Time may be running out on certain auction-rate securities claims. Some investors may need to act promptly if they wish to protect their rights. The laws of each state establish time limits (statutes of limitations) within which legal claims must be asserted. Those time limits vary from state to state. Claims not brought within the applicable statute of limitations may be disallowed. To be conservative, investors should assume the clock starts ticking on the date of the transaction in question (although discovery and tolling rules that delay the running of the clock may apply).
Claims that many investors have include claims for violations of state securities acts (blue sky laws) and various common law claims, such as breach of fiduciary duty, fraud, negligence and breach of contract. State securities act statutes of limitation typically run from 1 to 5 years (more often 1 to 2 years), and statutes of limitation for common law claims generally run from 2 to 6 years. Claims of any kind that are older than six years are often ineligible for arbitration under FINRA rules. Auction-rate securities investors are well-advised to determine the statutes of limitations applicable to their specific claims.
While some sellers of auction rate securities have offered settlements to some investors, many are not covered by the settlements for various reasons, and will not be getting their money back any time soon, if at all, without taking legal action. The largest group of investors that has been ignored consists of large institutional and corporate investors. They have been excluded from auction rate settlements notwithstanding the fact that material information was withheld from them. Most of these investors will have to decide whether to take legal action in order to protect themselves and their shareholders.
Likewise, many smaller investors who purchased auction rate securities from so-called “downstream” or “distributing” broker/dealers have also been denied relief. Clients of Wells Fargo, Raymond James, Stiefel Nicolas and Oppenheimer remain out in the cold and there is no indication that this is going to change.
In addition to the investors described above, as Gretchen Morgensen wrote in her recent Fair Game column in the Sunday edition of The New York Times, some investors remain frozen in the auction rate securities for “quirky” reasons, including the date of purchase and whether they have moved their account from one firm to another.
In order to protect their claims, investors who have been left out of the settlements should consult with an attorney to determine what claims they may have and the applicable statutes of limitations.
Page Perry is an Atlanta-based law firm with over 125 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 30 occasions. Page Perry’s attorneys are actively involved in counseling institutional and individual investors regarding their auction-rate securities investment problems. For further information, please contact us.