North Carolina is the first state to reach a settlement with E*Trade over the misrepresentation of auction-rate securities as safe investments suitable for short-term cash management purposes.

The NC investigation found that E*Trade salesmen had not been properly trained by the company to sell the products and had failed to consistently disclose the risk that, if the auctions failed, clients would not be able to sell their auction rate securities and could be stuck with illiquid investments.

 

E*Trade to pay $25,000 settlement http://www.charlotteobserver.comE*Trade Securities will pay a $25,000 civil penalty under a settlement reached with the state over auction rate securities it sold to North Carolina investors.