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Blame Game On Auction Rate Securities Has Begun

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Brokers who sold auction rate securities to customers have begun a "counteroffensive" in response to investigations by New York State Attorney General Andrew Cuomo, according to CNBC. The brokers, stung by recent allegations that they misled customers about the liquidity of the securities and the possibility that charges will be filed against individual brokers, have begun pointing to the role of underwriters, according to a CNBC report.
The Regional Bond Dealers Association, a brokerage trade association, has written a letter to Cuomo's office. They hope to shift his focus onto firms who underwrote the securities, rather than the brokers who sold them on. Brokers are also pointing to the role of issuers, who many believe knowingly benefited from deception about risks in the market and who have been slow to redeem the securities.
The letter from the RBDA alleges that fraud occurred among the underwriters, the banks who brought the auction rate securities to market on behalf of the issuers. The brokers claim they were entitled to rely on the reassurances about liquidity from underwriters and acted in good faith.