Thank you for sharing!

Your article was successfully shared with the contacts you provided.

Wachovia customers who invested in auction-rate securities before the market for those securities collapsed will receive their share of $7 billion in liquidity, the Securities and Exchange Commission said.Wachovia Securities LLC agreed to the settlement, which resolved charges from the SEC that the bank misled investors regarding the liquidity risks associated with auction-rate securities that it underwrote, marketed and sold.The SEC’s complaint, filed in the U.S. District Court for the Northern District of Illinois, alleged that Wachovia and A.G. Edwards & Sons Inc., whose broker-dealer operations were consolidated into Wachovia on Jan. 1, 2008, misrepresented to customers that ARS were safe, highly liquid investments that were comparable to cash or money market instruments. According to the SEC’s complaint, Wachovia reinforced the perception of liquidity by routinely purchasing ARS from A.G. Edwards’ customers between auctions, without telling customers that Wachovia’s willingness to do so depended upon the continued success of the auctions.Wachovia became aware of mounting evidence in late 2007 and early 2008 that put the firm on notice that the risk of auction failures had materially increased, according to the SEC. Wachovia continued to market ARS to its customers as highly liquid investments. On Feb. 14, 2008, Wachovia followed the lead of other broker-dealers and decided to stop supporting auctions, the SEC said. Without broker-dealer support, ARS auctions failed and thousands of Wachovia’s customers were left holding billions of dollars in illiquid ARS, without any practical means of redeeming, selling or deriving value from them.Wachovia Capital Markets LLC, an affiliate of Wachovia, has voluntarily agreed to provide identical remedial relief to Wachovia Capital customers who purchased ARS in Wachovia Capital accounts.–[email protected]

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.

Already have an account?


Credit Union Times

Join Credit Union Times

Don’t miss crucial strategic and tactical information necessary to run your institution and better serve your members. Join Credit Union Times now!

  • Free unlimited access to Credit Union Times' trusted and independent team of experts for extensive industry news, conference coverage, people features, statistical analysis, and regulation and technology updates.
  • Exclusive discounts on ALM and Credit Union Times events.
  • Access to other award-winning ALM websites including TreasuryandRisk.com and Law.com.

Already have an account? Sign In Now
Join Credit Union Times
Live Chat

Copyright © 2022 ALM Media Properties, LLC. All Rights Reserved.