Look out, Pimco: Raymond James may sue ARS issuers

Raymond James wants help from issuers of auction rate securities. And if it doesn’t get it, the firm may sue. Clients of Raymond James Financial Inc. of St. Petersburg, Fla., hold about $900 million worth of auction rate securities. The market for those investments seized up last year as the credit crisis deepened. Raymond James chief executive Thomas James said some issuers were cooperating with Raymond James in helping its clients refinance those investments, but others weren’t. “These [issuing firms] are going to refinance; otherwise, as I’ve told them, ‘We’re going to sue you guys,’” Mr. James said last week in an interview in Las Vegas, where he was attending the national sales conference for Raymond James Financial Services Inc., its independent-contractor broker-dealer. “‘You don’t understand. We distributed for you guys, and you haven’t lived up to your obligations.’” Some fund companies, however, like Pacific Investment Management Co. of Newport Beach, Calif., don’t “feel the obligation to go pay them back.” Mr. James added that he told Pimco: “‘You said these things were going to be liquid. There was going to be a market. You’re not doing anything about that. You just can’t do that.’” Other companies have been more helpful, Mr. James said. “Our municipal bankers have been working with Nuveen [Investments LLC] in Chicago. Nuveen is fine,” he said. “Nuveen recognizes that this is their distribution base.” Raymond James clients have $560 million of auction rate securities issued by Nuveen, and $180 million from Pimco, Mr. James said. Raymond James has more than 5,000 brokers in its various platforms and reported $170 billion in client assets at the end of December. Mark Porterfield, a Pimco spokesman, did not immediately return a call to comment.