|  | | 2008 News and Press Releases | | |
HEADLINE NEWS:
Enforcement: SEC, FINRA Probing ARS Sales, Misrepresentations Of Risk Alleged
Lynn Hume And Andrew Ackerman
Bond Buyer. April 11, 2008
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EXCERPT: Spurred by hundreds of complaints from investors stuck holding illiquid auction-rate securities, the Securities and Exchange Commission and the Financial Industry Regulatory Authority are probing whether broker-dealers misrepresented the liquidity risks of the securities when they sold them. The regulators also are looking at a number of other things, including whether broker-dealers favored certain customers by ensuring they would be able to sell their auction-rate securities, when others could not. SEC officials would not provide details. "While we cannot disclose specific matters, as a general matter, we are looking at representations made to investors when they purchased auction-rate securities, in coordination with FINRA," a spokesman said. A spokesman at FINRA denied his agency's sweep is an enforcement action. "This is not an enforcement sweep. It is a fact-finding sweep," he said. "As in any fact-finding sweep, if information comes to light that suggests the possibility of misconduct, that information would be referred to enforcement for further investigation." Market sources said the probes began over the past two weeks when SEC enforcement staff and FINRA officials separately sent more than 15 banks and broker-dealers questionnaires and document requests pertaining to auction-rate securities transactions going as far back, in some cases, as 2006. |
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