When the collapsed Auction Rate Securities (ARS) market gets personal

Lily: The Swiss Gov't is trying to throw up a roadblock preventing PROSECUTION. This is an outrage. This fraud was committed on US soil by US citizens working for UBS. None of the ones I know are named Hans or Sven...

http://www.swissinfo.ch/eng/news_dig...63423000&ty=nd

Foreign ministry presses for UBS cooperation

A senior foreign ministry official has urged authorities in the United States to refrain from taking unilateral action against the embattled Swiss banking giant UBS.
Michael Ambühl, the state secretary for foreign affairs, made the comments following a meeting with his US counterpart, William J. Burns, in Washington.

"I have reaffirmed the offer of the Swiss government to cooperate with US authorities under the existing legal bases," Ambühl told reporters on Friday. "I have at the same time emphasised that we expect that, in order to receive information from Switzerland, no unilateral measures will be taken against UBS so long as there is cooperation."

kicking ars, I am not surprised that the Swiss is throwing up a roadblock. If you look up most of the 22 banks involved in this, almost all of the top managers, CEO, Presidents are foreigners. Even alot of the Board of Trustees are foreigners. They move around from bank to bank too.

What does that spell. Foreigners running and ruining the U.S. I think I remember hearing this years ago, all of the foreigners are going to ruin the U.S. During the Congress debate, one of the Congressman kept saying how much the foreigners hate us.

I guess this is what happens when the foreign countries hate the U.S. Who knows maybe foreigners are running the SEC and AG's and Congress too. That sure seems like a possibility. Maybe the foreigners are also running Bernanke and Paulson. Maybe all of the US offiicials have no backbone to stand up to the foreigners.

Just look at the shape of our entire system. EVerything is ready to collapse.

Shadow, when you transferred your ARPS from the crooks at UBS to Fidelity, did it show the DEVALUED amount that UBS shows in our personal accounts or the full $25K per they sold this junk to us?
For the record, the same idiot that sold me this junk, said that UBS could not allow a transfer...probably because they, and he, would have more liabilitity for a sale for less than the $25 K promised.
Thanks

So that opens up another can of worms if in fact UBS is still getting a commission on our frozen ARS. (we need to confirm that). If we transfer our ARS out from UBS to another brokerage/bank, will UBS/FA still receive their commissions?

Paul.... Sorry for the possible confusion. I transfered all BUT my ARPs to Fidelity. Fidelity had no way of adequately handling the arps. ARPS are not their cup of tea. I have completely lost faith in my former UBS FA. When I told him I was switching over to Fidelity because they were not active in ARPS he quickly came back to me with the statement "They were one of the biggest". If that were the case how come we don't see complaints against them on this blog.
I left my ARPS with UBS cause I really had no place else to take them and everything, interest redemptions, etc is handled automatically.
I'm sending UBS a letter Monday asking if they wish to purchase my remaining ARPs. If not I'll just sell thru RSTN and give UBS more of a headache legally. With the Pimco I already sold it comes to a worthwhile amount. It's amazing. I've dealt with my FA over 10 or more years. I'm not a trader; Arps are about the only thing I got into big time with him. But as I think back over conversations I've had with him I see things I didn't recognize before. Live and learn.

Paul... Re. transfer of arps to another broker... I was concerned that UBS would not let me transfer my ARPS to RSTN but they did. They have to if you want to switch and have a company out there willing to take them on. Those are YOUR BONDS. If they give you a problem or static make BIG WAVES.

Mikaele,

john AT johnrausch DOT com

Lily,

If you thing the cost to hire an attorney for arbitration is expense, check out what it would cost to go to court! The simple fact is that the wrong done against most normal folks is usually too costly to recover using the legal system. Small claims court is just about the only affordable legal remedy that I know of and the amount you can go after is very small. Who wins? The banks and the attorneys.

John, I know and agree with everything you just wrote. This is why they only way to pay them back is to expose them for the thiefs and the liars that they are by continuing to make sure everyone files a black mark with FINRA and the SEC against the FA and the frim that put us into these in the first place. Make sure we inform anyone and everyone that will listen. Pray that god will punish them someday and pray for redemption.

I still say if every person was willing to talk to a newspaper reporter in their home city and State, this is the way to let other victims know that their money is frozen. If we had an article in every state across the country then maybe we woudl be able to expose these crooks for waht they have done to us.

Like one guy on Serges site wants to organize, this is what needs to be done, organize and write up a letter of individual stories with all of the facts and send a copy to every city in the 50 U.S states.

What this world COULD look like in 5 years:

Freddie Mac and Fannie Mae, gone.

The U.S. Real Estate Market - down another 200% from where it is today. People walking away from homes that used to be worth $2 million.

The FDIC: Bankrupt, from bailing out all the banks that went under. Most banks closed, with Americans keeping what paltry little money they have left buried in their yards.

Unemployment: hovering around 50%.

The stock market: shut down, having gone broke.
Many brokers having committed suicide when the market plunged to next to zero in one day.

The price of a gallon of gas: $20, making driving pretty much obsolete.

The airlines: Shut down and bankrupt. Americans unable to travel, stuck in our homes. Many former millionaires now homeless.

I think there's a good chance of the above happening. Thank you, George W. Bush.

I have not posted on this blog for quite some time, although I periodically have posted on Serge's message board. I just wanted to give everyone an update on some of the ARS cases that my firm is handling. While I will not give every detail, I provide some of the highlights:

UBS - In February we filed what I believe was the first case in the country against UBS, and we have filed other cases since that time. The final arbitration hearing in our first case is scheduled to take place in October 2008, only 8 months after we filed. As expected, UBS is denying liability. Notwithstanding that UBS has marked down our various clients' ARS, UBS continues to maintain that our clients have not suffered any damages. Of course, we disagree. Further, we do not believe that dimunition in value is necessary for us to prevail. At least one of my clients accepted the UBS loan because she desperately needed the money. Unfortunately, the risks inherent in such loans quickly came to fruition. Within days of taking the loan, UBS marked her ARS down and issued a margin call. We continue to be very confident in our UBS cases.

Morgan Stanley - Morgan Stanley has taken the position that my clients were warned of the risks of ARS because the trade confirmation (received several days after the ARS purchases and several days after the material misrepresentations and omissions) had a website address on it that would have led our clients to a website that discussed some of the ARS risks. We are confident we can overcome this disingenuous defense for a number of reasons.

Wachovia - Simply maintains that our clients were aware of the risks. We are confident on these cases as well.

Merrill Lynch - We filed what I believe was the first ARS case in the country against Merrill. They have raised a defense similar to Morgan Stanley's defense. Again, we are not concerned about that defense. They also claim that our clients traded yield for liquidity. While technically correct, it is misleading. Our clients (like other ARS investors) received a slightly higher interest rate and traded one-day liquidity for seven-day liquidity. They certainly did not knowingly accept only a slight interest rate increase in exchange for years of illiquidity.

Banc of America - Rather than address the merits of our cases, BOA is attempting to stay our cases (and all other ARS arbitrations against it) because of the pending putative class actions. We believe that BOA's argument is wrong and that we will be permitted to continue with our cases. We have not received rulings yet on that issue, however.

E*Trade - Similar to Wachovia and Merrill, E*Trade disingenuously argues that my clients were aware of the liquidity risks.

Citigroup - Same as E*Trade, Wachovia, and Merrill.

We also have Northern Trust and Fidelity cases and have looked at cases against most of the other Wall Street firms. We remain very confident in our ARS cases and will continue to file and prosecute cases aggressively in an attempt to recover our clients' frozen assets.

I will provide updates as to any material events tht happen in our cases so that you generally know what to expect in your cases if and when you file.

Jeffrey B. Kaplan
Dimond Kaplan & Rothstein, P.A.

5 years? That's what things COULD look like in 5 months!

Aloha Lily,
do you have john rausch email, I can't get through to him from here? If get I can forward my message to you and you could forward?
Kaplan, What do you think about sold on secondary and being told by finra its a crap shoot. We were completely lied to and FA who we know and said this is his fault but what chance do we have in a world where 45k isn't a loss.It is more than most people in the world make a year.
What are secondary people doing with their money?
I would like to know if you could give info,
Fidelity, Vanguard?
FDIC said most banks are safe today... What most
you kooks tell us which ones!

Mikaele, Yes, I have John's email address , go ahead and I will send it on to you.

Mikalele, I meant to say I wouldsend it on to John.

For what it's worth, article about selling ARPs on the secondary -

More investors act to sell ARPS at deep discounts
Online platform is helping to match buyers and sellers
By David Hoffman
July 14, 2008
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More investors are looking to sell illiquid auction rate preferred securities issued by closed-end mutual funds even though in many cases, they must sell at hefty discounts.
The Restricted Securities Trading Network, an online trading platform for institutional and accredited investors interested in buying and selling restricted securities and other illiquid assets, has seen an increase in the number of deals involving ARPS, said Barry Silbert, chief executive of Restricted Stock Partners of New York, which operates the website.

"Things are really picking up," he said.

The network is facilitating be-tween 40 and 50 transactions a week, Mr. Silbert said.

That isn't bad considering that ARPS weren't even traded on the platform until March 3, soon after auctions of preferred securities began to fail.

The network is believed to be the only secondary market for the $330 billion asset class.

But before investors rush out to sell their ARPS on the network, they might want to think about the consequences.

ARPS are selling at a 5% to 15% discount, Mr. Silbert said.

And while it doesn't cost anything to put ARPS up for sale, when a sale is reached, the network receives a 1% commission from both the buyer and the seller, he said.

GOOD DEAL?

At least one broker whose clients own ARPS said that it isn't a great deal.
"I'm telling clients not to sell, because we will have a solution shortly," said an East Coast broker with Merrill Lynch & Co. Inc. of New York, who asked not to be identified.

Three closed-end-fund advisers in particular — BlackRock Inc. of New York, Eaton Vance Corp. of Boston and Nuveen Investments Inc. of Chicago — have plans to create ARPS structured in such a way as to make them available to money market funds.

The hope is that money funds will buy the proposed securities — intended to replace established ARPS — providing liquidity to what has become an illiquid market.

Investors stuck in ARPS would finally be able to cash out at par value.

It is a great idea in theory, but some money fund insiders have raised doubts about whether money funds will rush to buy restructured ARPS.

Considering the amount of effort that the closed-end-fund industry is expending to resolve the crises, however, it seems highly unlikely that a comprehensive solution won't be hammered out, said Cecilia L. Gondor, executive vice president of Thomas J. Herzfeld Advisors Inc., a closed-end-fund specialist in Miami.

Close-end-fund advisers have already made some progress, she said.

As of July 4, such advisers had redeemed, or announced plans to redeem, 32.6% of the outstanding ARPS, Ms. Gondor said.

I just found out for certain that H&R Block Financial is not a broker-dealer and would have had to place their bids through a broker-dealer. Merrill-Lynch is the main Broker-Dealer (all accounts for Cohen & Steers AMPs are held in an account at Bank of New York) for Cohen & Steers ARS, but H&R Block Financial is not a customer of theirs.

It's amazing the information these employees will look up for you when you reach the right number!

I am not sure, but believe that shit rolls downhill and that includes the practices of the broker-dealers. In other words, H&R Block Financial would have received the best practices and other information about ARS from the broker-dealer they used and should have passed any risks or disclosures mentioned in these along to me. I was hoping it would have been Merrill-Lynch considering the documents we have seen from them that say ARS are a money market alternative. Maybe they used UBS! That could not hurt my arbitration.

Also, I ended up getting burned again with my secondary market sale. My reset date was July 1 and Schwab, who was holding the ARS, transferred them late on July 1 when they had previously told me it would take at least until July 3. Dividends go to the owner at close of business on the reset date. So, the dividends for 28 days went to the new owners after owning them for just a couple of hours. Take care with your dates if you decide to sell!

Franklin, can you provide a link for that story? I have some comments for them!

Of COURSE the Merrill Lynch broker doesn't recommend selling. That would establish a loss and make Merrill more vulnerable to a lawsuit! The writer should have mentioned that.

I'd also like to know more about all the effort that is supposedly being expended on solving this problem. I suspect they are spending a lot of time trying to avoid prosecution.

These funds have been completely unwilling to say WHAT they are doing. I resent being kept in the dark while they keep MY money as ransom.

Jerry, that's one heck of a sci-fi movie you've got laid out there. By "good chance"of it happening, I'd peg that at about 0%, plus or minus 1/100th of a percent.

Jeffrey Kaplan:

Thanks for the update. If you need a witness against Merrill, contact me at arpholder@live.com