Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Monday, February 28, 2011

FINRA Won't Discipline Schwab for ARS Sales

On February 11, FINRA notified Charles Schwab that it has decided not to bring a disciplinary action against it related to sales of auction rate securities.  Schwab previously reported that in November 2009 FINRA issued a Wells notice in connection with the ARS.  A complaint filed by the New York AG around the same time is still pending against the firm.  InvNews, Finra backs down, won't discipline Schwab over ARS sales

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The same fraud was committed by all of these banks, using the same representations of a security that was peddled as cash, but was in fact long-term or perpetual bonds.

The financial industry should have been forced to refinance the entire $336 billion market. Instead, individual investors - risk-averse, many of them elderly, all of them misinformed -- have been stuck, some more than three years, with "cash" their investment bank will not return as promised.
Finra is a joke, but I'm not laughing.

Posted by: Kathy | Mar 1, 2011 3:47:40 PM

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