MIAMI, March 5, 2008 (PRIME NEWSWIRE) -- On February 26, 2007, the securities law firm of Dimond Kaplan & Rothstein, P.A. ("DKR") (http://www.auctionratesecuritieslawyer.com) filed a $5.2 million Financial Industry Regulatory Authority ("FINRA") securities arbitration claim against UBS Financial Services, Inc. ("UBS"). The claim seeks rescission of fraudulent auction rate securities ("ARS") transactions. Within days of DKR filing the claim, UBS removed information concerning ARS from its website, apparently in response to DKR's claim.
ARS include auction rate certificates and auction preferred securities in closed-end funds. Brokerage firms, including UBS, Goldman Sachs, Lehman Brothers, Wachovia, Citigroup f/k/a Salomon Smith Barney, Morgan Stanley, Wachovia, Oppenheimer, and Merrill Lynch, routinely marketed and sold ARS as safe, highly liquid, cash-equivalent investments. In truth, ARS are subject to extreme illiquidity and currently are nearly impossible to sell, with billions of dollars now frozen in illiquid ARS. Moreover, investors also are subject to significant risk of loss.
As alleged in DKR's recent claim, UBS represented that auction preferred securities were liquid, cash-equivalent investments. In support of that allegation, DKR attached to the claim an excerpt from UBS' own website that touted ARS as "(c)ash alternatives" and "highly liquid, short-term investments" that gave investors "the ability to quickly convert investments into cash when you need it."
But only four days after DKR filed the claim, UBS removed the ARS-related representations from its website. Accessing that page on UBS's website now delivers the message "Page not found." DKR believes that UBS removed the ARS page from its website because the information grossly misrepresented ARS and, in effect, served as an ongoing admission that UBS had defrauded investors. In a similar circumstance, Oppenheimer recently changed the way it lists ARS on account statements, previously listing ARS as "Cash Equivalents" and now listing them in the "Other" category.
In addition to the case that DKR recently filed, the firm expects to file a number of additional cases on behalf of similarly situated clients over the next several weeks. In each of those cases, the investors were told by brokerage firms that the ARS were cash-equivalent investments that were just as liquid as a money market investment. But millions of dollars worth of the investors' assets now are inaccessible in illiquid ARS.
Dimond Kaplan & Rothstein, P.A. is an AV-rated law firm that represents investors nationwide in stockbroker misconduct and investment fraud cases. They have represented investors against most major Wall Street brokerage firms in claims involving stocks, options, variable annuities, hedge funds, mutual funds, bonds, auction rate preferred securities and collateralized mortgage obligations (CMOs). If you suffered securities investment losses, please contact Jeffrey Kaplan, Esq. of Dimond Kaplan & Rothstein, P.A. at (888) 578-6255 or jkaplan@dkrpa.com for a free case evaluation. You also may visit Dimond Kaplan & Rothstein, P.A. on the web at www.auctionratesecuritieslawyer.com.
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