swindled

Retail Investors Stuck Holding Auction Rate Securities

This whole thing is business as usual for the brokers. They fleece the retail investor time and time again. It will never end until the penalties they get hit with hurt more than the money they make fleecing the retail investor. When they get caught and end up paying whatever they pay pales in comparison to what they made mis leading the public. Why would they ever stop if that is the way it works.

Nuveen Investments Inc. Q4 2007 Earnings Call Transcript

The perpetual nature of these funds makes owning the preferreds very problematic. There is no legal obligation to de leverage and get the preferreds liquid. Why can't the fund issue new preferreds to replace the current ones that have some type of mechanism that say if the auctions fail like 5 times in a row (or some number of failures) that there is a put available to the preferred holder. After all since these are very safe if most people knew there was an out they probably wouldn't all want to sell at the same time and they would bring balance back to buyers and sellers. I, personally did not know there was any possibility of these becoming illiquid. Somehow Nuveen has to do something because holding these forever, no matter what the rate is completely unacceptable.