Jefferies to pay $7 mln in auction-rate securities arbitration
Sept 25 (Reuters) - Investment bank Jefferies Group LLC, a unit of Leucadia National Corp, has been ordered by an arbitrator to pay $7 million to an investor over an auction-rate securities dispute.
Saddlebag LLC filed a statement of claim in May 2012 with the Financial Industry Regulatory Authority claiming Jefferies wrongfully invested certain bond proceeds in unspecified, illiquid, auction-rate securities.
Auction-rate securities were sold by financial firms as highly-liquid short-term instruments similar to money-market funds but with slightly higher returns.
But the $330 billion auction-rate market failed in 2008 due to the credit crunch, and thousands of investors were left with securities that could not be sold.
Saddlebag had originally requested $16 million in compensation. (FINRA Dispute Resolution:)