Wachovia Securities Auction-Rate Sales Under Investigation

July 17, 2008 4:13 p.m. EST

Charlotte, NC (AHN) - Securities regulators representing six U.S. states raided the St. Louis headquarters of Wachovia Securities on Thursday as part of an inspection into the handling of auction-rate debt.

A team of 10 regulators went into the St. Louis headquarters seeking information about sales practices and internal evaluations of the auction-rate securities market, said Missouri Secretary of State Robin Carnahan's office.

"Hundreds of Missouri investors have called my office because of inability to access their money," Carnahan said in a statement, adding that she aims to take actions to "to make these investors whole."

The auction-rate securities market suffered what is widely considered a meltdown in February as nearly half of the $330 billion auction-rate securities market remains frozen.

"Most securities firms, including Wachovia, are responding to inquiries from regulators about the auction rate securities industry," Wachovia spokeswoman Christy Phillips-Brown said, according to the Associated Press "The discussions that are occurring today are a part of this ongoing process."

Wachovia Securities is an affiliate of Wachovia Corp.

Wachovia Corp. is expected to report second quarter earnings on July 22.