CHICAGO - Investor confidence in municipal securities may have been shattered by the "liquidity freeze-up" in the auction-rate securities market earlier this year, as well as the contemporaneous downgrades to most bond insurers that caused the value of insured bonds to plummet, the Securities and Exchange Commission's municipal securities chief Martha Mahan Haines warned bond attorneys gathered here yesterday.

Haines said that thousands of investors have contacted the commission in recent months to express frustration about having invested in auction-rate municipal securities that they thought were safe. The $330 million ARS market dried up in mid-February when broker-dealers stopped propping up the securities' auctions.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.