THE NEXT CHAPTER IN THE LIQUIDITY CRISIS:

AUCTION RATE SECURITIES MARKET FAILURES

A recent spate of litigation suggests that various investors are combing the financial statements of numerous companies to scrutinize how some funds, broker-dealers, and public companies have characterized and marketed auction rate securities.

Auction rate securities are municipal bonds and other highly-rated financial instruments with interest rates set at periodic auctions. Through these auctions, holders of the securities have the ability to sell their investments. Although these securities usually have long-term maturity dates, for years auction rate securities have been classified (and at times marketed) as cash equivalents, akin to money market funds, because they could be liquidated at regularly scheduled auctions. On February 13, 2008, however, the ability to liquidate these securities deteriorated virtually overnight just as many broker dealers began withdrawing their support for the auctions.

For our readers, we have prepared a brief overview of the implications of these failures for hedge funds, broker-dealers, and other financial institutions that carry these securities.

Please read it here.

DLA Piper’s Securities Litigation lawyers provide experienced legal counsel for individuals and entities in all areas of securities law, participating in landmark cases that have helped shape securities laws and successfully representing clients before the SEC and United States Attorneys.

For more information, please contact:

Perrie Weiner, International Co-Chair, Securities Litigation

Robert Brownlie,
Co-Chair, Securities Litigation

Gregg Zucker

Published by DLA Piper US LLP
Copyright © 2008 DLA Piper US LLP
All Rights Reserved

This publication is intended to provide clients with information on recent legal developments. It should not be construed as legal advice or legal opinion on specific facts. Pursuant to applicable Rules of Professional Conduct, it may constitute advertising.

Circular 230 Notice: In accordance with Treasury Regulations which became applicable to all tax practitioners as of
June 20, 2005, please note that any tax advice given herein (and in any attachments) is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of (i) avoiding tax penalties or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

You are receiving this communication because you are a valued client or friend of DLA Piper.

To unsubscribe from this mailing list, reply to this message with REMOVE in the subject line. Written requests may be sent to:
DLA Piper, Attention: Marketing Department
401 B Street, Suite 1700, San Diego, California 92101-4297, USA