Reuters: Regulatory News: Jefferies to pay $7 mln in auction-rate securities arbitration

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Jefferies to pay $7 mln in auction-rate securities arbitration Sep 26th 2013, 01:24 Sept 25 | Wed Sep 25, 2013 9:24pm EDT Sept 25 (Reuters) - Investment bank Jefferies Group LLC, a unit of Leucadia National Corp, has been ordered by an arbitrator to pay $7 million to an investor over an auction-rate securities dispute. Saddlebag LLC filed a statement of claim in May 2012 with the Financial Industry Regulatory Authority claiming Jefferies wrongfully invested certain bond proceeds in unspecified, illiquid, auction-rate securities. Auction-rate securities were sold by financial firms as highly-liquid short-term instruments similar to money-market funds but with slightly higher returns. But the $330 billion auction-rate market failed in 2008 due to the credit crunch, and thousands of investors were left with securities that could not be sold. Saddlebag had originally requested $16 million in compensation. (FINRA Dispute Resolution:)

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