Stull, Stull & Brody Announces Class Action Lawsuit Against RBC Dain Rauscher Inc. for Purchasers of Auction Rate Securities
The Stull, Stull & Brody announces a securities class action lawsuit against the Royal Bank of Canada and its subsidiaries on behalf of purchasers of Auction Rate Securities from RBC between May 12, 2003 and February 13, 2008. The class action lawsuit has been filed in the United States District Court for the Southern District of New York.
The RBC and its subsidiaries are accused of violating the Section 10(b) and 20(a) of the Securities Exchange Act 1934 by deceiving its investors about the true nature of the investment characteristics. RBC offered and sold Auction Rate Securities to the public as highly liquid cash-management vehicles that were suitable alternatives to money market mutual funds.
Also the charge includes that:
(i)Auction Rate Securities were not cash alternatives, like money market funds, but were instead, complex, long-term financial instruments with 30-year maturity dates, or longer; (ii) Auction Rate Securities were only liquid at the time of sale because broker-dealers were artificially supporting and manipulating the auction rate market to maintain the appearance of liquidity and stability; (iii) broker-dealers routinely intervened in auctions for their own benefit, to set rates and prevent all-hold auctions and failed auctions; and (iv) RBC continued to market Auction Rate Securities as liquid investments after it had determined that broker-dealers were likely to withdraw their support for the periodic auctions and that a freeze of the market for auction rate securities would result.
Source: Fox Busienss