{"id":4586,"date":"2008-03-20T16:34:59","date_gmt":"2008-03-20T16:34:59","guid":{"rendered":"https:\/\/www.stockbrokerfraudblog.com\/2008\/03\/to_little_to_late_fund_compies"},"modified":"2021-09-20T15:40:54","modified_gmt":"2021-09-20T20:40:54","slug":"to-little-to-late-fund-compies","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/to-little-to-late-fund-compies\/","title":{"rendered":"Too Little Too Late: Fund Compies&#8217; Attempts to Refinance Auction Rate Preferred Securities Using Leverate or Varible Rate Securities Unlikely"},"content":{"rendered":"<p>\t\t\t\tSome closed end funds which issued preferred shares in the auction rate market suggest they might obtain liquidity in Auction Rate Preferred Securities (ARPs) using leverage and Variable Rate Demand Preferred Securities.   Such statements may give hope to those holding ARPs, yet we believe that these solutions unlikely create the liquidity sought.   <\/p>\n<p>This action by the closed-end fund companies is likely intended to benefit these companies and will not help the preferred share holders.  If the goal were truly to benefit ARP holders, such action would have been initiated prior to the lock-up of the ARP market.  As the broker-dealers actually increased sales to unwary investors, the fund companies were silent as risk to ARP investors grew and liquidity disappeared. <\/p>\n<p>According to the Investment Company Institute, closed end fund companies manage a total of $314 billion dollars worth of assets for their common shareholder clients.  Closed-end funds have borrowed about $60 billion of this total using preferred shares.  The preferred shares were created to use a low rate paid to preferred holders in order to boost yield to common mutual fund shareholders.  Risk to preferred shareholders could have been avoided by liquidating holdings within each respective fund when possible.  This would have also greatly reduced risk to common fund shareholders by &#8220;getting them off margin.&#8221;   <\/p>\n<div class=\"read_more_link\"><a href=\"https:\/\/www.investorlawyers.com\/blog\/to-little-to-late-fund-compies\/\"  title=\"Continue Reading Too Little Too Late: Fund Compies&#8217; Attempts to Refinance Auction Rate Preferred Securities Using Leverate or Varible Rate Securities Unlikely\" class=\"more-link\">Continue Reading \u203a<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Some closed end funds which issued preferred shares in the auction rate market suggest they might obtain liquidity in Auction Rate Preferred Securities (ARPs) using leverage and Variable Rate Demand Preferred Securities. Such statements may give hope to those holding ARPs, yet we believe that these solutions unlikely create the liquidity sought. This action by [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3865],"tags":[],"class_list":["post-4586","post","type-post","status-publish","format-standard","hentry","category-auction-rate-securities"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Too Little Too Late: Fund Compies&#039; Attempts to Refinance Auction Rate Preferred Securities Using Leverate or Varible Rate Securities Unlikely &#8212; Investor Lawyers Blog &#8212; March 20, 2008<\/title>\n<meta name=\"description\" content=\"Some closed end funds which issued preferred shares in the auction rate market suggest they might obtain liquidity in Auction Rate Preferred Securities &#8212; March 20, 2008\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.investorlawyers.com\/blog\/to-little-to-late-fund-compies\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Too Little Too Late: Fund Compies&#039; 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