Indiana Secretary of State’s Office Holds Securities Firm Accountable with Return of Over $31 Million to Indiana Investors

Raymond James agrees to repurchase investments in latest auction rate securities settlement. Efforts of Indiana Securities Division lead to return of $804 million to Indiana investors in auction rate securities cases against Wall Street firms.

INDIANAPOLIS (August 24, 2011) – Indiana Secretary of State Charles P. White announced today that his Indiana Securities Division finalized a settlement with national securities firm, Raymond James, on allegations that the firm misled investors about the safety of the auction rate securities market.

The consent agreement with the Office of the Indiana Secretary of State requires Raymond James to return $31,240,000 to Indiana investors – bringing the grand total of money returned to investors from this and previous settlements with Wall Street firms in auction rate securities cases to approximately $804 million.

Raymond James will re-purchase some auction rate securities from investors whose funds have been frozen since the collapse of the auction rate market in early 2008. The firm also must pay a civil penalty of approximately $63,000. 

“When there is an opportunity to return money to Indiana investors, it’s a win,” White said. “When we’re talking about a total of just under a billion dollars returned to Hoosiers, it’s a huge win. I can’t praise our staff enough for their leadership in making this possible.”

The Indiana Securities Division took a leadership role in this case as a member of the North American Securities Administrators Association Task Force that investigated Raymond James and negotiated the settlement on behalf of all state securities regulators.

Although marketed and sold to investors as safe, liquid and cash-like investments, auction rate securities are actually long-term investments that were sold in a complex auction process on a periodic basis.  However, these auctions failed in early 2008, leaving investors frozen without a market to sell their securities that they bought because of the liquidity.

In 2008, state securities regulators across the country began receiving complaints from investors and formed a multi-state task force to investigate whether the nation's prominent Wall Street firms had systematically misled investors when marketing auction rate securities.

“As a result of this settlement, Hoosiers are able to avoid thousands of dollars in legal fees and years of litigation in individual efforts to recover their investments,” White said.


Media Contact:
AJ Feeney-Ruiz
Deputy Chief of Staff
Communications Director
Office: 317-233-8655
Cell: 317-730-4778