Regulators Probe Auction-Rate Securities Sales

Law360, New York (April 9, 2008, 12:00 AM EDT) -- Now that the dust from the collapse of the auction-rate securities market has settled, regulators are taking a closer look at what went wrong.

Both the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority have launched investigations into how brokers advertised and sold the financial products.

Auction rate securities are bonds and preferred stocks with interest rates or dividends that are reset periodically through an auction.

The market for auction rate securities went bust in mid-February amid growing fears over the widening subprime...
To view the full article, register now.