http://www.investorwatchdog.com/fool-me-once-shame-on-you Timely financial educational resource information is your best defense against investment schemes & scams Wed, 01 Feb 2012 21:35:24 -0800 http://wordpress.org/?v=abc hourly 1 http://www.investorwatchdog.com/fool-me-once-shame-on-you/comment-page-1#comment-1145 Matthew Arndt, CFA, CPA, CFP Mon, 07 Dec 2009 17:04:37 +0000 http://www.investorwatchdog.com/?p=2934#comment-1145 These were pitched as safe alternatives to cash when they are really long-term securities. The banks held weekly auctions to set the interest rates and give investors the option of selling their securities. The auctions failed, the banks refused to support these auctions, and investors funds were frozen. The banks were not legally obligated to make markets or give investors a price where they would buy the ARS's back. These types of instruments largely depend on new investors showing up to buy the securities much like a Ponzi scheme. ARS's were issued by municipalities, close-end mutual funds, student loan companies, corporations, etc. The bidding process appears to have been corrupt and lacking transparency. Many advisers who did not do their homework placed their clients' savings in these products. These were pitched as safe alternatives to cash when they are really long-term securities. The banks held weekly auctions to set the interest rates and give investors the option of selling their securities. The auctions failed, the banks refused to support these auctions, and investors funds were frozen. The banks were not legally obligated to make markets or give investors a price where they would buy the ARS’s back. These types of instruments largely depend on new investors showing up to buy the securities much like a Ponzi scheme. ARS’s were issued by municipalities, close-end mutual funds, student loan companies, corporations, etc. The bidding process appears to have been corrupt and lacking transparency. Many advisers who did not do their homework placed their clients’ savings in these products.

]]> http://www.investorwatchdog.com/fool-me-once-shame-on-you/comment-page-1#comment-1131 Jimmy the Greek Tue, 01 Dec 2009 04:08:03 +0000 http://www.investorwatchdog.com/?p=2934#comment-1131 I heard that Auction Rate Securities were represented as CD alternatives to investors and then the firms participating(underwriting) in the process stopped supporting the weekly auctions. I heard that Auction Rate Securities were represented as CD alternatives to investors and then the firms participating(underwriting) in the process stopped supporting the weekly auctions.

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