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Auction Rate Securities – National Settlement Offer

Clients of Oppenheimer & Co. Inc. (“Oppenheimer”) held investments in Auction Rate Securities (“ARS”) when that market failed in February, 2008.  Since that time many affected clients have received some liquidity through redemptions by issuers of ARS. Oppenheimer has worked throughout this period to resolve issues surrounding illiquid ARS. In February, 2010, Oppenheimer entered into a settlement with the New York Attorney General (“NYAG”). Shortly thereafter, Oppenheimer entered into a settlement with the Massachusetts Securities Division.  The result of these settlements (the “ARS” settlements) will be to provide some liquidity to Oppenheimer clients who currently own illiquid ARS. These settlements resolve outstanding regulatory litigation and investigations and more importantly provides a path for Oppenheimer to assist its clients in resolving the illiquidity of their holdings in ARS.

On February 24, 2010, the New York Attorney General announced a settlement under which Oppenheimer & Co. Inc. (“Oppenheimer”) will restore partial liquidity (approximately $30 million initially) to investors nationwide holding illiquid auction rate securities. 

Under the NYAG’s settlement, Oppenheimer has committed to use a significant amount of its available resources to purchase illiquid auction rate securities from individuals, charities, non-profits, and small businesses and institutions.  The settlement provides an important first step in restoring liquidity to investors.  Oppenheimer has committed to extending additional buy-back offers as soon as it has “available funds” (as defined in the settlements) for this purpose.

As a result of the settlement, approximately 1,250 accounts nationally can obtain some immediate liquidity.  All individuals, charities, and small businesses with account equity of less than $1 million at Oppenheimer on February 29, 2008 will be eligible for $25,000 in liquidity. Some of the terms of the settlement are as follows:

  • Commencing on or around May 24, 2010, Oppenheimer will offer to purchase one (1) share of ARS ($25,000) from each client household nationally whose household equity (value of all securities and cash in an account) was less than or equal to $1 million as of February 29, 2008.  This offer to purchase will remain open for seventy-five (75) days from the commencement of the offer. A reminder notice will be sent to each non-responding eligible investor 45 days after the commencement of the offer.  Eligible investors must accept the offer to purchase in writing within this 75-day period or the offer will be deemed declined.  An eligible investor who fails to participate in the initial offer to repurchase will not be precluded from participating in any additional offers to repurchase, provided that they qualify for such subsequent offer.
  • Oppenheimer will then make sequential offers to all eligible ARS holders as funds become available. Eligible ARS holders include natural persons (including their IRA accounts, testamentary trust and estate accounts, custodian UGMA and UTMA accounts, and guardianship accounts) charities, endowments or foundations with Internal Revenue Code Section 501(c)(3) status and small businesses and institutions who, at February 29, 2008, had less than $10 million in assets at Oppenheimer or (total assets at February 29, 2008) less than $50 million.
  • “Available funds” are funds deemed in excess of regulatory and financial capital constraints under which Oppenheimer operates.
  • No employee or member of an employee’s household can participate.


As a result of the settlement in Massachusetts, all litigation with the Massachusetts Securities Division was dismissed with prejudice.  In addition to participation in the Offer described above, Massachusetts residents will also participate in “funds for redemption” as described in the Settlement.  Residents in New York may also participate in similar funds pursuant to the provisions of the New York settlement.

The New York Attorney General settlement can be found at  Should you have additional questions please call 1 (866) 669-1051.

For a list of Frequently Asked Questions regarding Oppenheimer's Auction Rate Securities settlement please click here.