IBJNews

State makes $31M settlement with securities firm

Back to TopCommentsE-mailPrintBookmark and Share

The Indiana Securities Division has finalized a settlement with a national securities firm accused of misleading Hoosier investors, Secretary of State Charles P. White said Wednesday afternoon.

St. Petersburg, Fla.-based Raymond James has agreed to return $31.2 million to Indiana investors by repurchasing some auction rate securities. The firm also will pay fines totaling $63,000.

White’s office accused Raymond James of misleading investors about the safety of the auction rate securities market.

Overall, state regulators say they have helped return $804 million to Indiana investors who purchased auction rate securities.

In April 2010, former Secretary of State Todd Rokita announced that the securities division finalized a dozen settlements with investments firms that agreed to repurchase more than $370 million in auction rate securities.

Those firms were Goldman Sachs & Co., Banc of America, Citigroup, Credit Suisse, Deutschebank, JP Morgan, Merrill Lynch, Morgan Stanley, RBC, Stifel Nicolaus & Co., UBS and Wachovia.

Auction-rate securities are bonds whose interest rates are meant to be reset regularly at daily, weekly or monthly auctions. Many financial firms marketed them as safe, liquid and cash-like investments. But when credit markets seized up as the recession deepened, auctions began to fail in 2008, freezing the $200 billion global market and leaving investors unable to access their money.

Because only a handful of previous auctions ever had failed, many investors considered the securities a safe form of temporary financing—essentially a better-yielding alternative to money market accounts.

 

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
ADVERTISEMENT