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Auction Rate Pain Continues: February 14, 2008 to February 14, 2012 Recommended

Posted by Larry Doyle on February 14, 2012 6:07 AM |

“Larry, they have forgotten about me. I do not know what to do and I have nowhere to turn.”

In so many words, I received that message from an Oppenheimer Holdings customer just yesterday who continues to be unable to access his cash which remains locked up in auction-rate securities a full four years to the day that the ARS market totally froze.

This is America?

We have an administration and regulators which fabricate settlements and try to support people many of whom were financially imprudent? But who is standing up and speaking out on behalf of those remaining ARS investors who were defrauded by financial intermediaries and cannot access their funds from what were supposedly cash surrogate investments?

Four full years later and tens of thousands of our fellow citizens remain largely disenfranchised and disowned and unable to access tens of billions of dollars that is THEIR MONEY?

This is America? 

Where is the documentary exposing this ARS scandal? I have seen that documentary and it is powerful and exceptionally well done but for some reason it does not get shown. Is it corporate interests, the government, or a combination of the two that stymies the airing of that show which would blow the cover off this ARS travesty?

This is America?

Want to feel the pain of some ARS investors and sympathizers? Let’s revisit comments from an article I posted a few short months ago entitled, ARS Update: Jefferson County, Oppenheimer Holdings,

  1. coe

    To draw a sad parallel, Al Loewenthal (Oppenheimer Holdings CEO) might as well have raped these poor investors in the shower and persisted in this “investor abuse” for years – and the regulators/politicians/and even the press turn the other way in silent complicity…talk about NOT doing the right thing…it has been my considered opinion that buying back stock represents a concession by management that they have no vision, nothing to do with any capital investment, so they are conceding defeat…your point is well taken, LD, but why is it that they choose not to pay off the ARS holders? Because they don’t have to, that’s why!!! Never mind the implicit responsibility to make good on “cash substitute”…pathetic at the least/criminally negligent at worst…it’s no wonder why the financial “services” sector sure works to earn the negativity around reputation risk…keep on it, LD!

  2. Dave

    what opco did to its clients is worse than anything Jerry Sandusky did to those boys. And no, comparing opco to alleged pedophiles is not a stretch. same with N.Y. regs, scum, scum, scum.

    my elderly mother is w.o food or medicinie thanks to oppenheimer and nobody gives a damn

  3. Dave

    FYI – Larry I have contacted the head of the NASAA twice offering to assist with the pursuit of Oppenheimer and he did not give me the courtesy of a reply. You’ve been vocal in criticizing – correctly – the companies, but let’s also save some vitriol for NASAA which in many of our experiences is worthless.

    • LD

      Dave,

      Sorry to hear about your experience with the NASAA. I referenced them only because I believed they were productive in a few selected cases in certain states. I guess I was too naive in thinking that they might be helpful across other states as well.

      At this juncture, I believe nothing short of an all out public expose will be productive.

  4. mikaele

    Nice work,
    I have contacted everyone and to read now that I won’t ever get my money back! UGGH! I guess they are in the right business. Patriotism thin as can be.

  5. matt

    Terrible story about Dave’s mother!
    Bud Lowenthal, however,according to Yahoo Finance, pulled down $3.8MM in salary in 2010.The firm has expanded to Europe and Asia and continues to actively look to expand their branch network but there is no cash to pay these people!
    Some hope maystill lie in FINRA arbitrations where public customers won a siginificant ARS arbitration earlier this year!

    • Dave

      I think when you say “but there is no cash to pay these people” you are being sarcastic. Let the record note that.

      regarding FINRA arbitration – that’s only a recourse for those with millions frozen,. I contacted over 20 lawyers who specialize in going after brokerages and because I *only* had several hundred grand frozen nobody would handle my case. Not worth their time. One even laughed when I tried to explain about my mother, saying “Not pertinent, dude. The arbitration panel doesn’t give a #$%^ about Mama.” Also, there are reports that Oppenheimer alone, of all the brokerages, refuses to settle arbitration claims.

  6. matt

    In May of this year a Finra panel in California found for a couple vs. Oppenheimer in an ARS case. The amount was around $400,000+ costs I believe. Check the FINRA website under Arbitration and Mediation.
    The tide may be turning.

    • Dave

      I saw that earlier this summer. It’s one case out of the dozens, maybe hundreds of Oppenheimer clients who’ve filed arb. There’s been nothing since. Not a good batting average.

  7. Kathy

    If Opco can buy back its stock, then they can sell it again to get money to pay back the investors they defrauded.

    How $330 billion disappears in fraud without a peep, I will never understand.

Juxtaposed to the pain on display in these comments, what are we to make of the executives at many institutions and FINRA itself who liquidated personal and/or institutional holdings of ARS mere weeks and months before the ARS market totally failed. Many, dare I say most, of these execs have remained untouched by regulators for activity that could only be defined as classic front running. I can only compare the front running of these individuals to the cowardice displayed by men who occupied the lifeboats as the Titanic went down. Let that assessment occupy their conscience.

This is America?

“Larry, they have forgotten about me. I do not know what to do and I have nowhere to turn.”

Four years! The pain is real, ongoing, and ultimately indescribable for so many of our fellow citizens.

Navigate accordingly!!

Larry Doyle

For those who would care to witness even more pain on display, you may care to review my commentary of April 21, 2011, Auction Rate Comments Reflect Real Pain.

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets, our economy, and our political realm so that meaningful investor confidence and investor protection can be achieved.

  • Peter S.

    Are the ARS balances being leveraged in any way by the firms failing to return the funds to the depositors? What is precluding the firms that are holding the deposits from returning the balances to their clients? Where are the actual funds of the ARS balances held? This ARS debacle is needs greater understanding. I am stunned that the nation’s media has not gone to bat for these folks.

  • LD

    Peter,

    In a number of closed end mutual funds, the ARPS (Auction rate preferreds) do provide leverage and very cheap leverage at that.

    The ARS are also very cheap financing for a lot of municipal entities and the refinancing risks are significant thus little to nothing happpens.

    What is precluding the firms from returning the funds? They would end up holding the exposure to the entities that borrowed the funds. Much of that borrowing is very long term in nature.

    Too bad that the documentary does not run as that would explain and expose this entire travesty, including the sales practices utilized to move the ARS.

    • Peter S.

      So the ARS securities that Oppenheimer sold to their clients (unsophisticated investors) as a conservative investment are not an investment Oppenheimer (sophisticated investors) would consider to be a worthy investment for their own firm.

      Outrageous – aren’t there laws pertaining to investment advisors selling products they would not invest in themselves.






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