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Royal Bank of Canada may have harmed investors by misrepresenting the liquity of Auction Rate Securities.
Investigation Source (Case #08-cv-4431)
- Nationwide
Investigation Scope
Category Information
Investigation Topics
- Investments
- Unsuitable Investments
Product or Service
- Auction Rate Securities
Injury Type
- Monetary Loss
Investigation Details
Investigation and pending class action against Royal Bank of Canada on behalf of investors who purchased auction rate securities from Royal Bank of Canada.
Auction rate securities are also known as auction rate preferred stock; auction market preferred stock; variable rate preferred securities; money market preferred securities; auction rate bonds.
Royal Bank of Canada represented to investors that auction rate securities were equivalent to cash or money market funds, were highly liquid and safe investments for short term investments. Royal Bank of Canada knew but failed to disclose material facts about auction rate securities including the fact that auction rate securities were in fact long-term financial instruments that were artificially supported and manipulated by broker-dealers thereby creating the appearance of liquidity and stability.
On February 13, 2008, 87% of all auction for auction rate securities failed. This collapse left investors holding 300 billion in auction rate securities with no means of liquidating the investments.
Auction rate securities are also known as auction rate preferred stock; auction market preferred stock; variable rate preferred securities; money market preferred securities; auction rate bonds.
Royal Bank of Canada represented to investors that auction rate securities were equivalent to cash or money market funds, were highly liquid and safe investments for short term investments. Royal Bank of Canada knew but failed to disclose material facts about auction rate securities including the fact that auction rate securities were in fact long-term financial instruments that were artificially supported and manipulated by broker-dealers thereby creating the appearance of liquidity and stability.
On February 13, 2008, 87% of all auction for auction rate securities failed. This collapse left investors holding 300 billion in auction rate securities with no means of liquidating the investments.
Defendant Details
| Name (Stock Symbol) | Brief Description |
|---|---|
| Royal Bank of Canada (RY) | Royal Bank of Canada and its subsidiaries operate under the master brand name of RBC. RBC provides personal and commercial banking, wealth management services, insurance, corporate, investment banking and transaction processing services on a global basis. RBC employs more than 80,000 full and part-time employees. |
| RBC Dain Rauscher | RBC Dain Rauscher provides investment advice and services to individual investors in the western United States and investment banking services to corporate and governmental clients nationwide through its principal subsidiary, Dain Rauscher Incorporated. It also clears and settles securities trade on a fully disclosed basis for 166 correspondent brokerage firms. RBC Dain Rauscher, is an indirect subsidiary of Royal Bank of Canada. |
| RBC Capital Management | RBC Capital Management, a subsidiary of Royal Bank of Canada, is an investment bank. |