Another Oppenheimer ARS Investor Unloads On New York AG Cuomo

 

Investors defrauded in the distribution of auction-rate securities deserve a voice. Sense on Cents is happy to provide it. Aside from feeling screwed by Wall Street banks and money managers in the distribution of auction-rate securities as a cash surrogate, investors now feel increasingly incensed by the lack of support in the judicial system and in selected attorneys general offices in our country.

The latest AG to feel the wrath of ARS investors is New York AG Andrew Cuomo for his recent settlement with Oppenheimer Holdings. Rather than reading my opinion of Cuomo's settlement, let's listen to an investor (who remains nameless for obvious reasons). In my opinion, this individual's letter speaks volumes and echoes the sentiments of thousands of investors who continue to hold the $150 BILLION in frozen ARS.

Wall Street, Washington, state AGs, and to a very large extent the media have done these investors an enormous disservice in not addressing and rectifying the fraud involved in the distribution of ARS. The investor writes:

Cuomo sold us out. As an Oppenheimer ARS victim and a New Yorker and someone who was manipulated out of more than a million dollars by Oppenheimer I was thrown under the bus. First we had too big to fail now we have too small to regulate.

Can anyone in the financial sector be found guilty of anything? What other industry allows criminals, when they get caught, to give back what they took, only if they have the money, over a very long period of time, possibly pay an insignificant fine, and neither admit nor deny any wrong doing? They get to go back to their companies as if nothing ever happened. They are free to dream up the next product they can scam us with. Knowing that the cycle will just repeat itself. If Madoff didn't basically give himself up he would still be out there pillaging and plundering investors. What chance does the average investor have out there?

The part that really sticks in my gut is this. Right before the ARS market crashed the CEO and other top executives, knowing the market was going to crash and keeping this info to themselves, were selling their own ARS. They were using their brokers to dump their own personal ARS on me, using the guise of "cash equivalent" until the very end. They got most of their money out, because they had inside information, and have full use of their money today while our money will be stuck for decades. By the summer this will all be forgotten by everyone except the victims. I can picture Lowenthal (Oppenheimer CEO) at his country club having a good laugh about this. After all, the hardest part of this settlement for Oppenheimer is to figure out how to prove to Cuomo every 6 months they have no extra money. Hardly a chore in this business environment and with their particular skills.

Some more food for thought. For the past 2 years Oppenheimer has been collecting fees daily for the auctions that still go off and fail. That's fees on $960 million. In reality, the Cuomo settlement is costing Oppenheimer little or nothing of their own money. If you subtract the fees they collect from the amount they owe it's close to a wash. Every AG across the country that got an ARS settlement settled for full redemption for the people of their state.

Cuomo is the only AG that got a settlement that favored the company that misrepresented the sale of ARS and did as close to nothing as you can get for the people of his state.

Remember, it's their money. They deserve it back. They should be first in line. Fraud is fraud. Theft is theft. America is supposed to be better than this.