Mass. officials to testify in D.C. on trading scandal

Two Massachusetts officials will testify at a hearing in Washington next week on the sale of auction-rate securities.

Massachusetts Secretary of State William F. Galvin and Attorney General Martha Coakley will appear before the House Committee on Financial Services, chaired by Representative Barney Frank, on Thursday. Frank, a Newton Democrat had promised during the summer to hold hearings on the Wall Street scandal.

Regulators, including Galvin and Coakley, have secured settlements requiring brokerage firms to buy back nearly $60 billion in auction-rate securities from their customers, who have been unable to sell them since February.

The investments are the bonds of nonprofits and student lenders, as well as the debt of certain investment funds. They stopped trading abruptly when all brokerage firms abandoned the market, amid other troubles in the credit markets.

Others who will testify include the Securities and Exchange Commission’s director of enforcement, Linda Thomsen, Susan Merrill, director of enforcement at the Financial Industry Regulatory Authority, and William Adams IV of Nuveen Investments.
(By Beth Healy, Globe staff)