Securities News Releases

Wednesday, December 09, 2009
Contact: Laura Egerdal, (573) 526-0949
Contact: Abe Rakov, (573) 526-4734

Carnahan Resolves Two Auction Rate Securities Cases for Missouri Investors

Settlements reached with Morgan Stanley and Texas-based IPI

– Officials in Secretary of State Robin Carnahan’s office have resolved two more auction rate securities cases. The most recent settlements were with Morgan Stanley and Investment Professionals, Inc. (IPI). Carnahan’s Securities Division ordered Morgan Stanley to buy back certain retail portions of the more than $100 million in auction rate securities it sold to Missourians, and for IPI to repurchase the more than $1.5 million in auction rate securities they sold to Missouri investors.

Carnahan has been closely involved in resolutions reached by a national task force on auction rate securities since the $330 billion market melted down in February 2008, but has also worked separately on Missouri-focused cases, such as the IPI action. Along with IPI and Morgan Stanley, Carnahan’s office has settled auction rate securities cases with Credit Suisse, NatCity, JPMorgan, Merrill Lynch, RBC Capital Markets, Banc of America, Citigroup, Commerce Brokerage Services, Inc, and Wachovia Securities. These orders are available online.

The Securities Division in Secretary Carnahan’s office began investigating IPI’s auction rate securities activities following a complaint by a Marshall, Missouri, resident in May 2008. The order indicates that even two months after the auction rate securities marketed failed, Texas-based IPI continued to recommend the products and characterized the meltdown as “temporary.” IPI’s dishonest sales practices led to decisive action by Carnahan’s office requiring immediate repayment of more than $1.5 million to its auction rate securities clients in Missouri. The consent order also censures IPI and requires the firm to pay more than $50,000 to the Missouri Investor Education and Protection Fund.

Morgan Stanley, which sold a total of $103 million in auction rate securities to Missouri investors, is also required to repurchase certain auction rate securities it sold to Missouri clients in violation of state securities laws. In addition, the firm must pay more than $215,000 to the Missouri Investor Education and Protection Fund.

For more information regarding investments and fraud protection, or for information regarding a company or representative, call the Missouri Investor Hotline toll-free at 1-800-721-7996 or visit the Secretary of State's web site at

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