The Financial Industry Regulatory Authority (FINRA) has reached final settlements with certain member firms to resolve charges that these member firms misled investors regarding liquidity risks associated with auction rate securities (ARS). FINRA’s investigation into ARS found evidence that member firms misrepresented to their customers that ARS were liquid investments that were equivalent to cash and failed to disclose the increasing risks associated with ARS, including the member firms’ reduced ability to support auctions in early 2008. Depending on the nature of the claim being settled and the settlement amount, member firms may have certain reporting or disclosure obligations. When determining the dollar amount for reporting an ARS settlement, member firms must include the full dollar amount that was refunded to the customer as part of a repurchase agreement, plus any other damages identified in the settlement. ARS settlement amounts may not be reduced by the actual (if it can be determined) or estimated market value of ARS. FINRA expects more settlements as ARS investigations continue.