Christopher Cox, Chairman of the SEC, is throwing around threats again. The SEC’s investigation into auction-rates securities abuses has unearthed more violations than the five banks that have already agreed to buy back billions of dollars of ARS from customers.
“We have over a dozen pending investigations under way,” Cox said in his remarks to the press, according to Reuters. And the probe extends to secondary dealers, he added, with no company “getting a pass.”
The five banks that have agreed to billion-dollar settlements so far are Wachovia, JPMorgan, Morgan Stanley, UBS, and Citigroup, all of which have admitted they sold auction rate securities as safe, cash-equivalent products, when in fact they faced increasing liquidity risk.
Cox told the reporters the SEC is “working very, very quickly” on its pending investigations, according to the news service, but he declined to say when another settlement will be announced.
Meanwhile, the wire service noted that the Regional Bond Dealers Association has been calling on regulators such as the SEC, the New York state attorney general, and other state authorities to expand their ARS settlements to include investors who bought the now-illiquid bonds.
Reuters said the association is asking that primary bond dealers repurchase the securities from any customer who bought them, regardless of which firm distributed the securities
While of course banks should level with customers about the level of risk they’re undertaking, the SEC is on the verge of completely destroying allconsumer confidence. With banks going under every week, and the big 19 ( I’m including all the primary dealers in that number) being threatened with a surplus of mortgage-assets that are quickly becoming worthless, the last thing Wall Street needs is a wide-ranging threat of prosecution for ARS fraud.
Just pace out the scandals, that’s all I ask.
