December 31, 2010 Comments (0) Blog, Securities Fraud

Auction Rate Securities Fraud Investigation

(Last Updated On: July 17, 2015)

The White Law Group is currently investigating securities fraud claims against New York based broker‐dealer E-Trade Securities, LLC (“E-Trade”) involving auction rate securities.

Auction rate securities are long‐term bonds that rely on the successful operation of a periodic auction for short‐term liquidity. The White Law Group is currently reviewing several cases throughout the country wherein E-Trade brokers allegedly misrepresented the liquidity risks in auction rate securities (comparing them to money market funds) and selling the auction rates securities as suitable for cash management purposes.

In February of 2008, the auction rate market failed, leaving many investors holding long term bonds and tying up funds they needed in the short‐term.  Additionally, many investors have now been forced to sell their auction rate securities at a significant loss.

The Colorado Securities Commissioner recently announced that the Securities Division Staff has filed charges against E-Trade alleging that E-Trade Securities falsely represented auction rate securities as liquid, short‐term investments to investors without discussing the risks.

The charges further allege that these representations gave investors a false sense of security that the investments would always be liquid when auction rate securities, in fact, faced significant, inherent liquidity risks. In the complaint, the Division also alleges that E-Trade Securities violated the Colorado Securities Act by making false representations to investors, failed to adequately supervise its sales force, and engaged in unfair and dishonest dealings by making unsuitable recommendations to its customers.

If you have questions about auction rate securities you purchased at E-Trade, The White Law Group may be able to help.  For a free consultation, call the firm’s Chicago office at 312-238-9650.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida. With over 30 years of securities law experience, including experience working at FINRA (f/k/a the NASD) and the SEC, The White Law Group has the expertise to help investors defrauded in securities, investment and financial business transactions.

For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.

-->