|
NEWARK
-- The N.J. Bureau of Securities, as part
of a national task force with other state
regulators, has reached a settlement with
Wachovia Securities (“Wachovia”)
that will give thousands of affected clients,
including New Jersey investors, access to
$9 billion in funds that have been frozen
in the auction rate securities (ARS) market.
In
addition, as part of the settlement, Wachovia
will pay a $50 million penalty to be apportioned
among the states.
“This
ARS settlement, the fifth reached this month,
illustrates how state securities regulators
have been working together on behalf of
investors across the nation,” said
Vincent J. Oliva, Chief of the New Jersey
Bureau of Securities. “Our staff has
actively participated in these investigations
on behalf of New Jersey investors.”
The
five settlements – with Wachovia,
Morgan Stanley, J.P. Morgan, UBS and Citigroup
– resulted in $235 million in civil
penalties that the states will share.
Under
the terms of the agreement announced today,
Wachovia will repurchase illiquid ARS securities
from all non-profit charities, as well as
all individuals and businesses with account
or household values up to $10 million, no
later than November 28, 2008. All other
investors will be able to redeem their ARS
securities no later than June 30, 2009.
Wachovia
will also:
- fully
reimburse all retail investors who sold
their auction rate securities at a discount
after the market failed in February 2008;
- consent
to a special, public arbitration procedure
to resolve claims of consequential damages
suffered by retail investors as a result
of not being able to access their funds,
in which Wachovia will not contest its
liability related to the sale of ARS securities;
and
- reimburse
all refinancing fees to municipal issuers
who issued auction rate securities through
Wachovia since August 1, 2007, and who
refinanced those securities after the
market failed.
The
agreement follows an investigation led by
the Office of the Missouri Secretary of
State into complaints from investors that
Wachovia misled them by portraying ARS securities
as cash equivalents. The ARS markets froze
in February this year, leaving thousands
of investors across the country without
access to their money.
#
# #
|
