Royal Bank of Canada joins the list of financial institutions sued by clients over the large losses associated with the credit crisis.
Royal Bank of Canada has been hit with a proposed class action lawsuit in New York alleging that it told clients that auction rate securities were safe short-term investments for anyone with at least $25,000 in available cash.
The auction rate market froze earlier in the year and issuance has since plummeted. (On a side note, Warren Buffett has confirmed he has used this market dislocation for a little cherry picking.)
Going forward, expect to see a lot of lawsuits a la 1990s Orange County – Robert Citron. It’s just getting started.
Update: Since I wrote this there have indeed been lots of lawsuits, particularly in the auction rate security area. See my label ‘Lawsuits‘ for more on those posts since.