NASAA Launches Website to Help Auction-Rate Securities Investors Navigate Arbitration Process

WASHINGTON (March 31, 2009) – As state securities regulators continue to provide relief to auction-rate securities (ARS) investors, the North American Securities Administrators Association (NASAA) has launched a new website to guide investors seeking damages through a special arbitration process created as part of the recent settlements reached with several major Wall Street firms.

To date, the state-led ARS settlements have led to the return of more than $60 billion to ARS investors. The settlements provide for a “special arbitration procedure” that may be used by customers seeking to recover consequential damages. Investors who have ARS-related disputes with their brokerage firms also may pursue those claims through the standard arbitration process governed by the industry’s self-regulatory body, FINRA.

NASAA President and Colorado Securities Commissioner Fred Joseph said that while the special arbitration process is similar to the FINRA arbitration process, there are differences between the two approaches. For example, under the state special arbitration process, a single public arbitrator is used rather than the panel of three arbitrators – two public, one non-public – used in FINRA arbitrations. Also in the special arbitration process, all firms have agreed to pay forum costs and most have agreed to pay filing fees. In the standard arbitration process, a customer filing a claim must pay a filing fee, and the costs of the arbitration forum are allocated among the parties by the arbitrators.

“Although arbitrations are not conducted in a court of law, they are legal proceedings and they can involve complicated legal and factual issues,” Joseph said. “Customers contemplating bringing a claim against a brokerage firm, either in a special or standard arbitration, may wish to seek legal counsel.”

The online ARS Arbitration Information Center, available at, offers a step-by-step guide to the special arbitration procedure.

The ARS markets froze in February 2008, triggering complaints from investors who could not withdraw money from their accounts. NASAA members led the effort to negotiate settlements with several prominent Wall Street firms that had marketed auction rate securities as being as safe and liquid as cash.

NASAA is the oldest international organization devoted to investor protection. Its membership consists of the securities administrators in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Canada and Mexico.

For more information:
Bob Webster, Director of Communications

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2009 Headlines, Newsroom