Stormy
07-18-2008, 01:09 AM
Thursday, July 17, 2008
Report: Wachovia Raided by State Regulators
http://www.foxbusiness.com/images/stories/wachovia_branch.jpg
Federal regulators arrived at the St. Louis headquarters of Wachovia Bank on Thursday, demanding documents and the ability to do interviews on the bank’s auction rate securities department, The Wall Street Journal reported.
Shares of Wachovia (WB) briefly sold off on the news, but rebounded soon after the market had a chance to digest the report.
The investigators included regulators from Missouri, Illinois, Massachusetts, New Jersey and other states, the Journal reported.
According to the Journal, The Missouri Securities Division launched an investigation into Wachovia in April regarding the collapse of the auction-rate securities market. Regulators said Wachovia did not fully comply with the states’ subpoenas, prompting regulators’ visit to the bank’s headquarters today.
Action rate securities are long-term loans that are borrowed at short-term rates. Investment banks would hold auctions for the securities weekly or monthly, but after the credit crunch took its toll on the banks in February, the market seized and investors were unable to sell them. The clients who primarily purchased auction-rate securities were cities, states and other government-related entities.
http://www.foxbusiness.com/story/markets/industries/finance/wachovia-raided-state-regulators/
Report: Wachovia Raided by State Regulators
http://www.foxbusiness.com/images/stories/wachovia_branch.jpg
Federal regulators arrived at the St. Louis headquarters of Wachovia Bank on Thursday, demanding documents and the ability to do interviews on the bank’s auction rate securities department, The Wall Street Journal reported.
Shares of Wachovia (WB) briefly sold off on the news, but rebounded soon after the market had a chance to digest the report.
The investigators included regulators from Missouri, Illinois, Massachusetts, New Jersey and other states, the Journal reported.
According to the Journal, The Missouri Securities Division launched an investigation into Wachovia in April regarding the collapse of the auction-rate securities market. Regulators said Wachovia did not fully comply with the states’ subpoenas, prompting regulators’ visit to the bank’s headquarters today.
Action rate securities are long-term loans that are borrowed at short-term rates. Investment banks would hold auctions for the securities weekly or monthly, but after the credit crunch took its toll on the banks in February, the market seized and investors were unable to sell them. The clients who primarily purchased auction-rate securities were cities, states and other government-related entities.
http://www.foxbusiness.com/story/markets/industries/finance/wachovia-raided-state-regulators/