How often do politicians declare victory while innocent victims remain baffled, bewildered, and befuddled as they hang onto the pangs of defeat? How often do politicians look to score political points while not delivering real progress let alone justice for those victimized by fraud? Regrettably, this dynamic plays out all too often.
I witness it in a letter sent today by an innocent investor victimized by the fraudulent distribution of auction-rate securities by Oppenheimer Holdings. This investor who remains nameless for obvious reasons shares his pain and anguish in a letter sent to New York Attorney General Andrew Cuomo's office.
Feel his pain and know that Cuomo's settlement and victory lap are not even a drop in the bucket of the remaining $150 billion frozen ARS market. Two years have passed since the ARS market froze. For many investors, their lives and well beings froze right along with it.
Who within our political circles, our financial regulatory framework, our media are truly willing to stand up for all these victims?
The money frozen in these ARS investments does not belong to Oppenheimer or any of the other banks or managers. The fraud in the distribution process is now nothing more than an ongoing theft. I humbly submit:
Mr. Sangeap,
There seems to be a large disconnect between N.Y. state's reaction to your settlement with Oppenheimer over auction rate securities and that of Oppenheimer auction rate clients. While in public statements Mr. Cuomo said it was a good settlement and that "this should restore investor confidence" I can tell you that amongst the 20 or so Opco ARPS clients I'm in touch with there is huge disappointment in the settlement. Perhaps you can say something or point something out to address the sentiment that this settlement is sorely lacking. Maybe we have not been given enough info.
Considering that many of the most put off are N.Y. residents, you may want to address some of these points:
1) While every other state settlement has required the firm to buy back 100%, N.Y.'s deal with Opco calls for an initial buyback of approximately 5%, or, zero to those with over $1 million. How is that not terrible?
2) Unlike every other settlement thus far - about 25 between you and Massachusetts - this is the only one with no provision for those who sold on the secondary market. Why?
3) Cuomo calls this "an important first step." When can we expect the second step? Will it be larger? At the current re-payment rate, Oppenheimer will redeem all client shares in about 27 years. Up till now, the longest any firm has been given is 18 months. You would surely agree that when the most any other firm is given is 18 months, that 27 years seems a bit long. Considering many of those clients Opco sold this garbage to are seniors and will be dead in 27 years, this strikes me as hollow and insensitive.
Regarding those seniors Opco sold this to - it seems that Oppenheimer had a strategy much like a pack of lions stalking wild elk - to pick off the weakest of the herd. In Oppenheimer's case, the weakest were their elderly, naive senior clients, who hold ARS in disproportional numbers. What do you say to these senior citizens on fixed incomes, many in New York, who feel they've been victimized a second time by your office?
I know of two Oppenheimer clients - one worth about $50,000, the other $200,000 - whose Opco broker took their entire modest nest eggs and put it in auction rates. Do you have any reassuring words to them, that these folks of modest means won't have to wait 27 years for the return of their money, while Oppenheimer continues on with business as usual, hiring new employees and opening new offices, both of which they've done recently.
4) The threat to use the Martin Act seems idle. What, specificially, does Oppenheimer have to do to get this thrown at them? Is the criteria spelled out somewhere?
Sincerely,
Fraud is fraud. Theft is theft.
America is supposed to be better than this.
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