According to the Chicago Tribune, CareerBuilder has filed suit against Bank of America over $32.5 million in auction-rate securities it can’t unload because credit-market turmoil has frozen the entire auction system for over a year.
CareerBuilder is demanding that Bank of America, the institution that sold the securities, buy them back, saying that the bank assured them that the auction-rate securities were safe and highly liquid upon purchase.
Citing Illinois securities law, CareerBuilder asks the court to force BofA to nullify the original ARS transaction and return the frozen funds.
The Tribune notes that CareerBuilder isn’t the only company that is unhappy with its ARS investments: the collapse of the auction-rate system has spawned scores of class action lawsuits and hundreds of individual legal claims over the past year, as well as regulatory investigations and multibillion-dollar settlements by Bank of America and certain other big players.
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March 13th, 2009 at 9:36 am
At least this will put the lawyers back to work.
March 22nd, 2009 at 5:36 am
Wondering if this screw up, by presumably the CFO, has anything to do with the recent pay cuts? Investments by definition carry an inherent risk, my guess is the judge laughs them out of court. If you read the article carefully, careerbuilder still has assets that are worth $32.5 million, the only problem is they don’t mature for another 30 years. They are still getting interest payments on the toxic assets. Money markets and savings accounts were invented for a reason. They tried to get crafty and got burned. Remember investment bankers, are not your friend, do your own research before making any investment, Caveat emptor! That’s a $32.5 million dollar lesson careerbuilder will never forget.