FACTBOX: What financial agents are seeking
(Reuters) - A U.S. financial industry regulator is investigating about 40 firms over the auction rate securities (ARS) business starting next week, sources familiar with the probe said on Thursday.
A letter from the Financial Industry Regulatory Authority obtained by Reuters has given notice during the past week to the firms that they are going to ask for a wide range of documents related to the failed auction-rate debt market.
Attorneys and agents of the regulator will make on-site visits during the weeks of August 25 and September 8. They do not have subpoena powers but work to enforce the rules of FINRA, which operates under the oversight of the Securities Exchange Commission.
The following are some of the requests in the letter sent to firms.
* Provide an electronic list in Microsoft Excel of all ARS issues for which the firm had any involvement and provide the following information in separate columns:
Name of issue; alpha-numeric identifier; partial or full redemption of issuer; underwriter or selling group, auction agent, remarking agent, transmitted bids to auction agent or to others besides the agent, placed supporting bids and other roles
* Provide an electronic list of all ARS that were subject to an auction failure during the review period of June 1, 2007 through June 30, 2008
* All documents with evidence of any arrangement or agreement between the firm and any other party
* Does the firm have an auction rate trading desk and if it did not, identify the desk at which auction rate trading occurred
* Identify all employees on the auction rate trading desk or involved in auction rate trading at the desk such trading occurred by name, title, job function, broker registration number, business address and supervisor
* It asks for descriptions of the means by which bids and orders for ARS were submitted to the trading desk and the number of telephone lines and copies of ledgers and other records
* If applicable, it requests an electronic list of all ARS issues for which the firm provided supporting bids
* Whether the firm participated in surveying investor interest and providing "price talk" guidance to customers
* Provide the total dollar amount of ARS held by accounts at the firm
* All due diligence and research files maintained by the firm for ARS securities sold to customers
* All documents and correspondence regarding ARS, inside and outside the firm, including related to marketing of the securities, training and education provided by the firm
* All documents related to litigation, arbitrations, customer complaints and issuer complaints
* Account statements and new account documents for all complaining customers
* Documents about any internal investigations and internal risk analysis
(Reporting by Grant McCool)
