Did Hawaii Purchase ARS from FINRA through Citi?
The auction-rate securities market did not instantaneously freeze in early 2008. The fact is, the ARS market started to fail in mid-2007 on the heels of a variety of market segments repricing given the liquidity issues on Wall Street. Recall that mortgage hedge funds at Bear Stearns cratered in spring 2007. At that point, Wall Street was becoming much more risk averse while shepherding the use of its own capital and balance sheets. During this point in time, the ARS market started to fail and ultimately totally froze in early 2008. Evidence is rampant that Wall Street worked feverishly from mid-2007 until early 2008 to offload auction-rate securities anywhere and everywhere without informing investors of the failing nature of the market. Who was and is charged with protecting investors? The Financial Industry Regulatory Authority, FINRA. Did FINRA inform investors of the failing nature of the ARS market at that time? NO!! What did FINRA do in regard to ARS? This regulator offloaded $64
