC.
      Words cannot be copied and pasted off the FINRA site, or else I would.

      Anyone reading all the actions against them would probably not want to do business with them. pretty evil for sure.
      I suggest AVOID them if you want to keep your sanity,, and your money.

    • Pat


      The AG’s office filed a complaint against E*Trade in late August. I have the complaint electronically. Let me know if you still want it. To my knowledge E*Trade is stalling and now that we have a new AG Who knows what will happen.


      • Timmy


        I would like a copy of the E*Trade Complaint.

        Can you email a copy of it to stuckinarps at ?

        Thanks in advance.

  • Marc

    LD, Thanks for the CO info. I left a
    message attempting to get the transcript
    . I think i already read this unless it
    is an actual transcript of the case. I
    have read the complaint. I have looked
    at the NASD website and am attempting to
    find the equivalent with NC and SC
    relating to Etrade. The past article
    seems to be unrelated to ET. Thank you

    • RoachMotel


      Much more info available upon request, if you contact the OAC in CO ask them to include transcripts of}

      ” E*Trade Securities LLC Response to Notice of Charges” dated 23Aug10..

      makes for a good read into the insight of how scammy and deceitful these Wall Street con-men operatives are and will apparently tell obvious lies to a Judge and CO AG.. no mind, their hearing/trial will repudiate them.

      • Marc

        Thanks RM, I called a few times and left voicemails. They must have a lot of calls. Did you call or sumbit a written request? Thanks again.

        • RoachMotel


          I submitted a written request, dont know if they take over phone or not. You can try.
          No charge to request.
          The Director of the OAA Court in Colorado is a Matthew Azec, so you could contact his office.

          The deposition file # to referenc is # 1490117 vl den
          E*Trade responses to inquiry.. order it out.
          All public info. if you just request correctly.

          E*Trade’s deposition responses on 23Aug

          • Marc

            Thank you Roachmotel, LD, Phill and
            everyone else, You help more than you know.
            I submitted my written request to follow up my
            phone message to the CO office.


  • Mikaele

    is there any info that the Canadian’s have that could shed light on their hop to U.S. soil? A.G’s won’t tell us anything or even return a call. SEC, FINRA, blah.
    Opp took my money and won’t give it back!
    Thanks Larry.

  • phil trupp

    Since I wrote the book on the subject of the auction rate rip-off (at least to-date), and have just returned from one leg of a long book tour, allow me to convey a note I received this morning from a prominent attorney:

    “Thanks for the note, Phil…Keep up the good work and advocacy–there are many (ARS) investors out there who because of their limited amount invested cannot cost-effectively seek relief in arbitration and simply have no option other than public pressure.”

    Public pressure. Contemplate this powerful message. Allow it to sink in. In the end, one is forced to a distressing conclusion: If you have insufficient funds frozen in auction paper, you may not be able to afford justice. Your best and only hope may be “public pressure.” This conclusion is cold comfort to many.

    What are the approximate costs of arbitration? There are attorney fees, and these are seldom less than $50,000. There are fees for what are known as “expert witnesses,” which cost an average of $18,000 a head. There is a filing fee of about $1,800 paid to Finra. There are associated and unanticipated costs, such as fees for corporate attorneys if you wind up on the losing end. And of course there is a better than even chance that a) you’ll lose; b) you’ll receive pennies on the dollar. These are facts–unpleasant and disconcerting facts.

    The message is clear: If you were conned but don’t have a lot of money to throw into arbitration, you’re probably going to suffer humiliation and the pain of loss or go to a secondary market. That’s quite a message to swallow, let alone to pass on to your children, especially when it comes from flag-waving types who know the price of everything and the value of nothing.

    There’s another message: We have protected Wall street while Washington continues to enable the plunder of our citizens by these “legal” con men. There is no getting around these unsettling truths. Again, strong, ruthless public advocacy may be your best and only weapon of choice.

    So my attorney friend isn’t afraid to call it like it is: If you can’t afford to defend yourself against robbery, you may be out of luck. You’re stuck with public advocacy of the unrelenting variety, and you will lose nothing to become involved on a personal level.

    Which is why I wrote RUTHLESS. Which is why I am touring the country promoting not just the book, but also the concept of fair play. I tell audiences that, yes, we fear foreign terrorists, but we had better understand that Wall Street has created at least as much havoc as those who attacked us on 9/11.

    I have faced down some tough opponents who would like to see me gone; there have been less than subtle threats along the way. But we continue to make progress. There’s the upcoming PBS special. Soon we will hook up with Public Citizen. I continue answering emails and doing radio and TV shows, and pleading with ARS victims to keep the fight alive, to make the scandal a kitchen table item–to help us reach a wide public audience that gets mad as hell and actually does something about this ongoing scandal.

    Yes, public pressure is the last hope for many ARS victims, like the gentleman who recently called me from his new home–a tent. Like the homeless woman forced to live with friends. Or the cancer patient who is out of funds. I hear from victims every day. There tens of thousands of them out there, still suffering, still hoping for a miracle.

    Well, we are attempting a kind of miracle via PBS, and it will be televised. I know Larry will continue to fight, as will I and the few others I can count on to give a damn about someone other than themselves.

    Not long ago, someone who was once part of the battle haughtily suggested that I was the only person with “skin in the game.” That observer has since learned otherwise. The truth is that all of us–even those of us who have gotten our money back–still have skin in the game. A recognition of this fact will amount to one more step in the battle to rein in Wall Street’s rapacious and pathological culture.

    • Kathy

      Phil, this is so true. I was told by attorneys that I didn’t have enough money to make my case worthwhile. If it had not been for action taken by the victims themselves to involve state securities agencies, I would not have gotten my money back.

      Individuals should not have to take these cases to arbitration. What happened here was WRONG. Government should make these financial institutions give back money they took by misrepresenting ARS to clients. That some victims have their money back, while others — Oppenheimer, E*Trade — still have nothing after close to three years is a national shame.



      Heck, they have a “Watch-Dog” now…to protect THEM now, they call it FINRA & the SEC.

      “Regulations and ethics?”

      ” We don’t need no new stinking regulations”! We ain’t got no stinking morality or honesty, we don’t need it, we stole your $$ ALREADY!”

  • Kathy

    It’s true that not all the companies that promoted ARS aren’t equal. Many banks have managed to refinance their ARS and free their victims. (Of course, some had a state securities agency pushing them, like UBS, Citi, Wachovia…)

    Oppenheimer actually HANGS UP on the people it stiffed. I’ve heard both Opco and E*Trade threaten their victims that if they take legal action, they’ll never get a dime.

    Meanwhile, on the fund side, PIMCO and its owner Bill Gross — who could redeem every cent immediately and not feel it — stonewalls and refuses to budge.

    How does a bank get away with taking money on false pretenses, and then not give it back when exposed? What kind of government allows that?

    • A good question, Kathy. My answer: We have a government of, by and for the financier-monopolist. We have a pathological nexus between great wealth and servile government. It may be instructive to recall that our founders did not write the phrase, “life, liberty and the pursuit of happiness.” Their original phraseology was (and apparently remains) “life, liberty and the pursuit of property.”

      • fred


        You have your finger on the pulse of the problem, the government and our institutions are suppose to represent the people’s interest, they do not, have they ever, or are we all, have we all, been just one job loss, one neighbors false allegations, one financial scandal, one economic recession, or one personal crisis from learning the truth?

        Is our apathy and our ignorance the real enemy? Where are the checks and balances? How does strong, ruthless public advocacy morph into something larger, a cause, a cause with a voice, a voice with a message powerful enough to resonate with the masses, a movement leading to positive lasting change?



      The brokerages do have a Watch-Dog” to protect them now, it’s called FINRA, and shyster attorneys

      So they don’t need “no new stinking regulations”!





    • LD

      I have heard a variety of iterations of the story shared by Phil.

      This is America?

      Not the country I know or want to know.

      • Marc

        Over the last few weeks i have called about 10 times and left many messages. I also sent a request in writing early last week nothing yet. Maybe they will respond this week. It would be nice if someone would simply post ET answer and other relevant transcripts.

      • Marc

        I have called 10 times and written them early last week and recievesed nothing back. It would be helpful for someone to post or email a full copy of ET response and any other relevant information.


  • Lefty


    As you probably know, the SEC has a website for info about Auction Rate Securities:

    This website has not been updated since July of 2009!

    How is it possible the SEC has done nothing and has had nothing to say about this subject in over a year while BILLIONS remain frozen?

    • LD


      Great link. Well done and thanks for bringing that to our attention. Why is it that the SEC has done nothing on this front? Might the reasons include:

      (Only half-joking here…and given the amount of money involved, this is obviously no joking matter.)

      1. They have little interest in truly taking on the industry.
      2. They do not know what to do.
      3. What is an auction-rate security again?
      4. That guy who writes about this mess at that website may rail on us for our ineptitude.
      5. Let’s not draw further attention to the fact that Mary Schapiro’s former haunt (FINRA) dumped $647 MILLION ARS mere months before the market collapsed and froze.
      6. Our incestuous partners on Wall Street asked us not to ‘go there.’
      7. Exposing ARS fraud does not bring the SEC the flash and highlights that they would like.
      8. All of the above.



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