Adesa Impact

I noticed with interest that Citigroup is in negotiations with NY state & Federal regulators about its possible wrongdoing in the auction-rate securities market. Citigroup may have to buy back billions of dollars of securities from investors and pay a sizeable fine. Amazingly, Citigroup is considering HIRING Schwartz, the former head of Bear Stearns ! Maybe Citi is going to offer a new course at NYU or Columbia this fall, how NOT to run a big Wall Street firm. Or maybe, how * I * lost billions for my company but made out like a bandit ! Citi PAID Prince $10 million dollars as ... Read Full Story

Wall Street is a product machine. They are always devising new “packages” to sell their customers. A basic word of advice I can never share enough with new and seasoned investors alike is: “Know what you are buying.” This hit me again last week. Major brokerage firms settled class action suits with clients who bought a “risk-free” product called “auction rate securities.” Until February, auction rate securities had been a place investors could pocket a slightly higher yield without, they were told, “additional” risk. Then, in the tumult of the credit crisis, the regular auctions failed. This caused Goldman Sachs, Lehman Brothers, Merrill Lynch ... Read Full Story

In this morning's Tennessean , there was a teeny little two column-inch piece (so tiny they didn't put it on their website, so I can't link to it) about securities regulators from several states raiding Wachovia's headquarters in St. Louis over "the collapse of the $330 billion auction rate securities market." "Hmm," I thought. "That sounds really interesting. I wonder what an auction rate security is." It turns out that the story is much bigger, it's just that with all the chatter about subprime mortgages, collateralized debt obligations, inflation etc., this particular market collapse didn't make a very big dot on the radar screen. ... Read Full Story

NEW YORK (CNNMoney.com) -- New York State Attorney General Andrew Cuomo Thursday brought a multi-billion dollar civil lawsuit against the Swiss banking giant UBS for allegedly pushing everyday investors into buying troubled auction-rate securities. The lawsuit charges UBS ( UBS ) with falsely marketing and selling auction-rate securities as safe, cash-equivalent investments at a time when the market for these securities was under severe strain. "Today we bring the first nationwide lawsuit against UBS, seeking to recover billions of dollars for customers and sending a resounding message to the rest of the industry that this type of deceptive behavior will not be tolerated," Cuomo ... Read Full Story

Wall Street is a little hung over after yesterday's rapturous climb. The Dow Jones Industrial Average is down about 169 points at midday, which is still ahead of two days ago, so that's good. Oil is going for something like $118 a barrel. That would have sounded like insanity a year or 18 months ago, but today, it feels like a relief. Forbes blames the financial malaise on two things: people not buying stuff, because they can no longer afford to; and the forecast wave of regular mortgage (as opposed to subprime mortgage) defaults coming down the pike. Remember the auction rate securities disaster ... Read Full Story