Bill Text: HI SCR233 | 2010 | Regular Session | Amended
Bill Title: Auction Rate Securities; Attorney General Investigation/Legal Action
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed - Dead) 2010-04-12 - (H) Referred to JUD, FIN, referral sheet 67 [SCR233 Detail]
Download: Hawaii-2010-SCR233-Amended.html
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THE SENATE |
S.C.R. NO. |
233 |
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TWENTY-FIFTH LEGISLATURE, 2010 |
S.D. 1 |
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STATE OF HAWAII |
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SENATE CONCURRENT
RESOLUTION
REQUESTING THE ATTORNEY GENERAL TO INVESTIGATE ACTIVITIES SURROUNDING THE STATE'S PURCHASE OF AUCTION RATE SECURITIES AND TO TAKE LEGAL ACTION AS APPROPRIATE.
WHEREAS, auction rate securities refer to long-term investment instruments that are, in fact, bonds that are sold by investment banks at weekly or monthly auctions that set the interest rates and give holders the option to sell the securities; and
WHEREAS, according to a Honolulu Advertiser.com article appearing on March 5, 2010, Hawaii has lost about $250,000,000 in market value on $1,000,000,000 in student-loan securities, due to a collapse in the auction rate securities market; and
WHEREAS, auction rate securities may not be a secure investment for the State's moneys since auction rate securities, by definition, are dependent on an auction to determine the value of the investment, meaning that there is no fixed or predictable return or appreciation in value; and
WHEREAS, it was reported by Honolulu Advertiser.com on February 18, 2010, that the County of Maui filed a lawsuit in federal court against an investment firm to recover $32,000,000 of taxpayer money invested by the county in student loan auction rate securities; and
WHEREAS, the County of Maui was told that the securities were safe, short-term liquid assets, which the county could easily access, just like cash; and
WHEREAS, the County of Maui reportedly was not advised about the decreasing demand for the type of investment purchased by the county; and
WHEREAS, it has also been reported that one major investment firm has abandoned the practice of supporting student loan auction rate securities; and
WHEREAS, Hawaii has been unable to sell its holdings of $1,000,000,000 in auction rate securities without taking a loss of about $250,000,000, according to the Honolulu Advertiser.com article appearing on March 5, 2010, which also reported that major investment firms have settled $94,000,000,000 in claims under pressure from federal and state regulators; and
WHEREAS, as the chief legal counsel for the State of Hawaii, the Attorney General, as a general proposition, is the appropriate authority to determine whether the State's interests have been harmed and for this purpose the Legislature calls upon the Attorney General as its legal representative to investigate the State's investment in auction rate securities; now, therefore,
BE IT RESOLVED by the Senate of the Twenty-fifth Legislature of the State of Hawaii, Regular Session of 2010, the House of Representatives concurring, that the Attorney General is requested to investigate activities surrounding the State's purchase of auction rate securities and to take legal action as appropriate; and
BE IT FURTHER RESOLVED that the Legislature may contract with a private attorney to conduct the investigation if the Legislature determines that the Attorney General either has a conflict of interest or has taken positions on relevant issues that may raise questions as to the Attorney General's objectivity in conducting the investigation; and
BE IT FURTHER RESOLVED that the Attorney General, or private attorney as appropriate, is requested to immediately take any appropriate legal action against third parties who may have caused Hawaii to invest in auction rate securities; and
BE IT FURTHER RESOLVED that the Attorney General, or private attorney as appropriate, is requested to report findings, recommendations, and a summary of legal actions taken to the Legislature no later than twenty days prior to the commencement of the Regular Session of 2012; and
BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Governor, the President of the Senate, the Speaker of the House of Representatives, the Attorney General, and the Director of Finance.
Auction Rate Securities; Attorney General Investigation/Legal Action
