Along with “sub-prime mortgages,” “credit default swaps” and “Bernie Madoff,” the phrase “auction rate securities” has become part of the lore surrounding the current economic crises. The common denominator among these is their seeming causal relationship with massive investor losses and, as sure as night follows day, when a group of investors suffers significant losses, securities litigation is sure to follow.
To some extent, however, the impetus for private civil litigation with respect to auction rate securities (ARS) was diminished by aggressive, coordinated and reasonably prompt efforts by the SEC Division of Enforcement, FINRA, the New York Attorney General’s Office and the North American Securities Administrators Association to obtain settlements—with many of the largest participants in the ARS market—structured to restore liquidity to investors.
