State finalizes auction-rate securities deal with JP Morgan

Missouri Secretary of State Robin Carnahan's Office finalized a consent order with JP Morgan Chase & Co. to return more than $28 million in frozen assets to Missouri investors, Carnahan announced Monday.

JP Morgan is the seventh firm to sign an agreement regarding auction-rate securities - long-term bonds that investors can purchase as an alternative to stocks, which have no guaranteed rate of return.

Carnahan's office, along with several others across the country, said that investment firms had marketed the long-term securities as "the same as cash," saying that the securities usually allow investors fairly quick access to their money, because they can be put up for auction frequently.

With the weak economy, however, interest rates have risen. That made other investments more attractive and led institutions to stop buying the bonds at auction, leaving bondholders stuck with the investments.

That's when several secretaries of state stepped in, forming a national task force led by Carnahan, to negotiate settlements with the institutions selling the securities.

"Missourians with frozen savings cannot continue to wait," Carnahan said in a news release. "These companies must be held accountable, and I will continue to pursue resolutions that put investors first and give them access to their savings as promised."

The consent order covers JP Morgan's individual and small-business clients in Missouri; the firm also has agreed to make an $86,000 payment to the Missouri Investor Education and Protection Fund, used for statewide educational initiatives.