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CSI Wall Street: Lessons for Treasury Professionals from the Auction Rate Securities Debacle

CSI Wall Street: Lessons for Treasury Professionals from the Auction Rate Securities Debacle. Arbitration This agreement contains a pre-dispute arbitration clause. By signing an arbitration agreement the parties agree as follows:

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CSI Wall Street: Lessons for Treasury Professionals from the Auction Rate Securities Debacle

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  1. CSI Wall Street: Lessons for Treasury Professionals from the Auction Rate Securities Debacle

  2. Arbitration This agreement contains a pre-dispute arbitration clause. By signing an arbitration agreement the parties agree as follows: • All parties to this agreement are giving up the right to sue each other in court, including the right to a trial by jury… • Arbitration awards are generally final and binding; a party’s ability to have a court reverse or modify an arbitration award is very limited.

  3. Our Corporate Cash Investment Policy Objectives 1. Safety 2. Adequate liquidity 3. Maximum rate of return Permissible investments 1. Treasury bills 2. Investment grade commercial paper 3. Auction rate preferred securities Portfolio restrictions 1. No investment security will have a maturity greater than one year

  4. Brokers are not fiduciaries. (Yet.)

  5. (7) We are an institution and we • have such knowledge and experience in financial and business matters that we are capable of evaluating the risks and merits of an investment in the Securities and • have the financial ability to bear the economic risk of an investment in the Securities and adequate means for providing for current needs and possible contingencies…

  6. INSTITUTIONAL SUITABILITY CERTIFICATE AFFIRMATIVE INDICATION OF EXERCISE OF INDEPENDENT JUDGMENT (Pursuant to FINRA Rule 2111) II. It (1) is capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities; and (2) will exercise independent judgment in evaluating the recommendations of any broker-dealer or its associated persons, unless it has otherwise notified the broker-dealer in writing;

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