Oppenheimer, Cuomo reach $31M agreement
NEW YORK (Legal Newsline) - Broker-dealer Oppenheimer & Co. will restore $31 million to investors nationwide who hold auction rate securities following a settlement with New York Attorney General Andrew Cuomo.
The settlement with Oppenheimer is the latest in Cuomo's ongoing investigation into the auction rate securities market collapse.
"From the beginning of our investigation into the auction rate securities market, our objective has been to bring relief to investors stuck with illiquid auction rate securities," Cuomo said.
"Today's settlement with Oppenheimer is an important first step in bringing justice to investors who were promised a cash-equivalent investment, while helping to further restore investor confidence."
Oppenheimer, under terms of the settlement, has committed to use a significant amount of its available resources to purchase auction rate securities from individuals, non-profits, charities, small businesses and institutions.
The value of Oppenheimer's customers' frozen auction rate securities currently exceeds Oppenheimer's resources under regulatory requirements.
The settlement, however, provides for a first step in restoring liquidity to investors, with Oppenheimer committing to extend additional buy-back offers when it obtains additional capital or access to credit, Cuomo said.
Cuomo retains the right to charge Oppenheimer under New York's Martin Act should he deem that Oppenheimer's future efforts are insufficient.
More than 1,246 accounts nationally and 230 accounts in New York will obtain an immediate cash benefit liquidity as a result of the settlement. Individuals, charities and small businesses with accounts at Oppenheimer totaling less than $1 million will be eligible for $25,000 in liquidity.
Cuomo says auction rate securities had been marketed and sold to investors as safe, cash-equivalent products. The securities, however, faced an increasing liquidity risk, he said.
Cuomo's investigation has now reached settlements with 14 broker-dealers and provided investors with over $60 billion in investor buybacks, representing the largest return on behalf of investors ever.
To date, Banc of America Securities LLC and Banc of America Investment Services Inc.; Citigroup Global Markets Inc.; Credit Suisse Securities (USA) LLC; Deutsche Bank Securities Inc.; Fidelity Investments; Goldman Sachs & Co.; JPMorgan Chase & Co.; Merrill Lynch; Pierce, Fenner & Smith Inc.; Morgan Stanley & Co. Inc. and RBC Capital Markets Corporation; TD Ameritrade Inc.; UBS Securities LLC and UBS Financial Services Inc.; and Wachovia Securities LLC and Wachovia Capital Markets Inc have agreed to buy-backs.
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