WACHOVIA SECURITIES’ OFFICES RAIDED BY SECURITIES REGULATORS AMID COMPLAINTS OF ABUSIVE SALES OF AUCTION RATE SECURITIES
Securities regulators from more than five states raided the St. Louis headquarters of Wachovia Securities LLC, seeking documents and records related to the company’s sale of auction rate securities.
The regulators, led by officials from the office of Missouri secretary of state Robin Carnahan, executed subpoenas seeking information concerning Wachovia Securities’ sales practices, internal evaluations of the auction rate securities market and marketing strategies, Ms. Carnahan said in a statement.
Wachovia clients have filed more than 70 formal complaints, representing more than $40 million of frozen assets, with the state in the past four months.
“Hundreds of Missouri investors have called my office because of inability to access their money,” Ms. Carnahan said in the statement.
In May, Wachovia Corp. of Charlotte, N.C., the parent company of Wachovia Securities LLC and other affiliates, confirmed that it received inquiries from the Securities and Exchange Commission and state regulators regarding auction rate securities, according to an SEC filing.
“Finally, securities regulators are investigating a $330 billion dollar problem, because many investors have complained that they were mislead into buying auction rate securities with promises that these were safe, liquid investments that were cash-like or cash equivalents, and they are not,” said Jeffrey Sonn, Esq. a securities attorney with Sonn & Erez, PLC, who represents investors with investment related claims. “Although the regulators cannot give investors back their money, hopefully the investigations will reveal what we have been saying all along, that in our opinion the auction rate securities market was marketed fraudulently to many investors,” said Sonn.
