Auction Rate Securities Failures: Litigation Potential

Law360, New York (April 30, 2008, 12:00 AM EDT) -- Until quite recently, many investors had never heard of auction rate securities, and many who had heard of them had little understanding of how the $330 billion market for auction rate securities functioned.

In February of this year, however, auction rate securities made headlines after an unprecedented number of “failures” in the auctions that set the interest rates for auction rate securities and provide investors with the primary source of liquidity for those securities.

The widespread auction failures have left some investors holding unexpectedly illiquid investments...
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