More auction-rate security agreements with broker-dealers will be announced "within the next week or so," Secretary of the Commonwealth William Galvin told the Reuters news agency today.

Galvin said the agreements would be based on the settlement Massachusetts and New York reached last week with Fidelity Investments, where the giant mutual fund and online brokerage firm agreed to buy back about $300 million of auction-rate securities from its customers.

Galvin declined to say which "downstream broker-dealers" would be part of the agreements. He emphasized that time is of the essence because when the investigations take time "people can't get access to their money."

Massachusetts has been "softer" about fining the investment banks involved in settlements in order to keep the focus on returning money to investors, Galvin told Reuters in a break during a Congressional hearing on the frozen auction-rate market.

Wall Street investment banks recently agreed with U.S. regulators to pay millions of dollars in fines and buy back billions of dollars of securities that had become illiquid when the auction-rate market collapsed at the start of the year.

The banks had marketed the securities as liquid as cash to investors but when the auctions failed this winter those investors were stuck holding long-term investments. Municipalities which issued the debt also suffered, and were obliged to pay maximum default rates, often as high as 10 percent.

Fidelity was the first retail broker to settle, but Galvin said others were responsible.

"They weren't market makers," Galvin said. But, he added, "Sales practices are the key here."
(Reuters)