BREAKING: Feds Raid Wachovia

WALL STREET JOURNAL: The race is heating up among regulators and prosecutors to show the public that they’re sorting out the auction rate securities mess. Here’s the breaking news, courtesy of WSJ’s Liz Rappaport: A team of 10 state securities regulators drove to the St. Louis headquarters of Wachoviamoneyhousebank.jpg Securities yesterday to demand documents and conduct interviews about the firm’s sales and marketing of ARS. The “onsite inspection” occurred after Wachovia hadn’t fully complied with regulator requests, Missouri regulator officials said. The state investigators came from Missouri, Illinois, New Jersey, Pennsylvania and other states, all of which are part of a task force led by Massachusetts. (Missouri also said it is investigating Commerce Bank N.A.) MORE

REUTERS: Thursday’s raid provides a fresh headache for new Wachovia Chief Executive Robert Steel, who is trying to preserve capital and slash costs as a $121 billion portfolio of adjustable-rate mortgages deteriorates rapidly…Missouri said it has also served subpoenas on more than a dozen Wachovia Securities agents and executives after having received more than 70 complaints representing more than $40 million in frozen investments over the last four months. “Hundreds of Missouri investors have called my office because of inability to access their money,” Carnahan said in a statement. “They were told these investments were safe and easy to cash in, but now they cannot run their business, make medical payments, or pay school tuition.” MORE

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