Most brokerages are refusing to buy them back which means the investors can’t get any money out of what was sold to them as a cash equivalent. Ouch.
Who buys auction-rate securities? It’s not just “the rich.”‘ I’ve heard from self-employed people who thought it was a good, temporary place for their life savings, at least until they decided what else to invest in. I’ve heard from people who sold businesses and put the money there, and from people who inherited some money and did the same.
Morgan Stanley just got sued over auction rate securities. It’s a given there will be many more such lawsuits. As well there should be.