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Excerpt Of Interview With Stephen Weiss On Auction Rate Securities Class Actions

Seeger Weiss’ founding partner Stephen Weiss was interviewed by a Bloomberg news staff writer to asses the current state of the Auction-Rate security class actions, pending in various courts. An excerpt of the article follows: “…We do not bring cases unless we think there is a very good basis,” said Jerome Congress, a partner with […]

March 17, 2008

Seeger Weiss’ founding partner Stephen Weiss was interviewed by a Bloomberg news staff writer to asses the current state of the Auction-Rate security class actions, pending in various courts. An excerpt of the article follows:

“…We do not bring cases unless we think there is a very good basis,” said Jerome Congress, a partner with Milberg LLP, a New York firm that filed a class action against Citigroup. Milberg was Lerach’s firm when he filed the Enron suit.

Lawyers who have decided to take cases include Stephen A. Weiss of New York-based Seeger Weiss, who estimated damages are “in the many billions of dollars.” Weiss represents clients in 12 of the class actions.

Lower Return

Weiss said the investors received a lower return on their investment than they would have from fixed-rate bonds for the easier ability to sell them. Given the auctions’ failures, the bonds should have paid a higher rate, he said.

Faced with the high penalty-rate interest, some issuers are buying back auction-rate securities. Municipal borrowers have refinanced, converted or indicated they will redeem at least $68 billion of auction bonds by July 7, according to data compiled by Bloomberg.

Some investors such as Bristol-Myers Squib Co. have written down auction-rate investments as required by U.S. accounting rules that could also enable them to reset the value higher if market conditions improve. Companies such as Google Inc. have written down more than $1.8 billion since the market collapse.
The Citigroup cases include LHB Insurance v. Citigroup, 08- cv-3095, and Swanson v. Citigroup, 08-cv-3139, U.S. District Court, Southern District of New York (Manhattan)…

Read the whole article

Source: Bloomberg.com

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