Auction rate securities fraud attracts a crowd
This is just one of our articles referencing the financial crisis, crash of the housing market, subprime, and more:
The New York attorney general’s office is issuing subpoenas to several Bank of America Corp executives as the state broadens its probe into the bank’s marketing of auction-rate securities, a person familiar with the investigation said on Wednesday. As it should be, we say. The lawyers are coming out in droves, asking the question “Did you lose money?” Two credit Suisse brokers took auction rate securities fraud to a new level (or new low depending on your outlook) by telling investors that the securities were backed by school loans, when in fact the securities were backed by subprime mortgages.
While the two are headed for unfortunate incarcerations, their plan was to make higher commissions. Glacier Education Loan bought student loans guaranteed by the U.S. government, according to the Credit Suisse guys. The problem is that there is no such thing as Glacier Educational Loan. So what did they actually package? Five pounds of subprime crap in the proverbial two-pound bag. They are not the only ones — just the first to get caught.
Auction-rate securities are long-term debt instruments that were designed to trade like short-term securities.
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