RBC Capital Corp. has agreed, in a settlement with state securities regulators, to buy back from Colorado investors $264 million in “frozen” auction-rate securities.
The Colorado deal is part of a $14 billion multistate settlement between the North American Securities Administrators Association and RBC, which is a subsidiary of the Royal Bank of Canada.
The auction-rate bonds were marketed as highly liquid investments “like a money-market fund,” Colorado Securities Commissioner Fred Joseph said.
The liquidity came from monthly auctions at which the bonds could be sold, but the auction market collapsed in February with the credit crisis.
“Investors were left holding 20- to 30-year bonds, not 90-day notes you’d find in a money-market fund,” said Joseph, who is also president of the NASAA.
RBC has agreed to contact investors in Colorado and other states with an offer to purchase the bonds at par value, Joseph said.
Other auction-rate bond settlements with securities administrators were made by Citigroup, Wachovia, JP Morgan, Credit Suisse, Deutsche Bank, Merrill Lynch, Goldman Sachs,UBS, Bank of American Securities LLC and TD Ameritrade.
RBC did not return a call for comment.
State regulators are continuing their investigations into possible misconduct by other firms, Joseph said.
Mark Jaffe: 303-954-1912 or mjaffe@denverpost.com
