Special Arbitration Procedures for Investors Involved in Auction Rate Securities Regulatory Settlements

Auction Rate Securities (ARS) are debt securities that are sold through a dutch auction. A dutch auction is public offering auction structure in which the price of the offering is set after taking in all bids and determining the highest price at which the total offering can be sold.  In a dutch auction, investors place a bid for the amount they are willing to buy in terms of quantity and price.  In this type of auction, an ARS is sold at an interest rate that will clear the market at the lowest yield possible. This ensures that all bidders on an ARS receive the same yield on the debt issue.  The interest rate is reset periodically.

 

Investors covered by ARS final settlements with securities regulators (i.e., SEC, FINRA, and the states) may participate in a Special Arbitration Process (SAP) to recover consequential damages.

 

The SAPs are voluntary. Eligible investors may choose any SAP associated with their brokerage firm. The SAPs found in the various regulatory settlements are not similar. Provisions for payment of fees, damages, and other procedures may vary from settlement to settlement. Eligible investors should review all applicable SAPs before filing a claim.

 

If an eligible investor elects not to participate in these special procedures, the investor may pursue all other legal or equitable remedies available including filing a regular arbitration with FINRA.

 

Please review the lists of regulators and firms covered by final settlements before filing a claim: