FINRA Notifies E*Trade Of Intention Pursue Action For Sale Of Auction Rate Securities (ARS)

The Financial Industry Regulatory Authority (FINRA) sent E*Trade Financial Corporation a Wells notice related to the purchase of auction rate securities (ARS) by its customers. A Wells notice indicates that regulators are recommending enforcement action against the firm and gives the company an opportunity to respond.

E*Trade is the latest online firm to be sent a Wells notice followed by pressure from regulators to make investors whole following the collapse of the ARS market in February 2008. In 2010, TD Ameritrade (AMTD) agreed to repurchase $305 million auction rate securities (ARS) from clients. E*Trade has said that the total amount of ARS sold to its customers was $138.2 million as of December 31, 2010.

Auction rate securities (ARS) are long term debt instruments with attributes of short term securities because they were resold with new interest rates at periodic auctions. The product was marketed as being a safe investment and as liquid as cash, while providing a steady stream of income. Unfortunately, the market froze in February 2008 and investors were unable to access their money.

If your funds have been tied up due to investments in ARS or if you have suffered other related damages, please contact our securities law firm at 1-800-259-9010 for a confidential, no obligation consultation.

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