Backlash is building against Wall Street for the credit crisis.
The latest case: New York state's attorney general, Andrew Cuomo, has launched a broad investigation into auction-rate securities, instruments used by municipalities, schools, closed-end mutual funds and others to raise money.
Mr. Cuomo's office sent subpoenas to 18 institutions on Monday and Tuesday seeking information on their auction-rate-securities, including some of Wall Street's biggest, such as UBS AG, Citigroup Inc., Merrill Lynch & Co., J.P. Morgan Chase & Co. and Goldman Sachs Group Inc., according to a person familiar with the investigation. The New York attorney general has plans to send out additional subpoenas soon, says the person.
And the state securities regulators are belatedly taking a look at the market as well. That begs the question of where the hell they were before this blew up, but better late than never I guess:
State securities regulators are investigating auction-rate securities as well, the North American Securities Administrators Association announced Thursday in a press release. Their efforts will be coordinated through a task force led by Massachusetts Securities Division director Bryan Lantagne. The task force includes members from Florida, Georgia, Illinois, Missouri, New Hampshire, New Jersey, Texas and Washington, according to the release.
I worked as a broker for over 15 years and I never sold these things. As the Economics Babe has said: "Something about seeing a security with a 25 year maturity in the Cash section of the statement just didn't seem right. How can a long bond always be priced at par? (long term bonds are the most volatile price wise)."