Why did they not ask questions. I mean the broker calls and say hey stick all your savings in ARS, they are like CD's. And people say sure, without flinching? not asking for a prospectus? not asking about what the heck an ARS is and how liquid it is? not going to the internet and searching for the phrase? People spend more time looking for an automobile or a pair of shoes yet they wont flinch at spending only 5 seconds on the phone and letting some dude mess with your hard earned cash? I manage my own money, no way in hell would I trust some money manager with it.
dude, the Auction Rate market failed because the broker/banks pulled support for a market they had provided for 20 years. Unless you were on the inside and could see what was coming, there was no way to predict this would happen and as fast as it did. Unless you have all your money in gov't insured or guaranteed instruments, there is no absolute safety. Even that can blow up if the govt fails. Sleep well.
My sister in law got hammered in it. Husband was best friend w/the UBS broker. Nobody reads a prospectus. Nobody. I read a few but you know what I mean. the industry sets itself up with trust. Look at all the commercials. Merrill, UBS, what's the operative word? Trust. They might just skip to 'never read the prospectus'. Anyway, many people pay these guys top dollar so they don't have to do it. That's why there is a new account form. You list your objectives. This one is easy. If you've marked your account form, 'safety of principal,' this didn't do it. But don't be surprised. As a Rep, you build trust, and it's up to you to do the right thing. That's what the big bucks are for.