"Made whole…
Auction rate securities investors at Citi and UBS will be made whole under today’s settlement with the SEC…
$ 30 billion of making whole… that’s lots of wholeness…
These ARS settlements represent the first time that the major dealers have had to pay an onerous penalty for shoddy fixed income practices… there have been multi-million dollar fines previously but there were never substantial penalities relative to the fees and spread that the firms were making… this is more than a slap on the wrist… this is incentive to improve and tighten fixed income practices for retail customers… right on!
From CFO.com ~~~~ ” … “Today’s settlements are the largest in SEC history, and represent the largest return of customer money in the agency’s 75 years,” said SEC Chairman Christopher Cox.”
The settlements with Citi and UBS will restore about $7 billion in liquidity to Citi customers who invested in ARS, and $22.7 billion to UBS customers who invested in ARS, according to the SEC. Under the settlement, Citi will offer to purchase ARS at par from individuals, charities, and small businesses that purchased those ARS from Citi, even if those customers moved their accounts. Citi also will “use its best efforts” to provide liquidity solutions for institutional and other customers, including facilitating issuer redemptions, restructurings, “and other reasonable means.”
The bank also will pay eligible customers who sold their ARS below par the difference between par and the sale price of the ARS. In addition, it will reimburse eligible customers for any excess interest costs associated with loans taken out from Citi due to ARS illiquidity.
UBS will offer to purchase at par from all current or former UBS customers who held their ARS at UBS as of Feb. 13, 2008, or purchased their ARS at UBS between Oct. 1, 2007, and Feb. 12, 2008, even if they moved their accounts. It will pay eligible customers who sold their ARS below par the difference between par and the sale price of the ARS. UBS also will reimburse customers for any excess interest costs incurred by using UBS’s ARS loan programs….” ~~~~
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