HARRISBURG, Pa., Aug. 7 /PRNewswire/ -- The Pennsylvania Securities
Commission is pleased that as a result of an agreement in principle entered
into by Citigroup, the United States Securities and Exchange Commission and
state securities regulators represented through the North American Securities
Administrators Association (NASAA), many investors whose funds have been
unavailable as a result of the discontinuance of support for auction rate
securities (ARS) auctions will be able to recover their frozen assets.
Citigroup has offered to repurchase all ARS sold to its retail customers
who held those securities on February 12, 2008 (when the auctions ceased to
function), no later than November 5, 2008. This will mean that individual
investors, businesses with account values up to 10 million dollars and all
charities will receive their invested funds. Citigroup has also consented to
engage in an arbitration process to resolve claims of consequential damages by
its retail investors.
Citigroup will pay a penalty in the amount of 50 million dollars to the
states as a result of issues raised by state securities regulators concerning
marketing of ARS and the unavailability of Citigroup records.
Pennsylvania and other members of the task force are continuing their
investigations of other companies involved in selling ARS product to
investors.
The Pennsylvania Securities Commission has been a participant in NASAA's
special task force created to provide remedies for investors. The investor
funds are tied up in ARS which had been offered as the liquid equivalent of
cash but were suddenly frozen when the auctions ceased earlier this year.
While the Citigroup settlement only affects customers who purchased ARS
through Citigroup, the settlement represents a potential breakthrough for all
investors who are similarly situated. Whether they were individuals,
corporations, or charities the loss of liquidity represented by these
investments has imposed great hardship.
"In difficult economic times, state securities regulators are doing all in
their power to uphold the trust of investors in the securities marketplace,"
said Chairman Lam. "Resolution of remaining ARS issues will go a long way
toward restoring investor confidence."
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