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Group Arbitration Being
Filed for Auction Rate Securities
Holders
Kansas City,
MO: If you have been waiting for a
class action lawsuit to compensate
you for money lost in Auction Rate
Securities it might be time to
consider filing an arbitration.
According to Diane Nygaard, founder
of the Nygaard Law Firm, it appears
that class action lawsuits will not
help clients who had money in the
auction rate securities market.
Unfortunately, there are still firms
who have not entered into a global
settlement with their auction rate
securities clients, leaving those
clients without their money.
"People who
bought auction rate securities from
those firms are filing
arbitrations," Nygaard says.
"Companies that sold a lot of
auction rate securities but have not
entered into any kind of global
settlement include Morgan Keegan,
which is run out of Memphis but is a
national broker-dealer, E*Trade,
Ameriprise, Thomas Weisel, TD
AMERITRADE, Wedbush Securities,
Raymond James and many regional
banks and smaller brokerage firms.
People who still have auction rate
securities not redeemed by
issuers—sold by these firms—should
file their arbitration."
Other
companies that have not fully
settled (or who have not compensated
everyone) are UBS, Merrill Lynch
(now owned by Bank of America),
Wells Fargo, Wachovia (A G Edwards)
and Morgan Stanley. Some of these
companies have settled with current
clients to whom they sold auction
rate securities, but those global
settlements excluded people who
moved their accounts elsewhere. For
example, a client may have purchased
auction rate securities from Merrill
Lynch but moved the account because
they were unhappy. That client would
not have received a settlement, even
though he was given the same
fraudulent information when he
purchased his auction rate
securities. That client will have to
file an arbitration to get relief.
Clients with
auction rate securities may wonder
if they can prove that they were
misled into purchasing the
securities. The truth is that some
broker-dealers have already been
fined by the government for
misleading investors, so it is well
documented that companies made
fraudulent statements when selling
auction rate securities. In fact,
Wachovia was recently fined $4
million by Texas for misleading
investors about the safety of
auction rate securities. In other
words, many people say they were
misled when they bought their
auction rate securities and the
government is backing them up.
"The other
thing that happened last week is
that the UBS class action lawsuit
was dismissed by a judge," Nygaard
says. "Anybody who has not been
compensated by UBS for auction rate
securities bought at UBS will not
get money from the class action. It
is now dead. And, given the way the
judge wrote that opinion, it means,
in my best estimate, that probably
the other broker dealers who sold
auction rate securities will
probably win dismissal of their
class actions."
According to
Nygaard, the Court held that as long
as a firm agreed to compensate most
investors, a class action should not
proceed. In such cases, investors
still holding auction rate
securities should file individual
lawsuits or arbitrations. Of course,
since most brokerage firms require
customers to sign arbitration
agreements, most cases will have to
go to arbitration.
People who
were involved in such class action
lawsuits can still file an
arbitration. However, they are
advised to do so as soon as possible
because the number of arbitrations
filed will likely increase as more
class action lawsuits are dismissed.
The sooner an arbitration is filed,
the sooner the case will be heard.
Arbitration
has been a good way for clients to
recover their lost money. Nygaard
notes that her firm has been filing
arbitrations for over a year against
UBS, Ameritrade, E Trade and many
regional banks and brokerages. She
says they have been successful in
recovering peoples' par value and
attorney's fees and, where
appropriate, consequential damages
that resulted from the frozen
auction rate securities market.
"In my
opinion, clients should go to
arbitration now rather than waiting
for the class action lawsuit to be
dismissed," Nygaard says. "Get in
line, because the market
deterioration means that a lot of
arbitrations are being filed. People
who have not [had their auction rate
securities] redeemed, given that the
class action route is probably not
going to work for them, need to file
an arbitration. Do not wait around
because class actions probably will
not help." |
