Case Studies


Foresight saves clients from collapse of auction rate securities market

Before 2008’s auction rate market failures, Coastal Bridge Advisors guided clients to safety and helped them avoid the market’s implosion.

In the months and years leading up to February 2008, many wealthy investors and institutions were heavily invested in auction rate securities, which at the time were deemed to be a cash equivalent but with a better yield than money markets.

Despite the fact that a large hedge fund with significant exposure to the auction rate markets failed in July 2007, Wall Street banks continued to market these securities as cash equivalents.

Coastal Bridge Advisors liquidated auction rate securities positions one year prior to market failure

We became extremely skeptical about the viability of these securities and directed all our clients to liquidate their auction rate positions by August 2007.

A year later, when the auction rate securities market imploded, investors were unable to access what they previously thought were cash equivalents.

Fortunately for clients of Coastal Bridge Advisors, our foresight and vigilance proved invaluable and they were unaffected by by the Auction Rate Securities Markets’ collapse.1

1. Past performance is no guarantee of future results. Please note this happened while the partners were still at Merrill Lynch.