WSJ: "Holders of Auction-Rate Debt"
WSJ writes "Holders of Auction-Rate Debt Have Choices, but Few Solutions", again spreads the myth that investors were unaware of the risks of auction-rate securities. ARS, which money funds could not and cannot buy, were clearly not "money market" securities. We find it unbelievable that any broker did not clearly disclose this fact. The Journal says, "For decades, individuals and companies bought auction-rate debt from municipalities, charitable organizations, student lenders and closed-end mutual funds. The securities had long-term maturities but functioned like a short-term investment, paying interest rates that were reset in weekly or monthly auctions conducted by Wall Street firms. Brokerage firms and financial advisers pitched them to investors as a safe place to stash one's cash and collect a higher yield than a money-market fund offered, often tax-free."
