Kansas City, MOIf you had money in Auction Rate Securities and have not received a settlement, time is running out. Diane Nygaard, founder of the Nygaard Law Firm, says that now is the time to file a FINRA arbitration claim to recover money that was lost or frozen in the Auction Rate Securities market.
According to Nygaard, there are still some firms that have not settled with clients who had money in Auction Rate Securities. Other companies have settled with some clients, but had other clients with accounts above a financial "limit" who did not receive settlements.
"Firms that have not settled with clients include E*TRADE and Wedbush Securities," Nygaard says. "Stifel Nicolaus has agreed to only partially repay its clients. UBS has only agreed to reimburse people who had up to $10 million at UBS. Anyone who had more money than that also needs to file a FINRA arbitration. Similar limitations are in place for the Merrill Lynch, Citigroup and Morgan Stanley 'global settlements'. Therefore, these investors need to file a FINRA arbitration. With the market decline, more and more arbitrations are being filed, so we believe it is best to file the arbitration now and join the queue.
"There are also people in another category: those with consequential damages. Because their money was frozen for so long, they lost business opportunities. Some people lost earnest money or deposits on real estate. These losses are called consequential damages. FINRA has established a separate and new arbitration forum for investors with consequential damages due to the auction rate securities market collapse. No arbitrator in these cases can have worked for a firm that sold auction rate securities. We are filing FINRA arbitrations for people with such consequential damages. For example, some people had entered into a business venture but their money was frozen so they violated their partnership agreements.
"In my opinion, the global settlements that will happen have already happened. UBS and Citigroup have already dispersed all the money they intend to disperse, unless there is an arbitration claim. This is also true of Merrill Lynch and Morgan Stanley. If you have not yet received your principle, or if you suffered consequential damages, it is time to file a claim.
"It is important to note that in these arbitration forums, claimants can recover all the damages they would recover in court. They can recover attorney's fees, interest and any losses, plus, if they can prove that there was a breach of fiduciary duty, they may receive punitive damages. There were a lot of trusts that were invested in Auction rate Securities. A lot of people used trusts for estate planning vehicles, thinking it avoided probate. The bank has become the fiduciary and the bank is not doing well in that position—there are a lot of losses incurred because of Auction Rate Securities.
"I think most people would probably know at this point if their money was in Auction Rate Securities. Some people might not know if they didn't try to take the principle out for some reason. I do know that a lot of brokers were slow to let people know that the auctions failed—that is why people were in situations where they committed to buying a home without knowing their money was frozen. People thought that the problem would be easily solved but it is a part of the credit crisis, so it didn't get solved.
"Financial firms are settling with us. We are finding that it is necessary to file the arbitration and get a hearing date—then the firms are settling the claims. But, it is necessary to file the arbitration. Once you file the arbitration, they know you're serious. We recently settled with E*TRADE for a retired physician. They covered all of her frozen money plus attorney's fees and a bit extra.
"It's been a year since the market collapsed, so people shouldn't delay. If they have a claim to bring, it's time to bring it."