Raymond James May Have To Pay $50 Million For Auction Rate Securities (ARS)
Raymond James Financial, Incorporated has announced that it could faces losses up to $50 million if it has to buy back frozen auction rate securities (ARS) from customers, according to Investment News. The firm has been the focus of an investigation by the Securities and Exchange Commission (SEC), the Florida Office of Financial Regulation and the New York Attorney General’s office. Negotiations are ongoing in an attempt to get the matter resolved.
The auction rate securities (ARS) were marketed and sold to investors as being alternative investments to certificates of deposit, very safe and touting their liquidity. Unfortunately, the market froze in February 2008, causing investors to be unable to access their cash. As of the end of March 2011, Raymond James has indicated its customers held some $370 million in auction rate securities (ARS). Many of the investment banks that were underwriters of the frozen securities quickly entered into settlements with the regulators to buy back the ARS from their retail customers. Raymond James was not an underwriter of the ARS.