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Simple English definitions for legal terms

Investor Protection Guide: Auction Rate Securities

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A quick definition of Investor Protection Guide: Auction Rate Securities:

Auction rate securities (ARS) are investments that promise a high yield, similar to a certificate of deposit (CD) or money market fund. However, they are actually long-term variable rate debt with interest payments determined through auctions. This means that when interest rates rise, so does the risk and volatility of the investment. In 2008, the auction market for ARS collapsed, leaving investors unable to sell their securities. The ARS market is now mostly inactive. It is important for investors to understand the risks associated with ARS before investing.

For more information, visit the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) websites.

A more thorough explanation:

Auction rate securities (ARS) are investments that were marketed as safe and high-yielding alternatives to CDs or money market funds. They are debt or preferred equity securities that have their interest rates reset periodically through auctions. These securities have long-term maturities or are issued in perpetuity.

ARS were promoted as safe investments with easy access to funds. However, they are typically long-term variable rate debt with interest payments determined on a 7, 28, or 35-day basis. When interest rates rise, the interest expenses and volatility of ARS also rise, making them a higher-risk investment than fixed-rate debt.

The auction market for ARS collapsed in February 2008, leaving investors unable to liquidate their investments. The ARS market is now generally defunct.

An example of an ARS investment would be a bond issued by a municipality or corporation that has its interest rate reset through an auction every 28 days. Another example would be a preferred stock that pays a dividend that is reset through an auction every 35 days.

These examples illustrate how ARS investments work. The interest rate or dividend payment is not fixed, but rather determined through an auction process. This means that the return on investment can vary and may be higher or lower than expected.

Investor Protection Guide: Affinity Fraud | Investor Protection Guide: Equity-Indexed Annuities

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medicine is a scam
join the ethically ambiguous legal field instead
Dkk
18:57
I want to meet an attorney that defends clients who run into flat earth problems. I want an attorney that knows and believes in flat earth theory.
19:05
i want a flat earther for president. i want a guy who posts on 4chan for president. i want someone who mogs for president.
Dkk
19:18
Exactly. My version of that awful poem.
Dkk
19:19
I can accept a president with maybe one or two of the poems traits hut good God, all of them??? No ty.
windyMagician
19:20
president who respects sex is crazy
windyMagician
19:20
we had bill clinton already
Dkk
19:21
Bill Clinton, first and last black president
windyMagician
19:23
I want to go running but my leg feels weird
windyMagician
19:23
it doesn't hurt its just tingly
Dkk
19:26
It needs more alcohol. You tingle when your nerves need watering.
19:27
try stretching it maybe to see what's up
windyMagician
19:27
stretches make me think it's just soreness
windyMagician
19:27
I'm sober lol
Dkk
19:38
Anyone else get the google notification that your LSD password has been compromised lol. LSD got hacked.
20:48
what.jpg @Dkk
CynicalOops
21:03
You think you just fell out of a coconut tree?
jackfrost11770
21:10
nope dk
CynicalOops
22:37
Calvinamala Harris
jackfrost11770
23:16
should i start using letterboxed again
Dkk
23:25
@jackfrost11770: if you want but like it aint for me
dk do u ever eat at bk
Dkk
23:48
@chickenburgahfart: I would do that in the Army if really desperate for food or if I had to work through lunch. One of the few fast food places I go to.
bk so slept on
Dkk
0:23
I will take In N Out everyday over it when I can though.
texaslawhopefully
1:22
In N Out is not only the best fast food place, but the prices too are fantastic
Dkk
1:27
Indeed, indeed.
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