Smaller Brokerages: UBS Defrauded Us In ARS Scandal, Too--They Should Pay


Smaller brokerages like Raymond James (RJF), Stifel Nicolaus, Oppenheimer (OPY), and Fidelity say that they too were bamboozled by the larger banks throughout the ARS blowup.

These smaller brokerages, unlike the big banks, just sold ARS to clients, and had nothing to do with running the auctions or creating the securities themselves. These firms therefore feel aggrieved when clients insist that they agree to the same settlement that the big banks are dishing out. Spokesmen for these brokerages have instead suggested that the banks that ran the auctions should be made to pay. WSJ:

“None of the rest of the market knew” about how “auction dealers allegedly controlled the whole auction process for 25 years,” says Michael Decker, chief executive of Regional Bond Dealers Association, which represents regional brokerages.

Brian Maddox, a spokesman for Oppenheimer, said the firm believes the recently announced settlements “should cover all investors,” even those who bought the securities elsewhere.

Lawyers for brokerage-firm customers who have filed arbitration claims over auction-rate securities contend that many brokerage firms either knew exactly what they were selling or didn’t bother to ask issuers and underwriters hard questions about the risks when the market was booming.

See Also: Wachovia (WB), JP Morgan (JPM), Morgan (MS) To Settle ARS Scandal; Merrill (MER) Refuses
UBS Agrees To Buy Back $19 billion Of ARS From Hosed Clients*

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