NYT: Auction rate securities

The debacle hit individual investors especially hard.

When state regulators investigated the circumstances surrounding auction-rate failures, they found that some of the firms selling the securities had turned their aggressive sales pitches on small investors even when astute institutional buyers had already seen trouble and stopped buying.

Regulators have since forced many brokerage firms that underwrote or sold the securities to buy back their clients’ holdings.

Eight large and small firms have already settled, or agreed to settle, auction-rate cases with the Securities and Exchange Commission.

http://www.nytimes.com/2009/08/02/business/02gret.html?ref=business