Talking points:

Re: a recent comment regarding Etrade.

I can tell you first hand that Etrade was putting people into ARPs. Got the spiel about AAA, liquid, you know the story. So they are part of the problem.


Re: Preferred Vs Common rights

This is a ludicrous argument. The common holder has been the beneficiary for YEARS of cheap money on the back of an ongoing SCAM.

If the public was not fooled into thinking this was a viable and liquid market , they would have had no access to the money at these low rates.

So the common holders, while not directly responsible for the misrepresentation, were the direct beneficiaries.

Now that the rugs been pulled, they are now claiming the common holders continue to be 'owed' something. This is preposterous on the face of it.

The GAME IS OVER, we are entitled to our money back as it was confiscated under illegal circumstances. The common holder is entitled to no special consideration, and certainly not on THE BACKS OF THE AGGRIEVED PREFERRED HOLDERS.

Just to promote this site and help other victims I created web page
http://nothingcontroversial.com/UBS-ARC-FRAUD/ARS.html and I'll update it with all new information.

I suggest everybody with access to the servers do the same and spread the word, make finding us easy in Google and other search engines, as in numbers is our strength.

I strongly believe that by combining our brains and financial resources we have the chance against multi trillions dollars industry.

Let's spread the word.

Would someone with legal knowledge please comment on the Gibbs Class Action lawsuit against UBS.

Does the Class Action suit absolutely cover all qualified investors of a similar situation even if you are not a client of Gibbs? Or, do we have to be 'named' plaintiff's or clients of Gibbs to participate in the outcome?

I write in response to a request for a legal opinion concerning the UBS class action. This opinion also applies to the class actions filed against the other broker-dealers as well. First, my law firm (Dimond Kaplan & Rothstein, P.A.) practices in the areas of both claimants' (plaintiffs') securities arbitration and plaintiffs' class actions. As such, my comments come from experience, not conjecture. Full disclosure: We specifically have declined to file class action against the broker-dealers for the reasons I will discuss below. Instead, we were one of the first firms in the country to file arbitration claims on behalf of aggrieved ARS investors. We continue to file such claims each week.


Before I answer the specific questions that Mr. Ecohls asked, I first will provide my view of the landscape and investors' options.

Option number one is to do nothing and wait to see what the markets do. That is not a very attractive option, as you are completely at the mercy of the decisions made by banks, regulators, etc. (I consider blogging for weeks on end and "putting pressure" on the banks, getting media attention, and e-mailing politicians and Oprah Winfrey to be the close cousin of doing nothing.) None of those things will result in a short-term fix for this massive fraud. This is a $300+ billion problem ($60 billion if you only consider ARPS) and there is no quick fix to such a huge problem. And the media and regulators already are well aware of the problem.

Your second choice is to bring a FINRA arbitration claim. (Notwithstanding comments in the blog that it is the investor's choice to go to court or arbitration, the arbitration clauses in your customer agreements are enforceable. You can bring a claim in court, but the brokerage firm will almost certainly prevail if it moves to dismiss your case and compel arbitration.) There has been some discussion of whether bringing a group arbitration claim or a number of individual arbitrations is the better way. Over the years, I have done both and have found little difference as far as one manner being more effective than the other. Here, I believe that each ARS case, standing alone, generally has very strong merit. There is no doubt that the broker-dealers recommended and sold these products as cash-equivalent or money market-equivalent products that would provide investors with safety and liquidity. Also, the cumulative effect of many investors telling the same story is not precluded by bringing individual claims. You can bring in other witnesses, i.e., other ARS investors, to testify in each case. We believe that individual arbitrations will be the most efficient and effective way to achieve a favorable resolution for ARS investors. (Most arbitration final hearings, i.e., the trial, will take place within 12 to 14 months from the filing of the case. UBS's Answer to the first case we filed is due April 18.)

That brings us to class actions, a third option. (Note that the arbitration clause in each investor's customer agreement generally will not preclude a class action.) I have not read any of the complaints that the Gibbs firm has filed. That said, your question concerning who is covered by the UBS class action depends on the definition in the complaint of the class on whose behalf the complaint was filed. They could have limited it to UBS customers in a particular issuers ARPS, only UBS customers who invested in ARPS, or all UBS customers in any ARS. Note, however, that class definitions can change in amended complaints. If you fall into the definition of the class in the case you would be covered by the case without being a named plaintiff.

Note, however, that a class action complaint does not automatically give rise to a viable class action. A class action complaint merely alerts the court and the parties of the intent to have the case proceed as a class action. Several months (or longer) down the road the Gibbs firm will need to file a motion for class certification, at which point the defendant will argue, and court will consider, myriad arguments that, among other things, the case has too many individualized issues to treat everyone the same way and certifiy the case as a class action. One of the most obvious arguments against classing the case up is that "point-of-sale" discussions between each individual ARS investor and their individual broker precludes a uniform treatment of the case. In other words, the court could determine that the unique answer as to what was said to each investor by their broker overrides all other common issues, thereby precluding a class action. Another argument is that each investors has a sufficient amount of money at stake that a class action is not necessary. All told, we believe there are significant hurdles to the class actions.

Finally, assuming all hurdles can be overcome to get the case certified as a class action. You must decide whether you want to be part of a class action or whether you want to opt out of the class action. (You would be given the opportunity to opt out of the class during the pendancy of the case.) We believe that for smaller ARS investors, it may not be a bad alternative to be in the class. But for larger investors who have high six figures, seven figures, or more in ARS, we think being a member of a class action is a bad idea. Such investors have far too much money at issue to be subjected to what often are cents on the dollar class action recoveries. And the class action attorneys' fees likely would eat up a large percentage of any such settlement. (Arbitration fees likely would not reach the heights that class action fees would.) Finally, a class action is likely to last several years, as opposed to a year or so for an arbitration. And unless you are the named plaintiff, you essentially will have no say in how the case is handled, unlike in an individual arbitration proceeding.

I would be happy to discuss any of the above or other issues with anyone who would like to contact me. My email is jkaplan@dkrpa.com and my toll-free number is 888-578-6255.

Mr. Kaplan,

Thank you for your learned comments; obviously you do this for a living and have expertise in this matter.

I pose this question to you and to Lisa Swanson who is also an attorney. If you own relatively safe asset secured ARPS that are backed by AAA municipal bonds should you hire an attorney based on the usual hourly fee or a contingency arrangement?

From my perspective I cannot see why anyone would hire an attorney on contingency for what will likely be full recovery. Of course the full recovery could take weeks or alternatively it could drag on for months or longer.

As a side note I am encouraged that the closed end fund owners are now screaming not to deleverage (decouple) the funds to pay the preferred unit owners. Clearly the word "preferred" includes establishing a senior position that would, if necessary, include deleveraging the funds to the extent necessary to make the preferred owners whole.

We should remember that the owners of the common shares of the closed end funds benefited for years from this leverage the preferred unit class afforded them. In other words; what goes around comes around.

Again Mr. Kaplan thank you for your input into this matter you seem to understand the predicament that we're in with this giant fraud.

I'm glad that I stumbled across this site. I'm part of the ARPS club. I've been unable to sell my Nuveen ARPS for the last month. Thankfully, I only have 1 share (25K) of this crap. This investment was totally misrepresented to me by my broker TD Ameritrade. My story goes like this: I had a 25K 6-month T-BILL that expired last December. I got a call from a "Fixed Income Specialist" at TD Ameritrade. We discussed some options about what to do with the money. I said that I did not want to tie up the money more than a year. He mentioned the Nuveen ARPS, said that they had weekly liquidity, were like cash, and as safe as Money Market. I also asked if it was a marginable security. He did some checking and came back and said that it was considered a "cash equivalent" investment and was not marginable. I asked for a prospectus and was told to just Google for more information about ARPS. I made it clear that I wanted short term liquidity and safety of principal for this money. I had turned down his previous suggestion of a Preferred Unit Investment Trust that had a duration for a few years and no safety of return at par at the end. I feel that my intentions were very clear. In any event, I find it strange that they were not forth coming in the beginning about the risks, and that I have never received ANY paperwork from TD or Nuveen regarding the investment that I just bought other than it shows up on my monthly statement. All of my Mutual Funds and Money Markets send Prospectuses and Quarterly/Annual reports on a regular basis. I would have thought that I should have automatically received a Prospectus from TD upon investing. I'm not sure what else to do at this point. I'm going to keep trying to sell every week. Nuveen announced some sort of refinancing that is going to begin soon... that might help.

aarps_burden, I got suckered by TD Ameritrade too. Email me at bill4598@sbcglobal.net if you want to compare notes.

Ms. Swanson and I have discussed the fee issue at length.

The decision to hire a lawyer hourly or on a contingency fee depends on a number of factors, including the contingency fee and hourly rates being offered.

For a small case, a contigency fee might make more sense, of course depending on what the contingency percentage is. On a hourly case the fees that the lawyer bills easily could be more than a contingency fee and could amount to a substantial percentage of the amount at issue. For a larger case, contingency fees can get quite large, again, depending on what the contingency fee percentage is. And for these ARS liquidity cases contingency fees should be much lower than the typical contingency fee charged in a principal loss case.

Some people want to know the exact amount they would be charged in given outcome and only want to pay if they win. This would achieved in a contingency fee structure. Other people only want to pay for work performed, win or lose, which is accomplished in a billable hourly fee structure. (Note that many lawyers will not put a cap on their total hours/fees in a billable matter, unless the cap is very high. That is because the unpredictability litigation/arbitration could result in far more work than predicted.)

That said, my firm is handling ARS cases on contingency fee and hourly fee structures, depending on what makes sense for our client and my firm.

Mr. Kaplan: You recommend arbitration which you said could take a "year or so", to get our money in a settlement. Would the settlement be at par or possible less? Or no guarantee? After subtracting your fees would it be cheaper to sell on the secondary market at a 30% discount and eliminate the year or so delay in getting the money? I know your answer is possible relative as to whether it is six or seven figures. Secondly, what would happen if the funds announce a deleverage agreement and pay us back at par prior to an arbitration settlement with our brokers? Would the lawsuit with the broker become a mute point? Wasted legal fees? I am one of those investors sitting on the fence with seven figures invested in ARPS not knowing whether to pursue arbitration or wait to see if my 4 ARPS deleverage. One, Cohen & Steers has announced plans to deleverage, and a second , Claymore is working on the situation now. I think there is hundreds, if not thousands of us waiting to see if the funds will buy back our securities and thus hesitant to seek an attorney at this time. By the way, don't you think the Funds were just as much to blame for this mess and why not sue them as well?

I would like to thank Mr. Kaplan for his learned remarks concerning my question about participating in the Class Action suit. That information is very helpful. Again...thank you!

Regards,
Michael Echols

Jeff (since everyone's on a first name basis here I will use your first name unless you object):

It is my understanding that on the filing of a class action suit which, as pleaded, covers an investor's particular claims, the statute(s) of limitations on those claims will be tolled for that investor--including his/her eventual private suit or arb. (Meaning the clock stops ticking on the claims.)

Can you comment on this?

I know that not all class action complaints will directly mirror all investor claims & I have not studied the Girard Gibbs complaints (though I was just forwarded a copy.) However, say I am an investor who was placed in CE ARPS by UBS between 2002 and the present, as so many people on this blog are. I want to look very carefully at that Girard Gibbs complaint with a trusted attorney. Because I believe that if Girard Gibbs has filed a class action for all investors placed in ARPS by UBS from 2002 to present claiming, say-- 1)fraud, 2) breach of contract, 3) breach of fiduciary duty; 4) gross negligence; 5) unsuitability--and seeking rescission, damages, attorneys fees, etc., and my case fits these categories, and those are the claims I want to bring and remedies I want to seek, my statutes of limitations are tolled for those claims and requested remedies. So I don't have to rush out and sign a contingency retainer agreement right now, not at all. I can discuss it with private counsel, but I can also wait to see if the class is certified, or what class is certified after the issue is fought in federal court. I will then have notice and the opportunity to opt in or out of the class, and then the class action is pursued to settlement or award and I have a second right to opt in or out of that.
Even if no class action ultimately goes forward the class action filing buys me time, years perhaps.

So one of the beauties of the class action form is that many private claims are preserved. Yes, we all have to be very careful and pay attention and make sure the class action that would have applied to each of us actually covers the claims we would want to bring in front of FINRA, obviously. But in point of fact I can wait till the dust settles to bring my FINRA action, provided I have been diligent in making sure the class actions filed spoke to the claims I want to preserve.

Can you comment. It seems to me even if FINRA were the superior way to proceed, as I know you urge, why rush into signing away any fraction of one's principal now?

P.S. Jeff,
It's true you and I have discussed your fee arrangement "at length" but I am looking at your retainer agreement right now (for a large claim) and, as a fellow attorney, I am still confused.

Your contingency percentage for any "Recission Recovery" on a large ARS claim is "capped" at 5%. That is, it is 1% for the first 30 days, 2% for the next, then caps at 5%. Since these cases always take more than 5 months 5% is the fee for "RESCISSION." The key here is rescission, which has a very specific meaning in law. It means the fraudulent deal is "undone"--either as a settlement by the parties or by arbitration award: the injured investor gets back her cash, and the injuring brokerage takes back the ARS. Okay, understood, your retainer caps at 5% for that in "big money" cases.

Your retainer then goes on to say that if the investor sells at a loss on the secondary market during the pendency of your representation, making "rescission" as described above "impossible," you will charge your client by the hour. Well, okay. I believe in our discussions you said you could not predict what this charge might be, would depend on complexity of case and how long it had been in your hands and how much work had been put in, obviously.

But here comes the real puzzler to me. The third possibility in the retainer is, and I quote:

"If You suffer loss of principle (sic) in Your auction-rate securities, either by a diminution of the market value of the [ARS] or as a result of a sale of Your auction-rate securites, the Firm would seek recovery of that lost principle (sic) and would receive...25% of the any (sic) Gross Recovery if the case is resolved prior to the filing of a response to the Statement of Claim by Respondent"--ie., by settlement with the broker dealer.
You take a slightly higher percentage if the principal is recovered later.

This language raises all kinds of questions to me, so I am posing them to you here. To use easy, even numbers and a big claims, let's assume I am bringing a FINRA action with you against UBS for putting me into $1,000,000 (original par value) of ARPS without appropriate disclosures.

If we go to arbitration and the arbitrators decide the appropriate remedy is "rescission," (or even if we manage this by settlement before the arb begins), well and good. They "buy back" my ARPS at original par for $1,000,000. I get $1m, UBS gets the ARPS, you get 5%, or $50,000.

But what if we go to arbitration, or we settle before arbitration, and the settlement or award is NOT based, strictly speaking, on rescission? Because we are also, to cover our bases, suing on damages theories and claims other than fraud, and arbitrators often like to give partial awards, etc. etc. And they don't even have to write down their reasons and justifications for what they are doing. So, what if our eventual recovery is based on a damages theory relating to breach of contract, or breach of fiduciary duty, or suitability, etc. Or if the arbitrators decide this is really a "worthless" security, or that it is not worth the par it was sold for, etc. etc. Here are the scenarios for you. Could you say whether your fee would be 5% or 25% in each case?

1. if the arbitrators determine due to your hard work that my security is a worthless, dead animal, and award me $1,000,000 based on breach of contract and lack of suitability, but do not order rescission and do not require UBS to take back the security:
is your fee $50,000? or is it $250,000?

2. if the arbitrators decide that this was breach of fiduciary duty and lack of suitability, but that I was somehow "partially at fault" and thus award me only $800,000 in damages, but do not reach the question of rescission and do not require UBS to take back the security
is your fee $40,000? or is it $200,000?
This seems like a very likely outcome of an arbitration, and it appears I would get $600,000 out of my $1,000,000 here.

3. if the arbitrators determine that my ARPS is now worth 50 cents on the dollar of original par, (too bad for me,)but that UBS is liable on a breach of contract theory, and the panel awards me $500,000 in "damages" for lost value but do not require UBS to take back the security (this also seems like a very likely outcome for an arbitration, given the vigor with which UBS is likely to argue that the risk of loss for "market failure" should be spread)
is your fee $25,000? or is it $125,000? do I get back $375,000 of my $1m?

And one more scenario: 4. if the arbitrators give me PARTIAL rescission, that is, they decide that UBS must take back only half of what it sold me and pay me $500,000, because, they rule, there has been a 50% "diminution in value" in the security which is really no one's fault, and the risk should be spread, does this "partial rescission" remedy which also partakes of a "diminution in value" qualify as a "rescission" measure for your fee (5%) or a "diminution" measure (25%)?
Is your fee $25,000? Or $125,000? Is my recovery $375,000?

I think it's important for people to be very clear on this, because in the real world, we are likely to see many "recoveries," if we see any, that do not look like neat, clean "rescissions."

Lisa: What an excellent post. I am very interested to hear what Jeff says about the various scenarios.

I also had ARS munis in an account with Smith Barney. My broker suggested them as a place to park cash and earn a good tax-free rate. They were, in fact, a good investment for the many years I held them.

I began to get concerned about the liquidity in November, when MBIA and Ambac started looking shaky. My worry was not about default, since my munis had high underlying credit quality, but I was worried that if the securities lost AAA ratings they would cease to trade. I called SB and was told that in theory an auction could fail, but it had "never happened". They sent me a brochure explaining how ARS's worked, something that I probably should have gotten years earlier. I read through this, and, since I also did not need the money immediately, I decided that I could stand to hold the investments, however I needed to know what the failed-auction interest rate was. My reasoning was that if the liquidity failed, I could be trapped hold a very long maturity bond, something I'd never want to do ordinarily given the high interest rate risk. I would therefore need a very high interest rate in the event of a failed auction. SB was unable to get that information for me, so, fortunately for me, I liquidated the entire position and move the money to treasuries.

I still think ARS are a great way for investors in high tax brackets to earn tax-free interest, while allowing munis to take advantage of low short-term rates. Investors need to understand all the risks, however, including not just the default risk (something any muni investor must accept) but the risk of illiquidity. Failed-auction rates need to be set very high to ensure that the muni has an incentive to buy back the bonds in the event of a failure, and/or to attract liquidity to the bonds. I suspect these ARS would not have blown up had the bond insurers not gambled in the CDO market. I certainly would not have run for the exits in an ARS insured by Warren Buffet. I think all of us, including my broker at SB, were blindsided by the ill-starred actions of the insurers.

Lots of questions to answer. I will try to capture them all.

First, class actions generally will toll the applicable statutes of limitations. As Lisa noted, however, you need to be sure that a pending class action includes you as a class member for purposes of tolling your claims. Second, you must be aware that even aside from statutes of limitations, FINRA also has a 6 year eligibility rule. As such, even if the limitations period is tolled, you still generally must bring a claim within 6 years if you want to be in arbitration. For all practical purposes, the 6-year elgibility period likely will not come into play, as most people will take some form of action regarding their ARS within the next 6 years.

Also, you usually can proceed on parallel tracks as a class member and in an individual arbitration. (That does not necessarily equate to rushing out and agreeing to give away a percentage of your recovery. You can also choose to hire an arbitration lawyer hourly.) That way, if you ultimately decide to opt out of a certified class action or the settlement of a class action, you will not have lost time and merely can proceed with the already pending arbitration. This would save a significant amount of time. (And the time frame within which each investor desire to resolve their own ARS problem is unique to that investor. Only you can decide how long you are comfortable being frozen in the ARS.) Or you can merely drop the arbitration case at the opt-out stage and remain a part of the class. As practical matter, because the ARS class actions are only in their infancy, the likely outcome is that an arbitration claim filed now likely would be over before the opportunity to opt out has even arisen.

Finally, there is absolutely nothing wrong with merely being a member of a class action and then filing an arbitration should you later decide to opt out of the class action (assuming the limitations periods have not expired.) If you are comfortable keeping your money frozen in ARS for the time being (be it months or years), will not otherwise need access to those funds, and are satisfied with the interest rate or dividends you are receiving, that is a very suitable and understandable alternative. There is no reason to incur attorneys fees in an arbitration (or in litigation) if you are fine with the status quo. We have told a number of potential clients who do not need their frozen funds for the foreseeable future that they should not hire us at all. If that is the investor's position, however, they must be sure to exercise their opt out rights when the time comes, otherwise, they would be bound by the result of the class action (even it is a cents on the dollar payout.)

As for the various arbitration result scenarios given a particular fee structure, I first must note that the fee structure that Lisa referred to is only one of the many that we have proposed and entered into with clients. We have made some slight alterations to the retainer agreement recently. There are many differences depending on the amount at issue, the financial position of the client, etc. Also, the questions assume that arbitrators actually opine on the different causes of action that are brought and actually would "reach" the rescission issue. That is not how arbitration awards regularly work, however. Arbitrators often merely order a dollar amount of recovery and sometimes give a loose explanation for the award.

Second, you need to appreciate the difference between what is now in the ARS market and what could happen. Presently, there does not appear to be a principal loss in most ARS. (I am aware of some that already have suffered principal losses.) That could change, however. If a true secondary market is created so that a reliable market value can be determined there will be a better ability to determine whether we are talking about a loss case (which generally involves a higher contingency fee) and merely a liquidity case.

Now on to your fee scenarios. The first three are really the same question. You get to keep the securities, which have a future income stream attached to them and certainly have some value given that they generally are backed by quality underlying municipal bonds (of course, this pertain to ARPS, whereas in ARCs you still have a piece of an actual specific bond). And you also receive a cash component as a damages award. Based on the way in which arbitrators generally rule, there likely would be no certainty as to on which legal issue the arbitrators based their award. But you clearly have not had a rescission because you were permitted to keep the securities. And while some comments on this blog suggest that the securities are worthless, that simply is not the case.

1. Arbitrators do not determine what your securities are worth. The value of your securities are worth what they are worth. Ideally there will be a secondary market at some point that will reflect a true market value of your securities. At worst, experts can opine on the price the securities would attract in a private sale. Remember the securities are still paying dividends/interest and there still is collateral underlying the securities. So, whether they maintain their value at par or have a discounted value because of the illiquidity (a more likely scenario) the securities still have a value. A determination that the securities are worthless would mean that, for example, all of the municipal bonds in the closed-end funds in which you hold ARPS are entirely worthless. It also would mean that the income stream you still are collecting is worthless. That clearly is not the case.

If arbitrators permit you to keep your securities (which have some, as yet undetermined value) and you receive a $1 million award, this would be a huge windfall for the investor, i.e., a home run for the investor. I do not think it is a likely outcome. Assuming there is a quantifiable loss, the entirety of the award would be at the higher rate. (Our retained expert is confident that a realistic valuation could be arrived. That merely would involve valuing the future cash flows and underlying securities in the closed-end fund for example.) The higher contingency fee would be based on the fact that there actually was a loss, rather than the investor merely have a liquidity problem with the expectation that the full par value would be returned at a later date. If you consider what such an award would entail, you would get to keep your securities, along with the future income stream from the securities, and even after fees you likely would end up in a far better financial position than you would be if you had never bought the securities in the first place.

2. This question is really the same as the first. You are permitted to keep your securities and also receive a cash payment. Again, if you get to keep the securities and still get a cash award, you very likely could have a large windfall and be in a far better position that you would have been had you never bougth the ARS in the first place.

3.

Sorry, I hit send by mistake.

3. The third scenario also is the same as the first two. You are permitted to keep your securities and also receive a cash payment. Again, if you get to keep the securities and still get a cash award, you very likely could have a large windfall and be in a far better position that you would have been had you never bougth the ARS in the first place, just not as large a windfall as the awards where you get $1million and $800,000.

4. This scenario actually involves a rescission. The fee in this instance would be the lower percentage times the $500,000 that actually was received in exchange for returning half of your ARS holdings.

By the way, the fee questions also make another incorrect assumption. There is a real possibility that the lower rescission fee percentage would not reach the 5% cap (understanding the percentages and the cap amount differ depending on the size of the case.) While I do not see the firms rescinding presently, the market is changing rapidly, and as things change the broker-dealers could decide to rescind before the cap amount is reached. Also, I believe I commented on this issue already, but the assumption that an arbitration award that allows you to keep all of your securities and also gives you a large cash award is anything but a huge home run is incorrect. Most of the ARPS and ARS still have significant value in the long run. I would love for this to happen to all investors, but I do not see arbitrators giving such home run awards.

I have tried to respond to the myriad questions and may have mispoken during the course of the responses. I would be happy to discuss any of these issues with anyone who wishes.

Mikag:

Excellent article called stockbroker fraud. It sums up the deception.

The one thing I do have trouble with is the valuation at $.60 on the dollar. He values the arp as if it is a fixed rate instrument. It is a floating rate interest and therefore you cannot assume today's reset rate into infinity. Obviously, the spread or reset calculations are insufficient to attract buyers in this market, but that may not be true of all markets. Unlike the common shareholders, if interest rates rise dramatically, the ARP rates are likely to rise with interest rates.

We are interested in funding a study as to value of these instruments in the absence of auction facility. This issue also goes hand in hand with the ability of the Funds to replace the leverage. If in certain circumstance and under different market conditions, the maximum penalty formula would be market, the Funds will be able to replace the leverage with different instrument or facilities.

Likewise, our decision to enter into costly litigation may be dependent on having some reasoned and researched opinion that a market resolution will be forthcoming. If anyone is interested in participing with us in this study, please contact me at arpholder@live.com.

Why hasn't the SEC or some attorney general commenced a criminal investigation into this fraud. Where is Elliot Spitzer when we need him?

To go off in a different direction: Would someone weigh on the downside risk of doing nothing and letting the ARS problem simmer down for a while?

With the collateral damage that can occur from lawsuits, if you don't currently need the cash tied up in the ARP, why not take a wait and see position? I have $500k tied up at UBS.

Would it make sense to wait until there is a resurgence of interest rates when the possibility of redemption is greater?

Any opinion on the danger of a significant or greater loss by holding on to the ARP's, compared to the roulette game of going to court or arbitration?

Yes Mike we areondering about the wait out, but of course continuing to put pressure out there to the public. I have been in touch with an investigator from the Vegas Attorneys General office. Let's hope someone starts a criminal investigation at some point.

When I spoke to the CEO's of Hancock and Eaton Vance they both assured me that we would receive our full par and accrued interest when redeemed. When is the big question. I guess if our Fa's can lie, our fund holders can to. But I truly hope they are telling the truth.

I too have $300 tied up in UBS and I want that money back.

We need to keep calling and writing.

There is supposed to be an article in the honolulu advertiser tomorrow on Monday. ( I thought it supposed to run last week but they kept changing the date) The reporter I gave my story to claims there is a portion in the article explaniing how he thinks this will play out and we will get our money returned to us. Sure hope he is right. LaDonna

Unfortunately I belong to your club. I have 2 shares of this junk sold to me by UBS. This is all I have, all my money is tied up in these securities. I have no access to cash except my paycheck. I am not a rich person. I was fortunate to be a beneficiary of my grandfather's estate which is why I had this much money to begin with. I had some of my own savings and put all this money into these securities. I was very naive about investing when I first opened my account with UBS. I made it very clear to my FA that I was a very conservative person when it came to money; that I needed liquidity and that I didn't want any risk, period. He assured me these investments were safe and very liquid, no risk, and "just like cash". I was notified by my FA on 2/22/08 that I would not be able to access my funds. I keep reading on here, there was trouble brewing in 2007 and early 2008 and I keep thinking why in the heck didn't my FA with UBS get me out of these? Like the rest of you I am livid! I repeated to my FA at that time he called me, everything I had relayed to him when I first met with him and he actually agreed with me what I had told him regarding my position regarding investments and being conservative. I spoke with the branch manager. I felt like he was blowing me off. He offered me no time table except "maybe" in a few months. They offered me a loan. I told them forget it, their offer was an insult. Borrow money from UBS, pay UBS interest because I can't get to my OWN money because of their neglience..? Nope, no way. Now I sit here trying to figure out which way to go...wait it out? Get a loan, spend money I don't have and see an attorney and file for abitration? Join the class action. It sounds like in the end, no matter which why I go, I'm going to lose in the end because it appears I probably won't get all of my money back. Thanks for listening.