Fairfield Greenwich Group is trying to play ball, but Massachusetts Secretary of State William Galvin isn't listening.

Instead, he's sending out notices to find all the investors who lost money with Fairfield as a result of its investments in Bernie Madoff's Ponzi scheme. The state does not intend to settle, though negotiations between the state and Fairfield are ongoing.

Isn't it finally time to put someone in charge of the SEC who really cares about investors?

There are many well qualified candidates. Here are a few suggestions:

William Galvin: The highly respected Secretary of the Commonwealth of Massachusetts. He has taken on the industry and recovered millions of dollars of damages for aggrieved investors.

Joe Borg: Executive Director of the Alabama Securities Commission. Mr. Borg has a stellar record of protecting the interests of investors in Alabama.

Andrew Cuomo: The Attorney General of New York. He knows the industry and has shown great tenacity in exposing the recent fraud involving Auction Rate Bonds and other misdeeds.

Mary Schapiro, who is President-elect Obama's choice, has spent her career protecting the securities industry from investors.

Bloomberg News reports that Merrill Lynch & Co., Inc. (NYSE: MER) has extended its Auction Rate Securities (ARS) redemption offer in response to what I thought was pressure from New York Attorney General Andrew Cuomo who threatened to take Merrill to court. But what is interesting is that Massachusetts Secretary of State William Galvin was the one who announced the settlement.

While the politics of this intrigue me, those who held Merrill ARSs (pun intended) care about the terms of the settlement. Bloomberg reports that Merrill "will begin the buyback on October 15 for individuals, nonprofits and small business with $3 million or less on deposit. Redemptions for clients with $100 million or less start on January 15." This Merrill deal adds to the one it announced on August 7 -- a voluntary buyback of $10 billion worth of ARS. Merrill has a total of "30,000 clients who held an estimated $12 billion" according to Bloomberg.

This leaves many major ARS issuers lagging behind their peers. Here are four holdouts (with their 2007 municipal ARS issuance in parentheses):

• Goldman Sachs (NYSE: GS) ($4.3 B)
• Bank of America (NYSE: BAC) ($3.7 B)
• RBC Capital Markets ($1.2 B)
• Lehman Brothers (NYSE: LEH) ($1.1 B)

What are they waiting for?

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

The New York Times reports that Massachusetts secretary William Galvin has subpoenaed some revealing e-mails from UBS AG (NYSE: UBS) that illustrate its decision to stick retail investors with its worthless ARS inventory.

I've been following the $330 billion ARS market since February when the weekly auction market for resetting their yields seized up. Since then 4,852 comments have been posted from individual investors whose money is frozen in ARS limbo.

The e-mails reveal that UBS's corporate customers did not want to buy the ARS on UBS's books. So UBS tried to unload the worthless securities onto its individual customers. Absent dumping the ARS, UBS would need to take the hit itself. Rather than do that, UBS decided to let those foolish enough to fall for the ARS sales pitch to take the losses. The Times illustrates this decision clearly in an e-mail from Joe Gallichio, a managing director in the municipal finance department at UBS, on February 21, after the ARS market had frozen.

Massachusetts Secretary of State William Galvin is suing Merrill Lynch (NYSE: MER), accusing the firm of defrauding the city of Springfield, home of Homer Simpson, with subprime investments.

Merrill Lynch has already taken the unusual step of agreeing to buy back $13.9 million in subprime debt from the municipality at its original value after deciding that brokers had not been authorized by the city to buy the debt in the first place.

Merrill says it's puzzled by the suit, but Massachusetts is arguing that it told Merill to invest in "instruments that yielded more than Merrill's money market account as long as the products were triple-A rated by the major credit-rating agencies." It says that Merrill didn't warn Springfield about the risks of the CDOs.

Springfield officials -- and the secretary of state -- should take a look at the chart above. The idea that they could earn above-average returns with no risk defies the most basic principles of investing.

Maybe the lawsuit does have merit -- I have no idea. It appears that Springfield may have been misled about what it was getting itself into. But the fact is, Merrill lost big on subprime too because everyone forgot about the handy-dandy chart above: if it sounds too good to be true ...