Yesterday, the Michigan Office of Financial and Insurance Regulation (OFIR) announced that it has reached a settlement with financial sector giants Citigroup and Wachovia. According to OFIR officials, the two companies misled investors about certain risks associated with auction-rate securities. These failed securities have been at the center of the credit meltdown. Under the terms of the settlement, Citigroup will be required to buy back about $717 million worth of auction-rate securities from eligible investors, while Wachovia is on the hook for about $159 million. The two companies will also pay administrative fines to the State of Michigan, totaling about $2.37 million. The majority of that money will be placed in the Michigan Investor Protection Trust.
This is not the first time the state of Michigan has prevailed against financial institutions regarding the management of auction-rate securities. Late last year, Comerica paid $100,000 into the Michigan Investor Protection Trust to settle a dispute with the state over some $1.46 billion in auction-rate securities. Michigan continues to seek settlements with other financial institutions involving similar misconduct. Several banks face allegations of misleading investors about the liquidity of these assets.
recently named in the 2009 edition of Best Lawyer's In America, David Mittleman has been representing seriously injured people since 1985. A partner with Church Wyble PC—a division of Grewal Law PLLC—Mr. Mittleman and his partners focus on medical malpractice, wrongful death, car accidents, slip and falls, nursing home injury, pharmacy/pharmacist negligence and disability claims.