Wachovia Securities St. Louis offices were searched today by the Missouri Securities Division after more than 70 formal auction rate securities complaints were filed against the St. Louis-based firm.
A team of ten securities regulators from Missouri, Illinois, Massachusetts, New Jersey, Pennsylvania and other states entered Wachovia’s headquarters seeking documents and records. The inspection sought information concerning Wachovia Securities’ sales practices, internal evaluations of the auction rate securities market and marketing strategies. Missouri Secretary of State Robin Carnahan's office also served subpoenas to over a dozen Wachovia Securities agents and executives in a request that they gather more information.
“Hundreds of Missouri investors have called my office because of inability to access their money. They were told these investments were safe and easy to cash in, but now they cannot run their business, make medical payments, or pay school tuition,” Carnahan says. “Our office is doing all we can to find solutions that will make these investors whole,” she says.A Wachovia spokesperson says, “Many securities firms, including Wachovia, are responding to inquiries from regulators about the auction rate securities industry. The discussions that are occurring today are a part of this ongoing process.”
The Missouri Securities Division first launched an official investigation into the bank in April, requesting documents, emails, transcripts and other records from Wachovia Securities and other banks. The Division says Wachovia failed to fully comply with these requests, thus prompting today’s inspection in the headquarters.
“We are pleased that Wachovia cooperated today, and no enforcement action has been taken against the company at this point. We expect the information gathered today will expedite the resolution of this issue,” Carnahan said in a statement.
After certain media reports characterized the inspection as a “raid,” Secretary of State Robin Carnahan felt compelled to issue a statement stressing that the Thursday incident was most certainly not a “raid.” Officials at Wachovia knew in advance that there was going to be an on-site inspection as part of an ongoing investigation into the sale of auction rate securities.