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Auction-Rate Holders Continue Long Wait

NEW YORK — With attention on the woes of auto makers, big banks and Bernard Madoff, investors still stranded in auction-rate securities are feeling forgotten.

Despite efforts by regulators, lawsuits and loud complaints from stranded holders, investors still hold more than $200 billion in auction-rate securities, including at least $20 million held by retail investors, said Thomas Martin, president of Americas Watchdog, a private consumer group in Washington.

More than a year after auctions started failing widely, Ed Dowling of Huntington Station, N.Y., is still trying to free more than $2 million he has trapped in auction-rate securities purchased through Oppenheimer & Co. It is a big chunk of his savings, and he wants it to build a new home. Continue reading…

A Dow Jones news story by Kevin Kingsbury and Shefali Anand stated, three closed-end funds at Pacific Investment Management won’t make monthly dividend payments due in April because of the falling value of auction-rate preferred shares. Five Pimco funds late Friday said they wouldn’t make their payments due today as planned.

 In part:

  A trio of closed-end funds at Pacific Investment Management Co. also won’t make monthly dividend payments due in April because of the falling value of auction-rate preferred shares.

  Five Pimco funds late Friday said they wouldn’t make their payments due Monday as planned because closed-end funds can’t announce or distribute dividends if their auction-rate leverage is more than 50% of total assets.

  As a result, the giant money manager is being forced to buy back some of the auction-rate preferred securities issued by its closed-end funds. That is a reversal for Pimco, which had refused to redeem these securities for months after the auction-rate market froze up a year ago. But deteriorating markets and legal requirements are forcing Pimco to do so after all.