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Posts Tagged ‘Wall Street’s greatest fraud’

ARS Update: Raymond James and Morgan Keegan ARS Investors’ ‘Nightmare Over’

Posted by Larry Doyle on June 30th, 2011 4:29 AM |

I strongly believe that the marketing and distribution of auction-rate securities was the single greatest scam perpetrated on investors by Wall Street.

While a full forty months have passed since the ARS market failed that fateful day in February 2008, approximately $100 billion of the original $330 billion ARS remain frozen.

Many thousands of investors continue to wonder if they will ever get a full return of their cash locked up in what were supposedly ‘cash-alternative’, ‘cash-surrogate’, ‘totally liquid’, ‘as good as cash’, ‘money market type’ instruments.

Forty plus months. $100 billion. You think you have stress. Place yourself in the position of these investors. Sense on Cents continues to bang the drum for ARS investors and now we witness two more ‘wins’ but one real ‘disappointment’ on the ARS front. Let’s navigate.

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Wall Street ARS Betrayal Brings Losses and Sleepless Nights

Posted by Larry Doyle on August 28th, 2009 9:19 AM |

Those who would betray the trust and integrity of a market and investment must be held to account.

Such is the current dynamic within Wall Street’s greatest fraud that encompasses Auction-Rate Securities.

At times, I wonder if I focus too much on the ARS debacle. Then, when I read of the depths of despair experienced by ARS investors, both institutions and individuals, I personally seethe at the injustice of it all.

Bloomberg provides a wide ranging review of institutional investors who were defrauded by Wall Street in purchasing auction-rate securities. Bloomberg writes Wall Street Betrayal Seen in $4.8 Billion Company Debt Losses. The highlights in this article are almost too numerous to single out, but suffice it to say this fraud has likely touched almost every investor in either a direct or indirect fashion.

I am heartened that the fraud is finally receiving significant focus. That said, how will Wall Street be held accountable and how will investors be made whole? Let’s address some specific details as highlighted by Bloomberg:

Bristol-Myers Squibb Co. the New York-based pharmaceutical company, took an 82 percent loss in 2008 when it sold a portion of its auction-rate debt with a $642 million face value.

The maker of Plavix, the world’s second best-selling medicine behind Pfizer Inc.’s Lipitor, continues to hold $169 million worth of auction-rate bonds. It wrote them down by $75 million in the second quarter, according to regulatory filings.

An 82% loss on a supposed cash surrogate! A 44% writedown on cash! (more…)

Wall Street’s Greatest Fraud

Posted by Larry Doyle on July 20th, 2009 9:07 AM |

Bernie Madoff’s Ponzi scheme has to be the greatest fraud of all time, right? Allen Stanford is likely a distant second, correct?

Well, actually, no. Madoff has certainly reserved a special place in financial ‘hell’ for his fraud, but make no mistake, the single greatest fraud ever perpetrated on investors is the collective Wall Street enterprise that marketed and distributed Auction-Rate Securities. The ARS market at its peak was a $330 BILLION market. Of that initial size, those on Wall Street tracking developments within the ARS market project that $165 BILLION held by thousands of retail and institutional investors remain frozen.

The Wall Street Journal highlights the next in what could be a long running series of ARS investigations in writing this morning, Cuomo Says Schwab Faces Fraud Suit:

In an official notice sent to Charles Schwab & Co. Friday, Attorney General Andrew Cuomo warned that his office plans to sue the largest online brokerage firm for civil fraud over its marketing and sales of auction-rate securities to clients. Emails and testimony cited in the letter show Schwab’s brokers had little idea of what they were selling and later failed to tell clients that the market was collapsing.

I am heartened to see AG Cuomo launch this action against Schwab but I wonder why he does not simultaneously take the same action against EVERY bank, broker, and investment management firm involved in the marketing and distribution of ARS.

Regular readers of Sense on Cents know that I believe the ARS trail leads back to the Wall Street self-regulatory organization, FINRA. For the benefit of our newer readers, allow me to reconnect the dots once again. (more…)