Wachovia to buy back $8.8 billion in ARS

Missouri securities regulators spearheaded the investigation into the firm's role in the market's February collapse.
AUG 15, 2008
Two divisions of Wachovia Corp. have agreed to repurchase $8.8 billion in auction rate securities following an investigation by state regulators into the market's February collapse. Wachovia Securities LLC, the bank's brokerage division, and Wachovia Capital Markets LLC of Charlotte, N.C., will also pay $50 million in fines to be distributed among states. Missouri securities regulators, assisted by regulators from other states, raided the St. Louis headquarters of Wachovia Securities last month seeking records related to the company's sale of auction rate securities (InvestmentNews, July 17) . Under the proposed settlement, Wachovia will offer to repurchase roughly $5.7 billion of ARS held by individual investors, small businesses and charitable organizations. The buybacks will begin no later than Nov. 10 and conclude by Nov. 28. In an action to begin no later than June 10 and conclude by June 30, Wachovia will offer to buy back roughly $3.1 billion of ARS held by all other Wachovia investors. "I have received hundreds of calls from Missourians and investors around the nation who need their money to make medical payments, run their businesses or retire as planned," said Missouri Secretary of State Robin Carnahan. "We are pleased to announce a comprehensive solution for the liquidity needs of clients who purchased auction rate securities at Wachovia and to resolve this matter with federal and state regulators," said Robert K. Steel, president and chief executive of Charlotte-based Wachovia. Over the past two weeks, New York-based companies Citigroup Inc., JPMorgan Chase & Co., Merrill Lynch & Co. Inc. and Morgan Stanley, and UBS AG of Zurich, Switzerland, have agreed to repurchase approximately $51.7 billion of the troubled securities. In early-afternoon trading, Wachovia shares fell 12 cents to $15.69.

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