and Citigroup to pay $618,000 for misleading investors
April 10, 2009
Wilmington, Del. —
Wachovia and Citigroup will each pay a $309,000 fine to the State of Delaware for misleading investors about the safety of the auction rate securities market, the Delaware Department of Justice announced on April 9.
The fines will be paid into the Delaware Investor Protection Fund, used by the Department of Justice to enforce investment laws.
Eleven firms were ordered to pay fines in November following a multi-state investigation into the auction rate securities market.
The firms agreed to repurchase more than $60 billion of auction rate securities and were required to notify investors of the repurchase offer. In Delaware, Wachovia sold more than $60 million in auction rate securities and Citigroup sold more than $92 million.
Auction rate securities are long-term financial instruments with interest rates that are reset through weekly or monthly auctions.
When auctions run properly, investors who hold auction rate securities can buy or sell them on a regular basis, but when there are not enough buyers for every security being offered for sale, investors are forced to hold their securities until the next auction.
Since early 2008, many investors have been unable to sell their frozen auction rate securities.
“These agreements send a clear message to investment firms that we will hold them accountable for misleading investors about the sale of these supposedly safe and liquid investment products,” said James Ropp, Delaware Securities Commissioner.
Delaware investors can call (302) 577-8424 for information about the repurchase of Auction Rate Securities.
Story posted online at: http://www.communitypub.com/business/x1098996441/Wachovia-and-Citigroup-to-pay-618-000-for-misleading-investors