Compliance September 12, 2008

Brokers: Being Forced to Buy Back ARS Is Unfair

The New York state attorney general’s office is close to reaching a settlement with brokerage firm Fidelity Investments over its marketing of auction-rate securities (ARS), The New York Times reported.
Reported by

A source told the newspaper this is the first such settlement with one of the “downstream” sellers of the assets.

The NYT said regional brokers like Fidelity, Oppenheimer, and Raymond James argue that they were merely sellers of these securities and had nothing to do with banks’ refusals to hold the auctions to reset their interest rates. A trade group, the Regional Bond Dealers Association, sent a letter to regulators last month demanding that the banks buy back securities for all the auctions they held, and not just those sold to their own clients.

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Most of the large originators of auction-rate securities, including banks such as Citigroup, UBS (see The Bill Gets Bigger for UBS), and Morgan Stanley (see New UBS Lawsuit Sprouts) have already reached settlements with state regulators as well as with the Securities and Exchange Commission (see Wachovia Settles Auction-Rate Securities Charges).

Banks hold the auctions at which interest rates on these securities are reset; however, after the onset of the credit crunch last summer, they began withholding the auctions, leaving investors with securities they could not resell.

Products September 12, 2008

BCG Offers New Rollover Solution

Considering the retirement savings lost every year by participants who take lump-sum distributions of their plan accounts, Benefit Consultants Group launched a service that “offers a unique approach to a void in the marketplace.”
Reported by

According to a BCG announcement, the company has launched a Web site (www.lumpsumdistribution.com) designed to connect employees with qualified financial professionals as well as provide an efficient means to take care of the distribution or rollover process. Beau Adams, executive vice president of business development at BCG, said in the release: “You simply log on to www.lumpsumdistribution.com to open an IRA rollover account, initiate a transfer of account, and choose from an extensive list of top performing investment options. Or, you can call and speak to a financial adviser for expert advice—it’s that simple.”

Tom Monahan, the financial adviser who originally worked with BCG on the offering, added: “This is a service employees from companies of all sizes are in desperate need of. This is a huge benefit for business owners, HR professionals and employees.”

For more information, contact Deborah White at 856.368.7217.

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