Phil Trupp

Auction-Rate Securities, RIP?

As of this writing (12/08), details of the ARS fraud have been exposed. Most of the $330 billion in frozen assets have been returned to frantic investors--but at a great cost to the financial industry as a whole. The loss of trust by investors can not be overstated.

It should have been clear as far back as 2004 that banks and brokers who peddled these securities had no respect for securities laws or their clients. They shrugged off SEC's cease and desist orders, lied to investors, and had no intention of returning anyone's money. It took action by state attorney generals, threats of prison time and huge fines to thaw the money freeze Compounding the problem was Washington's indifferent role. SEC Commissioner Christopher Cox, who was certainly aware of the commissioner's cease and desist orders, did nothing to enforce them. He has since come under increasing criticism, not only for his role in the ARS scandal, but also for a deregulation stance which has helped to throw all financial markets into chaos. His refusal to reinstate the safety net provided 70 years ago during the Great Depression has led to a short selling frenzy which has resulted in trillions of dollars of lost wealth. Mr. Cox even ignored the infamous Bernard Madoff, whose phony hedge fund turned out to be a $50 billion Ponzi scheme. Between Wall Street and Washington, the "free market" seems to have become criminal subculture.

More immedately, I am engaged in writing a book about the ARS scandal and am seeking investor interviews. If anyone out there has a story to tell, I will consider it for use in the manuscript. You may reach me online at [e-mail]. You may use your name or a pseudonym, the name of financial organization you dealt with, and disclose the worth of your ARS holdings if you choose to do so. I will guarantee your confidentiality.

The ARS debacle is an epic tale of Wall Street white collar crime and greed, and it was the tip-off for the financial meltdown we now face. I hope my book will serve investors first and foremost.

Thank you,

Phil Trupp