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UNITED STATES DISTRICT COURT - 6 4°9#. •FOR THE SOUTHERN DISTRICT OF NEW n INA <

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)DEFER LP, Individually ) Case No. 1:08-CV-3449 (LAK)And On Behalf of All Others Similarly Situated, )

)Plaintiff, - ) SECOND AMENDED CLASS ACTION

) COMPLAINT FOR VIOLATION OFv. ) THE FEDERAL SECURITIES LAWS

)RAYMOND JAMES FINANCIAL, INC., )RAYMOND JAMES & ASSOCIATES, INC., ) JURY TRIAL DEMANDED and RAYMOND JAMES FINANCIAL )SERVICES, INC., )

)Defendants. )

)

1. Lead Plaintiff Laurie Rubin and Plaintiff Jonathan Gold, by their counsel, allege the

following based upon personal knowledge as to their own acts and upon the investigation by

• their counsel, which includes, among other things, a review of: (a) public statements, sales

presentations and marketing materials by Defendants Raymond James Financial, Inc. ("RJF"),

Raymond James & Associates, Inc. ("RJA") and Raymond James Financial Services, Inc.

("RJFS") (collectively "Defendants"), and their affiliates, agents and employees; (b) Securities

and Exchange Commission ("SEC") filings made by RJF and other brokerages, financial

• services firms and investment companies; (c) public filings, transcripts and statements in civil

proceedings and government and regulatory investigations involving Defendants and other

brokerages, financial services firms and investment companies; (d) internal e-mails and other

business records of Defendants; (e) documents believed to be authentic copies of internal e-mails

and other business records of various brokerages, financial services firms and investment

companies obtained from public record sources; (f) securities analysts' reports, press releases

and media reports; (g) interviews with current and former RJA and RJFS employees and

financial advisors; (h) interviews with purchasers of auction rate securities and other

knowledgeable individuals; and (i) discussions with consultants.

INTRODUCTION

2. This is a class action under Sections 10(b) and 20(a) of the Securities Exchange Act

of 1934 ("Exchange Act") on behalf of all persons or entities who purchased auction rate

securities from RJA and/or RJFS between April 8, 2003 and February 13, 2008, inclusive

("Class Period"), and who were damaged thereby.

3. Auction rate securities are bonds or preferred stocks that pay interest or dividends at

rates set at periodic auctions. During the Class Period, RJA and RJFS sold more than $2.3

billion of auction rate securities to investors as highly liquid, cash-equivalent, short-term

investments.

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4. During the Class Period, Defendants engaged in a scheme to defraud purchasers of

auction rate securities by making omissions and misrepresentations of material fact about the

risks, value and liquidity of those securities. The scheme allowed Defendants to reap millions of

dollars in sales commissions, underwriting fees and auction management fees at the expense of

investors who purchased auction rate securities at overvalued prices, and to unload hundreds of

millions of dollars of auction rate securities that would otherwise have remained in RJA's

inventory and on RJF's balance sheet.

5. RJA and RJFS failed to disclose material facts relating to the liquidity and risk

characteristics of auction rate securities, including the scope and extent to which auction dealers

(including RJA) intervened in the auctions for auction rate securities, the extent to which the

auction rate securities market depended on continued bidding and purchasing by auction dealers,

the lack of sufficient maximum interest rates to attract liquidity or encourage issuer redemptions

if the auctions failed, the deteriorating condition of the auction rate securities market, and that

the cessation of continued bidding and purchasing by auction dealers would collapse the auction

rate securities market, leaving holders with illiquid assets.

6. On February 13, 2008, the auction rate securities market collapsed after all major

auction dealers abruptly ended their policy of propping up the market, leaving RJA and RJFS

clients holding more than $2.3 billion in illiquid auction rate securities, often earning interest far

below market rates. Defendants have refused to repurchase these illiquid securities from their

clients, contending that RJF lacks the capital, cash or borrowing power to do so at the present

time.

7. Subsequent to the collapse of the auction rate securities market, the SEC, the New

York State Attorney General's Office, and Florida's Office of Financial Regulation have all

commenced investigations, all of which remain ongoing, relating to RJA and RJFS's sales of

auction rate securities and involvement in the auction rate securities market.

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•

JURISDICTION AND VENUE

8. This Court has jurisdiction over the subject matter of this action pursuant to 28

U.S.C. §§ 1331 and 1337, and Section 27 of the Exchange Act (15 U.S.C. § 78aa). The claims

asserted herein arise under Sections 10(b) and 20(a) of the Exchange Act (15 U.S.C. §§ 78j(b)

and 78t(a)), and Rule 10b-5 promulgated thereunder by the SEC (17 C.F.R. 240.10b-5).

9. Venue is proper in this District pursuant to Section 27 of the Exchange Act and

28 U.S.C. §§ 1391(b) and 1337. Defendants maintain offices within this District and many .of

the acts giving rise to the violations complained of herein took place in this District.

10. In connection with the acts alleged in this Complaint, Defendants, directly or

indirectly, used the means and instrumentalities of interstate commerce including, but not limited

to, the mails, interstate telephone communications and the facilities of the national securities

markets.

PARTIES

A. Plaintiffs

11. Lead Plaintiff Laurie Rubin is the trustee of the Laurie Rubin Revocable Trust, the

trustee for Cole Goldenberg, and the President of Laurie Rubin, Inc. As set forth in her

previously filed certification (attached hereto), Ms. Rubin purchased auction rate securities for

the Laurie Rubin Revocable Trust, Cole Goldenberg and Laurie Rubin, Inc. from RJA and RJFS

during the Class Period. Lead Plaintiff Rubin continues to hold illiquid auction rate securities

sold to her by RJA and RJFS.

12. Plaintiff Jonathan Gold, as set forth in his certification (attached hereto), purchased

auction rate securities from RJA during the Class Period and was damaged thereby. Plaintiff

Gold continues to hold illiquid auction rate securities sold to him by RJA.

13. Unless specifically noted, "Plaintiffs" refers collectively to Lead Plaintiff Rubin and

Plaintiff Gold.

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• B. Defendants

14. Defendant RJF is a diversified financial services holding company whose

subsidiaries engage primarily in securities brokerage, investment banking, asset management and

banking services. Its three principal wholly owned broker-dealer subsidiaries are RJA, RJFS and

Raymond James Ltd. (RJF's Canadian broker-dealer subsidiary). According to RJF's Corporate

Profile, as of June 30, 2009, RJF had more than 5,300 financial advisors in 2,300 locations

throughout the United States, Canada and overseas. RJF financial advisors provide financial

services to more than 1.8 million individual and institutional clients. RJF is a Florida

corporation and shares a corporate headquarters in St. Petersburg, Florida with RJA and RJFS.

15. Defendant RJA, a wholly owned subsidiary of RJF, is one of the largest full service

brokerage and investment firms in North America. RJA is the primary subsidiary of RJF, and is

a self-clearing broker-dealer engaged in most aspects of securities distribution, trading,

investment banking and asset management. RJA is registered with the SEC as a broker-dealer

pursuant to Section 15(b) of the Exchange Act and is a member of the Financial Industry

Regulatory Authority ("FINRA"). Of RJF's 5,300 financial advisors, more than 1,280 are at

RJA. During the Class Period, RJA underwrote offerings of auction rate securities, managed

auctions for auction rate securities, and sold auction rate securities to Class members, including

Plaintiffs. RJA is a Florida corporation and shares a corporate headquarters in St. Petersburg,

Florida with RJF and RJFS.

16. Defendant RJFS, a wholly owned subsidiary of RJF, is one of the largest brokerage

firms in the United States. RJFS is registered with the SEC as a broker-dealer pursuant to

Section 15(b) of the Exchange Act and is a member of FINRA. Of RJF's 5,300 financial

advisors, more than 3,200 are at RJFS. During the Class Period, RJFS sold auction rate

securities to Class members, including Lead Plaintiff Rubin. RJFS is a Florida corporation and

• shares a corporate headquarters in St. Petersburg, Florida with RJF and RJA.

17. RJF, RJA and RJFS operate as a single unified entity for all practical purposes. In

its SEC filings, RJF refers to itself and its subsidiaries as the "Company." RJF's operations are

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not divided by subsidiary, but rather by business segments that may include personnel from more

than one subsidiary. The business segments are Private Client Group, Capital Markets, Asset

Management, RJ Bank, Emerging Markets, Stock Loan/Borrow, Proprietary Capital and Other

(which includes various corporate activities of RJF). Both RJA and RJFS operate primarily

within the same business segment at RJF — the Private Client Group.

18. RJA and RJFS are controlled by RJF's Board of Directors and senior management

• team, called the Leadership Team. The RJF Leadership Team includes the senior officers of RJF

as well as the President, Senior Vice President and Executive Vice President of RJA and the

Chairman and CEO of RJFS. Overall risk management, liquidity and internal control decisions

are made by RJF's senior management team. RJF's senior management team takes an active role

in the risk management process, including establishing and monitoring daily inventory limits on

• the dollar amounts of fixed income securities (which includes auction rate securities) held by

RJF and its subsidiaries. Finally, RJF's legal department is also the legal department for RJA

and RJFS.

19. RJF, RJA and RJFS hold themselves out to clients as a single unified entity as well.

All three entities share a public website and web address (raymondjames.com ), common e-mail

addresses for employees and financial advisors ( @raymondjames.com), the same

headquarters in St. Petersburg, common trading operations, common mission statement, common

risk management practices and oversight, common research reports, common client-facing

documents and common sales and marketing materials. For example, a document entitled "Your

Rights and Responsibilities As A Raymond James Client" (the "Client Brochure") does not

discuss or separately identify any of the different Raymond James entities. Instead, throughout

the Client Brochure, all of the Raymond James entities are referred to simply as "Raymond

James," and the Client Brochure states on its cover that it is authored by "Raymond James."

20. RJF also represents to current and prospective financial advisors that RJF, RJA and

RJFS operate as a single unified entity. For example, RIP states that "[w]ith Raymond James,

you receive comprehensive support from an organization that's one of the largest and most

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highly regarded in the industry. Through approximately 5,000 advisors in 2,200 locations, the

Raymond James Private Client Group serves more than 1 4 million individual and institutional

accounts." This statement does not distinguish between RJF, RJA and RJFS. RJF advises

prospective financial advisors that "we spend more than $100 million a year developing

technology solutions for our financial advisors. We don't just talk about support — we employ

more than 700 information technology associates who put your needs at the center of the action."

Finally, RJF assures prospective .financial advisors that "Raymond James' Legal department

makes your life easier" and that "Raymond James Compliance ensures that all applicable

FINRA, SEC and state regulations, as well as internal policies, are followed."

21. Regardless of whether a financial advisor is at RJA or RTFS, all financial advisors

have access to a shared internal network (called RJnet) and proprietary software programs. All

RJA and RJFS financial advisors also have access to the same RJA research, RJA-created

• internal sales materials and client-facing documents, RJA trading operations, inventory of

securities and financial products to buy or sell, and offerings underwritten by RJA.

22. Because RJFS is not a member of any exchange, all of its securities clearing

operations are conducted exclusively by RJA. Thus, even if a financial advisor is at RJFS, all of

that financial advisor's client transactions will be executed by RJA, not RJFS, and the client

confirmations will show that both RJA and RJFS were involved in the transaction.

23. For example, Lead Plaintiff Rubin's financial advisor, Richard Barnard, is at RJFS.

While Mr. Barnard solicited the purchase of auction rate securities by Ms. Rubin, his

solicitations were based on representations and materials provided to him by RJA employees.

Each trade confirmation has the logos for both RJFS (on the top) and RJA (on the bottom). The

confirmation shows that the account is carried by (or located at) RJA. While the confirmation

instructs Ms. Rubin to contact Mr. Barnard (at RJFS) to place any trades, it also instructs Ms.

Rubin to make any checks payable to RJA when depositing funds.

24. Since the auction rate securities market collapsed in February 2008, RJF, RJA and

RJFS also have acted as a single unified entity in their response to the crisis. First, in discussing

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Defendants' role in the auction rate securities market, Thomas James, the Chairman and CEO of

RJF, has spoken for all three entities and discussed their involvement without distinguishing

between RJF, RJA and RJFS ("We weren't auction market makers in any major sense of the

word. While we did do some business in between period dates, we really didn't do much. We

didn't have much inventory ourselves at all."). Second, in a letter to all RJA and RJFS clients

holding illiquid auction rate securities that was sent out on Raymond James letterhead, Thomas

James apologized for being involved in the purchase of these securities and acknowledged that

"Raymond James understood the remote possibility of an auction failure." At no point in the

letter does Mr. James distinguish between RJF, RJA and RJFS, and all three are referred to

collectively as "Raymond James." Third, Defendants have refused to repurchase any illiquid

securities from RJA and RJFS clients, contending that RJF lacks the capital, cash or borrowing

power to do so at the present time.

CLASS ACTION ALLEGATIONS

25. Plaintiffs bring this action as a class action pursuant to Federal Rule of Civil

Procedure 23(a), 23(b)(1), (b)(2) and/or (b)(3), and 23(c)(4) on behalf of a Class consisting of all

persons and entities that purchased auction rate securities from RJA and/or RJFS between April

8, 2003 and February 13, 2008, inclusive, and were damaged thereby (the "Class").

26. Excluded from the Class are Defendants; the subsidiaries and affiliates of any

Defendant; any person or entity who is a partner, officer, director, employee or controlling

person of any Defendant; and any entity in which any Defendant has or had a controlling

interest.

27. The members of the Class are so numerous that joinder of all members is

impracticable. RJA and RJFS were substantial sellers of auction rate securities while the market

for such securities existed. During the Class Period, RJA and RJFS sold more than $2.3 billion

of auction rate securities to thousands of customers.

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absence of successful auctions, there is no assurance that a secondarymarket will develop or that the security will trade at par.

91. While RJA and RIPS could have provided these disclosures in writing to

• prospective auction rate securities investors prior to their purchases, they did not. Nor did RJA

and RJFS instruct their financial advisors to make these disclosures when soliciting the purchase

of auction rate securities by RJA and RJFS clients. Instead, RJA and RJFS continued to instruct

their financial advisors to sell auction rate securities as safe, short-term, cash management

vehicles, emphasizing the liquidity of those instruments.

• 92. RJA and RJFS also failed to take any steps to provide this information to those RJA

and RJFS clients who had previously purchased and continued to own auction rate securities.

93. Even if RJA and RJFS had provided the information in the post-January 2007 trade

confirmations to investors in a timely manner, this still would not have been adequate, or

complied with SIFMA's Best Practices, because the disclosure language in the post-January

2007 trade confirmations was itself misleading and omitted material facts, as described in

paragraphs 147-148 below. Among other things, RJA and RJFS failed to disclose that interest or

dividend payments were not determined at a competitive Dutch auction, but rather were managed

by auction dealers that routinely intervened in the auctions for their own benefit, to set rates, and

to prevent all-hold auctions and failed auctions; that the apparent liquidity of auction rate

securities depended upon the perpetuation of an artificial auction market by auction dealers; that

auction dealers could allow the auction rate securities market to collapse at any time by refusing

to intervene in the auctions; and that the maximum rates were generally too low to attract

liquidity if the auctions failed..

94. After the collapse of the auction rate securities market in February 2008, RJA and

RJFS added additional disclosure language to their trade confirmations and added new disclosure

language to their account statements.

ii. Auction Rate Preferred Securities

95. During the Class Period, RJA and RJFS also marketed and sold auction rate

. securities issued by closed-end preferred funds, such as the various Nuveen funds identified in

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paragraph 65 above that were sold to Lead Plaintiff Rubin. The closed-end preferred funds

issued both taxable and tax-free auction rate securities (called auction rate preferreds).

96. The marketing and sale of auction rate preferred securities was managed by the

Taxable Fixed Income Group within the Fixed Income Department of RJA at corporate

headquarters in St. Petersburg, Florida. The Taxable Fixed Income trading desk was located

next to the Municipal Fixed Income trading desk.

97. Eva Skibicki was the most senior employee on the Taxable Fixed Income trading

desk. Ms. Skibicki is a Vice President of RJA and the Manager of Taxable Fixed Income

Trading. The other RJA employees who worked on the Taxable Fixed Income trading desk and

actively participated in the marketing and sale of auction rate preferred securities were Ry-Ann

Casesa, Irina Boudreau, Jessica Olson, John Hamm and Stacey Carlton.

98. According to CW 2, CW 3 and CW 43, RJA and RJFS financial advisors received

no training concerning auction rate preferred securities or the auction rate securities market.

Neither RJA nor RJFS made available to financial advisors any written information about the

nature, characteristics or risks of auction rate preferred securities or RJA's involvement as an

underwriter and auction dealer in the auction rate securities market.

99. According to CW 2, CW 3 and CW 4, the primary source of information available

to RJA and RJFS financial advisors about auction rate preferred securities was a Taxable Fixed

Income newsletter that was prepared by the Taxable Fixed Income trading desk and e-mailed to

RJA and RJFS financial advisors on a daily or weekly basis.

100. Throughout the Class Period, the Taxable Fixed Income trading desk uniformly

represented to RJA and RJFS financial advisors that auction rate preferred securities were a cash

. equivalent, were comparable to money market funds, and would earn financial advisors more

than other cash equivalents. Each newsletter compared the returns on auction rate preferred

3 CW 2 and CW 3 are current long-time RJFS financial advisors who sold auction rate preferredsecurities to their clients based on the representations made by RJA and RH'S that are describedin this Complaint. CW 4 is an RJFS branch manager who also sold auction rate preferredsecurities to clients based on the representations made by RJA and RJFS that are described inthis Complaint.

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securities to the yields on money market funds. Beginning in 2007, auction rate preferred

securities were specifically referred to in communications from the Taxable Fixed Income

trading desk as a "cash management alternative."

101. On January 18, 2007, Irina Boudreau of the Taxable Fixed Income trading desk

sent an e-mail to RJA and RJFS financial advisors entitled "Enhance Portfolio Returns With

Cash Management Alternatives." Under the heading "Cash Alternative" the following statement

appeared: "While holding cash positions provides immediate liquidity, it is [sic] also diminishes

your clients' overall returns. There are several alternatives available at Raymond James that you

and your clients should consider when talking about cash management. One of these alternatives

is Auction Rate Securities." The e-mail provided a very general description of an auction rate

security and noted that financial advisors were paid a trail of 15 basis points, which means that

the financial advisor continues to be compensated for as long as the auction rate securities

remain in the client's account. The e-mail did not disclose any of the risks associated with

auction rate securities.

102. In her January 18, 2007 e-mail, Ms. Boudreau also referred RJA and RJFS financial

advisors to two marketing documents, the "Taxable ARS Rate flier" and the "Meeting Short-

Term Investment Needs Fact Sheet." According to CW 2 and CW 3, both of these documents,

which described auction rate preferred securities as a cash equivalent, were removed from

Defendants' internal website, RJnet, shortly after the collapse of the auction rate securities

market in February 2008.

103. On April 10, 2007, Eva Slcibicki, RJA Vice President and Manager of the Taxable

Fixed Income trading desk, sent an e-mail to RJA and RJFS financial advisors which included

the following statement: "Keeping it short — Auction rate securities are yielding 5% - 5.17%.

• Yes, very attractive for a 7-day paper, but as [sic] other money market instruments, their yields

will fluctuate." Ms. Skibicki's e-mail did not disclose any of the risks associated with auction

rate securities.

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104. A July 17, 2007 e-mail from Ry-Ann Casesa of the Taxable Fixed Income trading

desk informed RJA and RJFS financial advisors that RJF's Investment Policy Committee had

increased the allocation to fixed income and recommended that financial advisors consider

taxable auction rate preferred securities to obtain "higher cash flows for your cash balances."

Ms. Casesa's e-mail did not disclose any of the risks associated with auction rate securities.

105. Another e-mail from Ms. Casesa a week later (July 24, 2007) to RJA and RJFS

financial advisors stated: "Looking for a cash alternative?" and then listed taxable auction rate

securities, noting that these securities provided weekly liquidity. Ms. Casesa's July 24, 2007 .e-

mail did not disclose any of the risks associated with auction rate securities.

106. RJA continued to make these types of representations throughout the Class Period,

even as the market for auction rate securities deteriorated in late 2007 and early 2008. For

example, as late as January 28, 2008, just days before the auctions started to fail, the Taxable

Fixed Income newsletter still compared the auction rate preferred securities to "comparable

money market instruments."

107. The representations to RJA and RJFS financial advisors that auction rate preferred

securities were cash equivalents with no apparent risks were not limited to those made by RJA's

Taxable Fixed Income trading desk. For example, a November 6, 2006 e-mail entitled

"Raymond James Financial Services Weekly Digest" that was sent to RJFS financial advisors

from RJ Home Office Communications stated: "It has been determined that auction rate (ARS)

and municipal preferred (MPS) securities held in fee-based accounts were being assessed an

asset-based advisory fee and a 15-25 basis point trail paid by the auction agent/issuer. Due to the

cash equivalent nature of these securities, the total cost to the client may be considered excessive

in relation to the billing of cash balances held in the client's sweep account." (Emphasis added).

108. According to CW 2, CW 3 and CW 4, RJA and RJFS manufactured the demand for

• auction rate preferred securities by giving RJA and RJFS financial advisors a financial incentive

to market the securities to their clients while at the same time claiming that the securities were

just as good as money market funds that would earn the financial advisors nothing. Financial

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advisors received no compensation if their clients' money remained in cash or money market

• funds, but they were paid trailing commissions for auction rate preferred securities in their

clients' accounts. RJA and RJFS highlighted this fact in communications to the financial

advisors throughout the Class Period. For example, a January 25, 2007 Taxable Fixed Income

newsletter advised RJA and RJFS financial advisors that taxable auction rate securities were

yielding 4.8% to 5.05%, that they provided "weekly liquidity," and that these securities would

allow advisors to "earn 30-40 bps [basis points] more on your cash positions."

109. According to CW 2, CW 3 and CW 4, and internal RJA documents, prior to July

2007, the Taxable Fixed Income trading desk selected the auction rate preferred securities for

RJA and RJFS clients. If an RJA or RJFS client was successfully solicited to purchase auction

rate preferred securities, the financial advisor called the trading desk to discuss the amount that

was available to be invested and the auction term sought (7, 14, 35 days), and possibly to inquire

about the yields. The trading desk then selected the auction rate preferred securities for the

client. The client and financial advisor did not know what the trading desk selected until they

received the trade confirmation several days later.

110. Starting in July 2007, RJA and RJFS financial advisors were required to provide the

Taxable Fixed Income trading desk with the CUSIP number for a particular auction rate

preferred security. Financial advisors obtained this information from a list the trading desk

emailed to financial advisors each week that showed the inventory of auction rate preferred

securities available for sale. This inventory list provided financial advisors with very minimal

information about the auction rate preferred securities available from RJA, such as the name of

the security, the CUSIP number, the date of the auction and the last interest rate. The list did not

disclose any risks associated with auction rate securities, did not explain the differences between

the various auction rate preferred securities offered for sale, and did not provide any maximum

rate information.

111. According to CW 2 and CW 3, neither RJA nor RJFS informed RJA and RJFS

financial advisors about the failures of auctions for securities backed by collateralized debt

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•

obligations beginning in August 2007. Nor did RJA or RJFS inform financial advisors and their

clients that Defendants added a webpage to their shared internet site discussing auction rate

preferred securities a few weeks after the auction failures.

112. Defendants added the webpage on or around August 28, 2007. The webpage stated,

among other things:

Are Auction Rate Preferred Securities Cash Equivalents?

As mentioned before,. Auction Rate Preferred Securities are perpetualsecurities that reset their rates periodically — usually every 7, 28, 35 or 49days. These are often regarded as short-term alternatives since rates areset by a Dutch Auction process and investors can normally hold, sell orbuy the securities on the auction dates.

Risk Considerations

Failed Auction (liquidity) — Simply put, a failed auction may occur whenthere are more sellers than buyers. Although not a frequent occurrence, afailed auction is still a possibility. In this event, all holders, includingthose that submitted a sell, must hold securities until the next successfulauction which may be for an indeterminate period of time, possibly untilmaturity or perpetually. The issuer is not obligated to redeem thesecurities. In the event of a failed auction, the maximum auction ratewould apply. Please note: If there is a failed auction in the future, there isno assurance or guarantee that an interested party will step in to supportthe auction process. These securities are not listed and there is noguarantee that a secondary market will develop.

The client should be aware that, as part of its regular course of business,Raymond James may routinely:

(a) place one or more Orders in Auctions generally for its own account,even after obtaining knowledge of some or all of the other Orders, and itmay do so in any particular auction;

(b) place Bids on the firm's behalf or those of others, and may encourageothers to place Bids likely to affect the Clearing Rate (includingpreventing the Clearing Rate from becoming the Maximum Rate) and theallocation of securities being auctioned (including displacing otherProspective Holders).

In addition, under exceptional circumstances Raymond James may:

(a) place one or more bids in auctions generally to prevent a FailedAuction or a Clearing rate the Broker-Dealer believes is not a market rate

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at the time it makes its Bid, even after obtaining knowledge of some or allof the other Orders, but is not obligated to continue to place such Bids orto bid in any particular Auction;

(b) encourage bidding by others in Auctions generally to prevent a FailedAuction or a Clearing Rate it believes is not a market Rate, even afterobtaining knowledge of some or all of the other Orders, and it may do soin any particular Auction.

113. Defendants' website disclosure was incomplete and misleading in that it failed to

disclose that the degree of intervention needed to prevent the auction rate securities resale market

from collapsing was far greater than the isolated or sporadic interventions hinted at in the

disclosure; that the market for auction rate securities was under increasing stress brought on by

• the deteriorating credit environment; that the levels of support needed by "interested parties" to

prevent auction failures were increasing as the balance sheets of those interested parties were

weakening (thereby increasing the likelihood of interested parties withdrawing their support for

the auctions and the securities becoming illiquid); that industry professionals anticipated

increasing liquidity problems in -the auction rate securities market; that the suppression of

• material facts relating to the intervention of interested parties in auctions resulted in the rates of

interest paid on auction rate securities being inadequate to compensate auction rate investors for

the risk of illiquidity; that failure of the auctions and the resulting illiquidity of auction rate

securities were not a "possibility" but were in fact certainties absent the persistent and self-

interested interventions of auction - dealers, including RJA; and that upon failure of the auctions,

investors would be left holding securities that could not be sold at par.

114. Defendants' website disclosure is an acknowledgement that Defendants knew that

RJA and other auction dealers (a) intervened in auctions for their own benefit or in order to

prevent failed or all-hold auctions; (b) intervened in auctions directly or indirectly to set or

influence the interest or dividend rate; and (c) did so as market-makers with knowledge of the

bids of other auction participants.

115. Defendants did not provide their website disclosures in writing to any of RJA and

RJFS's clients that already owned auction rate securities. Nor did they provide the disclosures in

writing to new purchasers of auction rate securities, or even tell RJA and RJFS clients that

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important infonnation about auction rate securities had been posted on the Raymond James

website. RJA and RJFS could have provided a link to the webpage in the trade confirmations

and account statements, but did not. RJA and RJFS also could have instructed financial advisors

to review the webpage and disclose this information to prospective auction rate securities

purchasers, but did not.

116. Instead, RJA's Taxable Fixed Income trading desk continued to tell RJA and RJFS

financial advisors that auction rate securities were safe, short-term, cash management vehicles,

emphasizing the liquidity of those instruments, with no disclosure of associated risks.

117. Defendants' website disclosure was inadequate for an additional reason. On May

31, 2006, the SEC entered an order against a number of auction dealers, finding that those

auction dealers had engaged in undisclosed manipulative practices in connection with the sale of

auction rate securities. The SEC order required the auction dealers to either cease and desist

from the manipulative practices or fully disclose these practices to all current and all future

auction rate securities clients. If the auction dealers chose to continue the practices complained

of, the SEC order set forth specifically what disclosures needed to be made and how they were to

be made in order for those practices not to violate the federal securities laws.

118. Defendants were not named in the May 31, 2006 SEC order. However,

Defendants' August 28, 2007 webpage concerning auction rate preferred securities is an

acknowledgement that they were engaging in the same manipulative practices that were the

• subject of the SEC order. While Defendants acknowledged engaging in the manipulative

practices, they made no effort to comply with the disclosure requirements set forth in the SEC

order. Specifically, Defendants never provided clients holding auction rate securities and new

purchasers of those securities with a written description of RJA's auction practices and

procedures and never provided a written notification of Defendants' webpage to auction rate

• securities purchasers in trade confirmations and account statements, as required by the SEC

order.

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119. In September 2007, CW 2 contacted Eva Sldbicici and Jessica Olson of the Taxable

Fixed Income trading desk about rumors in the market about developing problems with auction

rate securities. During this telephone call, Ms. Sldbicki and Ms. Olson assured CW 2 that the

auction rate securities RJA was selling were "rock-solid" and different than the auction rate

securities in the auctions that had failed in August 2007; that the auction rate securities RJA was

selling were as good as cash and there was no basis for concern because they were over-

collateralized; and that RJA research analysts had researched these securities and the underlying

collateral and "everything was good."

120. According to CW 2 and CW 3, during one of the break-out sessions at Defendants'

national sales conference on September 18, 2007 in Nashville, Tennessee, Ms. Skibicki was

asked by some financial advisors about the auction failures that had occurred in August 2007.

Ms. Skibicki told the financial advisors that the auction failures did not affect Raymond James or

its clients because Raymond James did not own or sell those types of auction rate securities.

121. The statements Ms. Skibicki and Ms. Olson made to CW 2, CW 3 and the financial

advisors that are set forth in paragraphs 119-120 above were consistent with statements RJA and

RJFS made more generally to all RJA and RJFS financial advisors and were false and misleading

because they failed to disclose the following facts:

a. The auction rate securities market was being maintained solely as a result ofthe routine intervention of auction dealers (including RJA) to prevent auctionfailures. Because the auction dealers were supporting the market, it was theirfinancial strength that mattered to the continued liquidity and value of theauction rate securities.

b. The auction rate securities RJA was selling were not as good as cash. In fact,RJF and RIA, on their own financial statements, did not classify RJA'sauction rate securities as cash or cash equivalent, but rather as debt securities.

c. Whether any particular auction rate security was over-collateralized wasirrelevant to the risk of illiquidity, and would only be a factor in the event of apotential default, not an auction failure.

d. RJA's research analysts had not adequately researched the auction ratesecurities RJA was selling. As discussed in paragraph 139 below, after thecollapse of the auction rate securities market, financial advisors asked Ms.Skibicki for the research that RJA's research analysts had conducted on

30

auction rate securities. Ms. Skibicki stated that there was nothing in writingand did not provide any research to the financial advisors.

122. According to CW 2, CW 3 and CW 4, as well as internal RJA documents, there was

a noticeable increase in the push by RJA to sell auction rate securities in late 2007 and early

2008. The number of communications from the Taxable Fixed Income trading desk increased

significantly.

123. In mid-January 2008, as the market for auction rate securities continued to

deteriorate, MA started to subtly modify the information it gave RJA and RJFS financial

advisors about auction rate preferred securities. In late 2007, the Taxable Fixed Income trading

desk had been sending daily e-mails to RJA and RJFS financial advisors listing the range of

interest rates resulting from the auctions conducted earlier that day.

124. On January 9, 2008, the Taxable Fixed Income trading desk added for the first time

the following language to the daily interest rate emails: "Please direct your clients to our public

site at http://www.raymondjames.com/auction rate preferred.htm." RJA did not explain to the

financial advisors why it added this language, did not make this instruction mandatory for all

RJA and RJFS financial advisors with clients holding auction rate preferred securities, and did

not undertake to independently provide this information to any existing or potential MA or RJFS

client directly through trade confirmations, account statements or otherwise. RJA also failed to

explain to RJA and RJFS financial advisors which clients should be referred to this site and when

in the sales process this should occur. Finally, even if all financial advisors had immediately

directed their clients to the website, the link was to the false and misleading August 2007

webpage discussed in paragraphs 112-113 above.

125. That same day, the Taxable Fixed Income trading desk sent another e-mail to MA

and RJFS financial advisors that continued to compare the auction rate preferred securities to

"comparable money market instruments."

126. On January 23, 2008, Jim Fulp, an Executive Vice President and Managing Director

of RJFS, send an e-mail to all RJFS financial advisors entitled "Best Practices in this Volatile

Market." In the e-mail, Mr. Pulp urged financial advisors to maintain open and regular

31

communications with all clients and to record notes of the communications as a "prudent risk

management practice." Mr. Fulp also identified several documents that had been approved by

the compliance department to provide to clients about the state of the market. None of these

discussed auction rate securities of the auction rate securities market.

127. On January 28, 2008, Irina Boudreau from the Taxable Fixed Income trading desk

e-mailed the daily Taxable Fixed Income newsletter to RJA and RJFS financial advisors. This

newsletter, like all of the others before, compared the returns on auction rate preferred securities

to the yields on comparable money market funds.

128. Beginning on January 29, 2008, all references to auction rate securities were

removed from the daily Taxable Fixed Income newsletter. The Taxable Fixed Income trading

desk gave no explanation for this sudden change and did not even point out that it had occurred.

Later that same day, John Hamm from the Taxable Fixed Income trading desk emailed the daily

rates resulting from the auctions conducted earlier that day. For the first time, the spreadsheet

accompanying the e-mail added a column for the maximum rate that would apply in the event of

an auction failure. Mr. Hamm did not explain why this information about maximum rates was

suddenly being provided or even point out that it was being provided.

129. On January 30, 2008, Mr. Hamm sent another e-mail to RJA and RJFS financial

advisors with a link to a news article that discussed auction failures in another part of the auction

rate securities market. Mr. Hamm stated, in part: "We encourage you to review your holdings to

confirm client suitability. To assist you, we direct you to the closed end fund information

(underlying collateral) on the taxable auction rate securities that we post on RJ Net. This page

recaps what the fund invests in, asset coverage, leverage, discount/premium to NAY and names

the lead manager among other information. We also have updated the daily rate sheet to show

you more information on the rates themselves."

130. Mr. Hamm's January 30, 2008 e-mail did not suggest that RJA and RJFS financial

advisors stop recommending auction rate securities to their clients. Mr. Hamm did not instruct

RJA and RJFS financial advisors to immediately contact their clients holding auction rate

32

preferred securities to discuss these important new developments. Moreover, the information

Mr. Hamm directed financial advisors to review did not provide the financial advisors with any

meaningful understanding of the liquidity risks of auction rate preferred securities because it did

not address the actual risk factors: the maximum rate provisions and the financial health of the

auction dealers.

131. On January 31, 2008, Mr. Hamm sent out yet another e-mail to RJA and RJFS

financial advisors that minimized the significance of the article and e-mail he had circulated the

prior day. Mr. Hamm said that "recent headlines were largely focused on the municipal auction

rate securities and the municipal insurers." He also noted that the auction rate preferred

securities were over-collateralized and assured the financial advisors that all was well with

respect to the market for auction rate preferred securities: "So, the liquidity, which at this time

seems to be a primary concern, still depends on the dutch auction process — matching buyers

with seller. As long as demand exists, sells should be filled. If you have been watching the

auction results of taxable auction rate securities, the yields have been in line."

132. On February 1, 2008, auction rate securities issued by closed-end fund Nicholas

• Applegate were removed from the list of available funds provided by the Taxable Fixed Income

trading desk. The Taxable Fixed Income trading desk did not provide any explanation why

Nicholas Applegate funds were no longer available.

133. Later that same day, CW 2 spoke by telephone with Jessica Olson from the Taxable

Fixed Income trading desk about 'Mr. Hamm's January 30 and 31 e-mails and to inquire why

• Nicholas Applegate had been removed from the list of available funds. Ms. Olson stated that

RJA was no longer recommending new purchases of Nicholas Applegate auction rate preferred

securities, but assured CW 2 that his clients should not sell any Nicholas Applegate they already

owned or any other auction rate securities, for that matter, and that clients who wanted to

purchase auction rate preferred securities should select from other fund providers that were still

available.

33

134. According to CW 2 and CW 3, more than a dozen of their RJFS financial advisor

colleagues also contacted the Taxable Fixed Income trading desk on February 1, 2008 in

• response to the January 30 and 31 e-mails, and all were assured that there were no problems in

the auction rate preferred market and that there was no reason to recommend to their clients that

they sell any holdings of auction rate preferred securities.

135. On February 13, 2008, Mr. Hamm and Ms. Skibicki sent an e-mail to RTA and

RJFS financial advisors informing themthat an overwhelming number of auctions had failed and

that all of the auctions in which RJA participated had failed.

136. At no time prior to or even after February 13, 2008 did either RJA or RJFS

undertake to contact directly any of their clients holding auction rate preferred securities to

apprise them of the material developments unfolding in the auction rate securities market. At no

time prior to or even after February 13, 2008 did either RJA or RJFS instruct their financial

advisors to contact any of their clients holding auction rate preferred securities to apprise them of

the material developments unfolding in the auction rate securities market.

137. At Defendants' national sales convention on March 11, 2008 in Orlando, Florida,

shortly after the auction rate securities market collapsed, Jessica Olson from the Taxable Fixed

Income trading desk was questioned by financial advisors during a break-out session about the

increased pressure from Defendants to sell auction rate preferred securities in the months

preceding the collapse of the market. Ms. Olson did not deny that this had occurred, or that it did

not look particularly good for Defendants, but claimed that it was purely coincidental.

138. At that same conference in March 2008, an assistant to Thomas James, the CEO of

RJF, told CW 2 that he was present at a meeting of RJF's Board of Directors in Fall 2007, during

which there was a lengthy discussion by the Board about problems in the auction rate securities

market.

139. According to CW 2 and CW 3, during an August 2008 conference call between

financial advisors and the Taxable Fixed Income trading desk after the collapse of the auction

rate securities market, financial advisors asked for the research RJA research analysts had

34

•

conducted on auction rate securities. Ms. Skibicki stated that there were no written research

materials to provide and did not provide any research to the financial advisors.

140. On a September 22, 2008 conference call with securities analysts, Thomas James

conceded that prior to the collapse of the auction market, Raymond James was an auction market

maker for auction rate securities, engaged in auction rate securities transactions in between

auctions, and maintained its own inventory of auction rate securities.

141. In a January 2, 2009 letter to all RJA and RJFS clients holding illiquid auction rate

securities, Thomas James apologized for being involved in their purchases of auction rate

securities, admitted that auction rate securities were not cash equivalents, and admitted that

Raymond James understood the possibility of an auction failure.

142. In that same letter, Mr. James also falsely claimed that neither Raymond James nor

its financial advisors had an incentive to offer auction rate securities over other standard

depositories, that Raymond James- only offered auction rate securities to fill client demand, that

Raymond James did not participate in the types of acts that other auction dealers who had settled

with the regulators had engaged in, and that Raymond James disclosed the risks associated with

auction rate securities in its trade confirmations, sales literature, advertising and through its

financial advisors. These statements by Mr. James were false and misleading based on the facts

alleged above.

143. Finally, according to CW 2 and CW 3, at Defendants' national sales convention on

March 5, 2009 in Las Vegas, Nevada, CEO Thomas James was questioned by financial advisors

about the increased pressure to sell auction rate preferred securities in the months preceding the

collapse of the auction rate securities market. Mr. James did not deny that this had occurred, but

stated that this was just a coincidence.

E. During The Class Period, RJA And RJFS, Through Their Financial Advisors,Misrepresented And Omitted Material Facts About The Auction Market And TheLiquidity Of And Risks Associated With Auction Rate Securities

144. In order to perpetuate the auction rate securities market, earn lucrative commissions

and fees for selling, underwriting, and managing auctions for auction rate securities, and reduce

35

Defendants' own exposure to auction rate securities held in inventory, RJA and R.TFS routinely

and consistently represented to their financial advisors throughout the United States that auction

rate securities were equivalent to cash and were safe, highly liquid short-term investment

vehicles suitable for any investor with at least $25,000 of available cash and as little as one week

in which to invest.

145. RJA and RJFS knew or were deliberately reckless in not knowing that these

representations about auction rate securities would be used by MA and RJFS financial advisors

to sell RJA's auction rate securities to clients because this was the only information about

auction rate securities that RJA and RJFS provided to the financial advisors. Throughout the

Class Period, RJA and RJFS failed to provide instruction or compliance training about auction

rate securities to their financial advisors, failed to disclose the risks associated with auction rate

securities, failed to disclose material adverse developments in the auction rate securities market,

and failed to provide prospectuses for the securities so that financial advisors would otherwise

know the facts about what they were selling.

146. As a result, MA and RJFS financial advisors lacked a rudimentary understanding

about auction rate securities and how the auction rate securities market functioned during the

Class Period, violating one of the key tenets of the Raymond James Client's Bill of Rights,

which provides that "Measonable investment alternatives suitable for a client's individual

objections should be presented with full disclosure of both risks and costs, as well as benefits."

147. As a result of the foregoing, during the Class Period, MA and RJFS financial

advisors sold auction rate securities as cash equivalents without disclosing the following material

facts about those securities:

a. Auction rate securities were not cash alternatives, but were long-termfinancial instruments with maturity dates of 30 years or longer, or no maturitywhatsoever;

b. With the exception of some auction rate securities issued by state agencies,municipalities and other government authorities that had maximum rates highenough to attract liquidity or cause the issuer to refinance, auction ratesecurities lacked features designed to ensure the holder's ability to sell the

36

•

security and, in the event of an auction failure, the purchaser would berequired to hold the security to maturity or indefinitely;

c. Many auction rate securities were subject to interest rate caps which, iftriggered, would reset their interest rates to levels well below market rates forcomparable securities, often as low as zero, and render those securitiesunmarketable.

d. Auction rate securities appeared readily liquid at the time of purchase and salebecause auction dealers (including RJA) were artificially supporting andmanipulating the auction market to maintain the appearance of liquidity andstability;

e. The short-term nature of auction rate securities and the ability of investors toliquidate their auction rate securities at par depended on the perpetuation ofthe artificial auction market by auction dealers (including RJA) and on thefinancial health of those auction dealers;

f. The periodic auctions at which the rates of interest or dividends on auctionrate securities were set required that investors actively bid their securities tomaximize the rate of return on their investments and minimize the impact ofmanipulative conduct by the auction dealers and others, and in the absence ofthe investor's active participation in the time consuming and highlyspecialized process of monitoring "price talk" and the bidding process,investors were likely to earn interest or dividends at reduced rates; and

g. In the event of persistent auction failures, auction rate securities would onlybe saleable at a substantial discount from their purchase price.

148. As a result of the foregoing, during the Class Period, RJA and RJFS financial

advisors also sold auction rate securities without disclosing the following material facts about the

auction market in which those securities were traded:

a. The auction market operated without transparency to investors, thus enablingmanipulation by auction dealers (including RJA);

b. The "auctions" for auction rate securities were not true Dutch auctions, asauction dealers (including RJA) submitted "support" bids and engaged inother manipulative practices for their own accounts in auctions that wouldhave otherwise failed during the Class Period, did so with knowledge of theother bids in the auctions, and often did so after the bidding deadline imposedon other investors;

c. Auction dealers (including RJA) systematically intervened in auctions duringthe Class Period for their own benefit, to set rates and prevent all-holdauctions and failed auctions;

d. If the auction dealers stopped intervening in the auctions, the auction ratesecurities market would collapse;

• e. Auction dealers (including RJA) directly or indirectly set the clearing rate inmost of the auctions in which they submitted bids during the Class Period;

37

f. Auction dealers (including RJA) managed the interest rates for auction ratesecurities to ensure that rates of interest or dividends paid were at levelssufficiently low, to attract continued interest from their issuer clients in futureauction rate securities issuances, while paying sufficient interest to makeauction rate securities saleable to retail investors;

g. By manipulating the auctions for auction rate securities and suppressingauction failures, auction dealers (including RJA) prevented investors fromlearning the true risk, value and liquidity features of auction rate securities;

h. Auction dealers (including RJA) intended to continue to market auction ratesecurities as cash equivalent and highly liquid, safe investments, even if theydetermined that they were likely to stop supporting and manipulating theauctions; and

i. Purchasers of auction rate securities were expected to monitor the auctions atall times to protect their interests, as auction dealers (including RJA)considered themselves free to "manage" auction outcomes and withdraw itssupport for the auctions at any time.

F. Plaintiffs' Experiences

i. Laurie Rubin

• 149. Lead Plaintiff Laurie Rubin serves as trustee of the Laurie Rubin Revocable Trust,

as trustee for her son, Cole Goldenberg, and as the President of Laurie Rubin Inc., and brings her

claims in these capacities.

150. As identified on Attachment A, Ms. Rubin purchased auction rate securities from

RJA and RJFS throughout the Class Period, and continuing through early February 2008.

151. The auction rate securities Ms. Rubin owns are perpetual securities with no

redemption date. They are presently earning a maximum interest rate of approximately 0.56%.

152. Ms. Rubin's long-time primary contact with Defendants has been Richard W.

Barnard, an RJFS financial advisor located in RJFS's Chicago office. Based on Mr. Barnard's

long relationship with Ms. Rubin and her written investment criteria, Mr. Barnard was aware that

Ms. Rubin was a conservative investor and that the funds invested were either maintained in trust

or would be used to run Ms. Rubin's business and pay anticipated taxes.

153. While Mr. Barnard was an RJFS financial advisor, Ms. Rubin's account was

maintained by and at RJA. All of Ms. Rubin's purchases and sales of auction rate securities

38

were solicited by Mr. Barnard at RJFS, but executed by RJA employees at the Taxable Fixed

Income trading desk in St. Petersburg, Florida.

154. Prior to the commencement of the Class Period, Mr. Barnard encouraged Ms. Rubin

. to invest in auction rate securities as an alternative to maintaining cash in the bank, which was

Ms. Rubin's usual practice.

155. Mr. Barnard told Ms. Rubin that auction rate securities were safe, short-term

investments, that they were similar to money market funds, that they were good cash

management vehicles, and that they were better than keeping money in the bank.

156. Mr. Barnard's representations to Ms. Rubin were consistent with the representations

RJA's Taxable Fixed Income trading desk made to all RJA and RJFS financial advisors, and by

repeating them to Ms. Rubin, Mr. Barnard was acting as an agent of both RJFS (where he

worked) and RJA (the seller of the securities).

157. Ms. Rubin was unfamiliar with auction rate securities and had not considered

investing in those securities prior to her conversations with Mr. Barnard.

158. Based exclusively on Mr. Barnard's advice and recommendation, Ms. Rubin

authorized Mr. Barnard to purchase auction rate securities.

159. Ms. Rubin relied on Mr. Barnard to select the auction rate securities to be purchased

for the various accounts. Until August 2007, Mr. Barnard, in turn, relied on employees on the

Taxable Fixed Income trading desk to select the auction rate securities to be purchased for Ms.

Rubin's accounts. After August 2007, Mr. Barnard made those selections from the list of auction

rate securities that was provided weekly to RJA and RJFS financial advisors by the Taxable

Fixed Income trading desk. This list set forth the auction rate securities in RJA's inventory that

were available for sale at that time.

160. Throughout the Class Period, as additional cash became available to be invested,

Ms. Rubin had numerous conversations with Mr. Barnard about investment options. These

conversations were generally by telephone, and occasionally by e-mail.

39

161. During the Class Period, Ms. Rubin inquired about alternatives to the auction rate

securities, including money market funds and certificates of deposit. In each instance, Mr.

Barnard continued to recommend that Ms. Rubin invest all of the cash in auction rate securities

for the reasons described above. , Mr. Barnard's continued recommendations were consistent

with the continued representations of RJA's Taxable Fixed Income trading desk.

162. Based on Mr. Barnard's advice and recommendation, Ms. Rubin authorized Mr.

Barnard to purchase additional auction rate securities at various times during the Class Period.

In each instance, Mr. Barnard either relied on the Taxable Fixed Income trading desk to select

the auction rate securities to be purchased for the various accounts or selected those securities

• from the inventory list provided by the trading desk.

163. RJA was one of the underwriters for several of the auction rate securities that Ms.

Rubin purchased, including Nuveen Dividend Advantage Municipal Fund Series T, Nuveen

Insured Quality Municipal Fund, Inc. Series TB, Nuveen Select Quality Municipal Fund, Inc.

Series TB, and Nuveen Dividend Advantage Municipal Fund 2 Series M and T.

• 164. RJA and RJFS continued to encourage their financial advisors, and Mr. Barnard, in

turn, continued to encourage Ms. Rubin to purchase auction rate securities into the first week of

February 2008, just one week before the auctions failed. Based on Mr. Barnard's advice and

recommendation, Ms. Rubin authorized Mr. Barnard to purchase auction rate securities in late

January and early February 2008.

165. Neither Mr. Barnard nor any other RJA or RJF'S employee provided Ms. Rubin with

a prospectus for any of the auction rate securities Ms. Rubin purchased, including those for

which RJA served as an underwriter.

166. Neither Mr. Barnard nor any other RJA or RJFS employee provided Ms. Rubin with

a written description of Defendants' auction rate securities practices and procedures or any

written materials concerning auction rate securities before or at the time of any of Ms. Rubin's

purchases of those securities.

40

167. Neither Mr. Barnard nor any other RJA or RIPS employee provided Ms. Rubin with

the information Defendants disclosed about auction rate securities on the Raymond James

website at the end of August 2007, or directed her to that website.

168. Neither Mr. Barnard nor any other RJA or RJFS employee explained to Ms. Rubin

how auction rate securities were traded or priced or that Ms. Rubin could seek to influence

interest rates by bidding in the auctions.

169. Neither Mr. Barnard nor any other RJA or RJFS employee explained to Ms. Rubin

about the risk of auction failure, what the maximum rate on her auction rate securities would be

if the auctions failed, or the impact these maximum rates would have on liquidity after an auction

failure.

170. Neither Mr. Barnard nor any other RJA or RIPS employee explained to Ms. Rubin

the extent to which the auction rate securities market was being supported by auction dealers,

including Merrill Lynch and UBS, two auction dealers that managed auctions for auction rate

securities Ms. Rubin purchased from RJA and RJFS and that routinely intervened in their

auctions in order to prevent the auction rate securities resale market from collapsing.

171. Neither Mr. Barnard nor any other RJA or RJFS employee informed Ms. Rubin of

the information in paragraphs 147-148 before she bought auction rate securities from RJA and

RJFS.

172. Had Ms. Rubin known about the information in paragraphs 147-148, she would not•

have purchased auction rate securities from RJA and RIP or would not have done so at the prices

she paid.

ii. Jonathan Gold

173. As identified on Attachment B, Plaintiff Jonathan Gold purchased auction rate

• securities from RJA on January 24, 2008, just three weeks before the auction rate securities

market collapsed after all of the major auction dealers decided to stop supporting the resale

market.

41

174. The auction rate securities Mr. Gold owns have a maturity date in 2027. These

securities have been downgraded recently to near-junk status, are presently earning a maximum

interest rate of 0.67%.

175. Mr. Gold's primary contact with Defendants was Scott A. Abraham, a Senior Vice

President of Investments and financial advisor at RJA, located in RJA's Locust Valley, New

York office.

176. In mid-January 2008, Mr. Gold spoke by telephone with Mr. Abraham. Mr. Gold

informed Mr. Abraham that there was cash in his account that Mr. Gold wanted to put into

something that was safe and liquid.

177. Mr. Abraham recommended auction rate securities issued by Jefferson County,

Alabama. Mr. Abraham told Mr. Gold that these auction rate securities were a safe, short-term

investment with monthly liquidity and that they were highly rated. Mr. Abraham's

representations were consistent with the representations RJA's Municipal Fixed Income trading

desk made to all financial advisors, and by repeating them to Mr. Gold, Mr. Abraham was acting

as an agent of RJA, his employer and the seller of the securities.

178. Mr. Abraham did not tell Mr. Gold about the risk of an auction failure, how the

auctions were conducted, or RJA's role in the underwriting and managing of the auctions for the

particular auction rate securities Mr. Abraham was recommending to Mr. Gold — information

that RJA did not disclose to financial advisors.

179. Mr. Gold was unfamiliar with auction rate securities and had not considered

investing in those securities prior to his conversation with Mr. Abraham.

180. Based exclusively on Mr. Abraham's advice and recommendation, Mr. Gold

authorized Mr. Abraham to purchase auction rate securities.

181. Mr. Gold relied on Mr. Abraham to select the auction rate securities to be purchased

for his account. Mr. Abraham made his selection from the list of auction rate securities that was

provided weekly to RJA and RJFS financial advisors by RJA's Municipal Fixed Income Trading

42

Desk. This list set forth the auction rate securities in RJA's inventory that were available for sale

at that time.

182. The auction rate securities that Mr. Abraham purchased for Mr. Gold's account

were underwritten exclusively by RJA, and RJA was the sole auction dealer for those securities.

These securities came from RJA's inventory and were not purchased for Mr. Gold on the open

market. The fact that RJA was the underwriter and auction dealer for the securities sold to Mr.

Gold was not disclosed to him at the time of sale or in the trade confirmation.

183. Neither Mr. Abraham nor any other RJA employee provided Mr. Gold with a

prospectus for the auction rate securities Mr. Gold purchased, even though RJA was the sole

underwriter of those securities. The prospectus for the auction rate securities Mr. Gold

purchased does not, in any event, disclose any risks associated with auction rate securities or the

auction rate securities market.

184. Neither Mr. Abraham nor any other RJA employee provided Mr. Gold with a

written description of Defendants' auction rate securities practices and procedures or any written

materials concerning auction rate securities before or at the time of Mr. Gold's purchase of those

securities.

185. Neither Mr. Abraham nor any other RJA employee provided Mr. Gold with the

information Defendants disclosed about auction rate securities on the Raymond James website at

the end of August 2007 before or at the time of Mr. Gold's purchase of those securities or

directed him to the website.

186. Neither Mr. Abraham nor any other RJA employee explained to Mr. Gold how

auction rate securities were traded or priced or that Mr. Gold could seek to influence interest

rates by bidding in the auctions.

187. Neither Mr. Abraham nor any other MA employee explained to Mr. Gold about the

risk of auction failure, what the maximum rate on his auction rate securities would be if the

auctions failed, or the impact these maximum rates would have on liquidity after an auction

failure.

43

•

188. Neither Mr. Abraham nor any other RJA employee explained to Mr. Gold the extent

• to which the auction rate securities market was being supported by auction dealers, including

RJA, or that auction dealers routinely intervened in their auctions in order to prevent the auction

rate securities resale market from collapsing.

189. Neither Mr. Abraham nor any other RJA employee informed Mr. Gold of the

information in paragraphs 147-148 before he bought auction rate securities from RJA.

• 190. Had Mr. Gold known about the information in paragraphs 147-148, he would not

have purchased auction rate securities from RJA or would not have done so at the prices he paid.

191. The auction for the Jefferson County auction rate securities purchased by Mr. Gold

failed on or around February 27, 2008, which was the first auction date after Mr. Gold's

purchase and within 14 days of the collapse of the overall auction rate securities market. Mr.

Gold never had the opportunity to sell his auction rate securities because of the immediate failure

of the auctions.

192. The Jefferson County auction rate securities Mr. Gold purchased are no longer rated

by Fitch Ratings Ltd., have been downgraded to BBB by Standard & Poor's Rating Services and

are on a negative credit watch, and have been downgraded to Caa2 by Moody's Investors

Service, Inc.

NO SAFE HARBOR

193. The statutory safe harbor provided for forward-looking statements under certain

circumstances does not apply to any of the allegedly false statements pleaded in this complaint.

194. The statements pleaded herein were not identified as "forward-looking statements"

when made.

195. To the extent there were any forward-looking statements, there were no meaningful

cautionary statements identifying important factors that could cause actual results to differ

materially from those in the purportedly forward-looking statements.

196. Alternatively, to the extent that the statutory safe harbor applies to any forward-

looking statements pleaded herein, Defendants are liable for those false forward-looking

44

statements because at the time each of those forward-looking statements was made, the particular

speaker knew that the particular forward-looking statement was false, and/or the forward-looking

statement was authorized and/or approved by a director or an executive officer of Defendants

who knew that those statements were false when made.

LOSS CAUSATION/ECONOMIC LOSS

197. As alleged above, during the Class Period, Defendants engaged in a scheme and

course of conduct to create, prop up and perpetuate for their own benefit an artificial market for

auction rate securities, to inflate the perceived value of those securities, and to generate

underwriting fees, auction management fees and sales commissions to the detriment of Plaintiffs

and Class members.

198. This scheme and course of conduct operated as a fraud or deceit on Plaintiffs and

Class members by, among other things, omitting to disclose material foreseeable risks

concerning the market for auction rate securities and the value, safety and liquidity risks of those

investments.

199. The materialization of the risks concealed by Defendants was foreseeable to

Defendants throughout the Class Period.

200. Those risks materialized when the auction dealers refused to continue serving as

buyers of last resort, causing most of the auctions to fail around February 13, 2008.

201. Materialization of those risks and subsequent disclosures of those risks directly

and/or proximately caused the damages sustained by Plaintiffs and Class members.

202. Only through the persistent conduct of auction dealers in artificially supporting,

maintaining and intervening in the auctions and acting as buyers of last resort was the market for

auction rate securities able to exist during the Class Period. •

203. Defendants failed to disclose to Plaintiffs and Class members that the auction rate

securities market depended on the voluntary, pervasive and ongoing participation of auction

dealers in the auctions, that the auction rate securities market was increasingly deteriorating

45

during the Class Period, and that many auction rate securities had insufficient maximum rates to

• attract liquidity in the event of an auction failure.

204. It was also materially deceptive for Defendants to represent to Plaintiffs and the

Class that auction rate securities were cash equivalents or highly liquid investments.

205. When the auctions failed around February 13, 2008, the concealed risks that auction

rate securities would stop trading as cash equivalents materialized, revealing that auction rate

• securities were not worth par and could not be sold at par value.

206. Because of Defendants' failure to disclose these and other material risks, Plaintiffs

and Class members were damaged when auction dealers withdrew their support for the auction

market.

207. If not for Defendants' omissions and false and misleading statements of material

fact about auction rate securities, the auction market in which those securities were traded, and

the conflicts of interest between Defendants' brokerage and investment banking operations with

respect to auction rate securities, Plaintiffs and Class members would not have purchased auction

rate securities or would not have purchased them for the prices and/or at the interest rates at

which they did.

208. Accordingly, Defendants' wrongdoing directly or proximately caused economic

losses to Plaintiffs and Class members by rendering their auction rate securities illiquid and by

limiting the interest and dividends that they would have otherwise received. Plaintiffs and Class

members remain unable to sell their auction rate securities at par and continue to receive interest

and/or dividends on those securities at below market rates that are insufficient to compensate for

the lack of liquidity features inherent in the securities.

209. As a result of the materialization of the concealed risks, the true value and liquidity

characteristics of auction rate securities have been revealed. Auction rate securities remain

illiquid, cannot be sold at par value on the open market, and are not worth the price Plaintiffs and

Class members paid for them.

46

TRANSACTION CAUSATION:

APPLICABILITY OF THE PRESUMPTION OF RELIANCE

A. Reliance on Material Omissions •

210. To the extent required, a presumption of reliance is applicable here due to RJA and

RJFS's use of standardized sales pitches which omitted on a uniform basis the material facts

described in paragraphs 147-148 regarding auction rate securities and the auction market in

which those securities were traded.

211. The facts described in paragraphs 147-148, which RJA and RJFS failed to disclose,

were material in that there is a substantial likelihood that the disclosure of these facts would have

been viewed by a reasonable investor as having significantly altered the total mix of information

about auction rate securities made available.

212. RJA and RJFS financial advisors used uniform, standardized and materially

identical sales pitches created and/or approved by RJA and/or RJFS to market and sell auction

rate securities to Plaintiffs and Class members as highly-liquid, cash-equivalent securities. The

sales pitch did not vary appreciably, if at all.

213. In light of Defendants' knowledge that their sales force routinely represented to

investors that auction rate securities were safe, highly liquid investments with interest rates

established by periodic auctions, it was materially misleading for Defendants to fail to correct the

record and state expressly that auction rate securities were, among other things, neither safe nor

• liquid investments, had interest rates managed by auction dealers, and traded in a propped-up

market that was increasingly susceptible to collapse.

214. As underwriter, auction dealer and/or broker-dealer engaged in the manipulation of

the market for auction rate securities and the sale of auction rate securities, RJA and RJFS had an

affirmative duty to disclose all material facts and risks associated with the auction rate securities

they sold and the auction rate securities market that they participated in.

215. Plaintiffs and Class members would not have invested in auction rate securities, or

alternatively, would not have purchased those securities on the terms at which they did, had

47

•

Defendants' omissions of material fact not concealed the true nature of those securities and the

auction market in which those securities were traded.

216. Plaintiffs' and Class members' fraud-based claims stem primarily, if not

exclusively, from these omissions of material fact for which reliance may be presumed.

B. Fraud on the Market

217. In the alternative, and to the extent required, a presumption of reliance is applicable

here because the auction rate securities market was well-developed and efficient throughout the

Class Period.

218. The presumption of reliance, based on the fraud-on-the-market doctrine, is

applicable here, because among other things:

a. Defendants made false and misleading omissions and misrepresentations offact concerning auction rate securities during the Class Period;

b. The omissions and misrepresentations were material in that there is asubstantial likelihood that the disclosure of these facts would have beenviewed by a reasonable investor as having significantly altered the total mix ofavailable information about auction rate securities;

c. The omissions and misrepresentations alleged would tend to induce areasonable investor to misjudge, among other things, the value of thesecurities at issue; and

d. Plaintiffs and Class members purchased auction rate securities afterDefendants made these omissions and misrepresentation, and did so withoutknowledge of the omitted and misrepresented facts.

219. Throughout the Class Period, auction rate securities were widely held among

numerous classes of investors including individuals, small businesses, charities, and large

corporate and institutional holders.

220. The very designation "auction rate" securities implied that the securities were

traded on an arm's-length basis, with the auctions matching buyers with sellers and establishing

a clearing rate for periodic interest or dividend payments.

221. Auction rate securities and the auction market had existed since 1984, and

developed rapidly since that time.

48

222. Throughout the Class Period and continuing until just days before the collapse of

the auction rate securities market, the major auction dealers published research reports and

presentations that touted the longevity and durability of auction rate securities.

223. Throughout the Class Period, RJA, RJFS and other financial firms sold auction rate

securities as cash or money market equivalents without disclosing that the market for those

securities was manipulated on a systematic and pervasive basis.

224. Throughout the Class Period, the auction market digested current information

regarding auction rate securities and reflected that information in the prices of those securities.

225. Material news concerning auction rate securities had a prompt and immediate effect

on the market price of those securities, as evidenced by, among other things, the rapid decline in

the market price occurring after the collapse of the auction market in February 2008.

226. Under these circumstances, all purchasers of auction rate securities suffered similar

injury in that those securities were overvalued throughout the Class Period.

227. When Plaintiffs and Class members purchased auction rate securities, they did not

know about, and could not reasonably have discovered, Defendants' wrongful conduct alleged in

this Complaint

228. Plaintiffs and Class members would not have purchased auction rate securities from

RJA and RJFS, or alternatively, would not have purchased those securities on the terms on which

they did, but for Defendants' misconduct.

COUNT I

Violation Of Section 10(b) Of The Exchange ActAnd Rule 10b-5(b) Promulgated Thereto Against

Defendants RJA And RJFS By Plaintiffs And The Class

229. Plaintiffs repeat and reallege each and every allegation set forth in the paragraphs

above as if fully set forth herein. Plaintiffs bring this cause of action on behalf of themselves and

the Class against Defendants RJA and RJFS.

49

230. During the Class Period, RJA and RJF'S employed manipulative or deceptive

devices or contrivances, in contravention of Rule 10b-5(b) promulgated by the SEC, which was

intended to and, throughout the Class Period, did: (i) deceive the investing public, including

Plaintiffs and Class members; (ii) enable RJA and RJFSs to sell approximately $2.3 billion of

auction rate securities to investors, and on which RJA and RJFS made substantial fees and

commissions; and (iii) cause Plaintiffs and Class members to purchase overvalued auction rate

securities from RJA and RJFS.

231. RJA and RJFS, jointly and individually (and each of them), engaged in a scheme to

defraud and made untrue statements of material fact and/or omitted to state material facts

necessary to make the statements made, in light of the circumstances under which they were

made, not misleading, in violation of Section 10(b) of the Exchange Act and Rule 10b-5(b).

232. RJA and RJFS are sued as primary participants in the wrongful and illegal conduct

charged herein, and RJA is also sued as a controlling person as alleged below.

233. RJA and RJFS, individually and in concert, directly and indirectly, by the use,

means or instrumentalities of interstate commerce and/or of the mails, engaged and participated

in a comprehensive scheme to defraud and a continuous course of conduct to conceal adverse

material information about auction rate securities, including in particular the information

. specified in paragraphs 147-148 above.

234. The information that RJA and RJFS failed to disclose to Plaintiffs and Class

members was material in that there is a substantial likelihood that the disclosure of the omitted

information would have been viewed by a reasonable investor as having significantly altered the

total mix of information about auction rate securities made available.

• 235. RJA and RJFS employed manipulative or deceptive devices or contrivances, while

in possession of material adverse non-public information, and engaged in acts, practices, and a

course of conduct as alleged herein in an effort to assure Plaintiffs and Class members that

auction rate securities were the same or virtually the same as cash and were highly liquid, safe

short-term investment vehicles suitable for almost all investors.

50

236. RJA and RJFS had actual knowledge of the misrepresentations and omissions of

material facts set forth herein, or acted with deliberate disregard for the truth and gross

recklessness in that they failed to ascertain and to disclose such facts.

237. RJA and RJFS made the material misrepresentations and/or omissions described

herein knowingly or deliberately and for the purpose and effect of (a) concealing the truth about

the value, liquidity and risks of auction rate securities from Plaintiffs, Class members and the

investing public, and (b) supporting the overvalued price and market for auction rate securities.

238. If RJA and RJFS did not have actual knowledge of the misrepresentations and

omissions alleged herein, they were grossly reckless in failing to obtain such knowledge and

refraining from taking those steps necessary to discover whether those statements were false or

misleading.

239. As a result of the dissemination of the materially false and misleading information

. and failure to disclose material facts, as set forth above, the market price of auction rate

securities sold by RJA and RJFS was artificially inflated during the Class Period.

240. Not knowing that the market prices of auction rate securities were artificially

inflated, and relying directly or indirectly on the false and misleading statements or omissions of

material fact made by RJA and RJFS, and/or on the absence of material information that was

known to or deliberately disregarded by RJA and RIF'S but not disclosed in public statements by

RJA and RJFS during the Class Period, and/or on the integrity of the auction market in which

auction rate securities traded, Plaintiffs and Class members acquired overvalued auction rate

securities from RJA and RJFS during the Class Period and were damaged thereby.

241. At the time of said Misrepresentations and omissions, Plaintiffs and Class members

were ignorant of their falsity, and believed them to be true.

242. Plaintiffs and Class members acted with due diligence, did not act with

recklessness, and could not have discovered the true facts that RJA and RJFS misstated and/or

failed to disclose.

51

•

243. Had Plaintiffs, Class members and the marketplace known the truth regarding the

value, liquidity and risks of auction rate securities, which were not disclosed by RJA and RJFS,

Plaintiffs and Class members would not have purchased auction rate securities from RJA and

RJFS, or, if they had acquired such securities during the Class Period, they would not have done

so at the overvalued prices which they paid.

244. By virtue of the foregoing, RJA and RJFS have violated Section 10(b) of the

Exchange Act, and Rule 10b-5(b) promulgated thereunder.

245. As a direct and proximate result of RJA and RJFS's wrongful conduct, Plaintiffs

and Class members suffered damages in connection with their respective purchases of auction

rate securities from RJA and RJFS during the Class Period.

COUNT II

Violation Of Section 20(a) Of The Exchange Act AgainstDefendants RJF And RJA By Plaintiffs And The Class

246. Plaintiffs repeat and reallege each and every allegation set forth in the paragraphs

above as if fully set forth herein. Plaintiffs bring this cause of action on behalf of themselves and

the Class against RJF and RJA.

247. RJF and RJA acted as controlling persons of RJFS within the meaning of Section

20(a) of the Exchange Act for the reasons alleged in this Complaint.

248. By virtue of their operational and management control of RJFS's business and

systematic involvement in the fraudulent scheme alleged in this Complaint, RJF and RJA had the

power to influence and control and did influence and control, directly or indirectly, the decision-.

making and actions of RJFS, including the content and dissemination of the various statements

and omissions of material fact which Plaintiffs contend are false and misleading.

249. RJF and RJA had the ability to prevent the issuance of the statements and omissions

of material facts described in this Complaint.

52

250. RJF and RJA had direct and supervisory involvement in the operations of RJFS,

and therefore, are presumed to have had and exercised the power to control or influence the

particular conduct giving rise to the securities violations alleged in this Complaint.

251. As set forth above, RJFS violated Section 10(b) of the Exchange Act and Rule lob-

5(b) promulgated thereunder by its acts and omissions as alleged in this Complaint.

252. By virtue of their positions as controlling persons of RJFS, RJF and RTA are liable

pursuant to Section 20(a) of the Exchange Act.

253. RJF also acted as a controlling person of RJA within the meaning of Section 20(a)

of the Exchange Act for the reasons alleged in this Complaint.

254. By virtue of its operational and management control of RJA's business and

systematic involvement in the fraudulent scheme alleged in this Complaint, RJF had the power to

influence and control and did influence and control, directly or indirectly, the decision-making

and actions of RJA, including the content and dissemination of the various statements and

omissions of material fact which Plaintiffs contend are false and misleading.

255. RJF had the ability to prevent the issuance of the statements and omissions of

material facts described in this Complaint.

256. RJF had direct and supervisory involvement in the operations of RJA, and

therefore, is presumed to have had and exercised the power to control or influence the particular

conduct giving rise to the securities violations alleged in this Complaint.

257. As set forth above, RJA violated Section 10(b) of the Exchange Act and Rule 1 01)-

5(b) promulgated thereunder by its acts and omissions as alleged in this Complaint.

• 258. By virtue of its position as a controlling person of RJA, RJF is liable pursuant to

Section 20(a) of the Exchange Act.

259. As a direct and proximate result of RJF's and RJA's wrongful conduct, Plaintiffs

and Class members suffered damages in connection with their purchase of auction rate securities

from RJA and RIF'S during the Class Period.

53

PRAYER FOR RELIEF

WHEREFORE, Plaintiffs.pray for relief and judgment, as follows:

A. Determining that this action is a proper class action, certifying Plaintiffs as•

representatives of the Class under Rule 23 of the Federal Rules of Civil Procedure and

appointing Plaintiff's Counsel as counsel for the Class;

B. Awarding damages, including but not limited to rescission, other compensatory

damages, consequential damages; restitution and disgorgement of ill-gotten gains in favor of

• Plaintiffs and Class members against all Defendants, jointly and severally, for all damages

sustained as a result of Defendants' wrongdoing, in an amount to be proven at trial, including

interest thereon;

C. Awarding Plaintiffs and the Class their reasonable costs and expenses incurred in

this action, including counsel fees and expert fees;

D. Awarding Plaintiffs and the Class pre-judgment and post-judgment interest;

E. Awarding extraordinary, equitable and/or injunctive relief as permitted by law,

equity and the federal statutory provisions sued hereunder; and

F. Granting such other and further relief as the Court may deem just and proper.

•

54

JURY TRIAL DEMANDED

Lead Plaintiff hereby demands a trial by jury.

Dated: October 16, 2009 Respectfully submitted,

GIRARD GIBBS LLP

By:

Daniel C. Ugard (admittifpro hac vice)Jonathan K. evine (JL-8390)Aaron M. Shemin (admitted pro hac vice)Christina H. C. Sharp (admitted pro hac vice)601 California Street, 14 th FloorSan Francisco, CA 94108Telephone: (415) 981-4800Facsimile: (415) 981-4846

Plaintiff's Lead Counsel

Additional Counsel:

Norman E. SiegelMatthew L. DarneronSTUEVE SIEGEL HANSON LLP460 Nichols Road, Suite 200Kansas City, MO, 64112Telephone: (816) 714-7100Facsimile: (816) 714-7101

Christopher A. Seeger (CS-4880)Stephen A. Weiss (SW-3520)David R. Buchanan (DB-6368)SEEGER WEISS LLPOne William StreetNew York, NY 10004Telephone: (212) 584-0700Facsimile- (212) 584-0799

CERTIFICATION OF PROPOSED LEAD PLAINTIFFPURSUANT TO TiiE FEDERAL wijittrirrs LAWS

I, Laurie Rubin, declare the following as to the claims asserted, or to be asserted,

under the federal securities laws:

1. I am the trustee of the Laurie Rubin Revocable Trust, the trustee for Cole

Goldenberg, and the president of Laurie Rubin Inc. (collectively, the "Rubin Entities"). I

have full authority to act on behalf of the Rubin Entities including the authority to bring,

participate in, or seek appointment as lead plaintiff in an action under the federal

securities laws.

2. I have reviewed the complaint against Raymond James Financial, Inc. and

its affiliates ("Raymond James"), prepared by Girard Gibbs LLP, Stueve Siegel Hanson

LLP, and Seeger Weiss LLP, whom I designate as counsel for myself and the Rubin

Entities in this action for all purposes.

3. The Rubin Entities did not acquire any auction rate securities from

Raymond James at the direction of counsel or in order to participate in any private action

under the federal securities laws.

4. The Rubin Entities are willing to serve as a lead plaintiff either

individually or as part of a group. On behalf of the Rubin Entities, I understand that a

lead plaintiff is a representative party who acts on behalf of other class members in

directing the litigation, and whose duties may include testifying at deposition or trial.

5. The Rubin Entities will not accept any payment for serving as a

representative party beyond their pro rata share of any recovery, except reasonable costs

and expenses, such as lost wages and travel expenses, directly related to the class

representation, as ordered or approved by the Court pursuant to law.

6. The Rubin Entities not sought to serve or served as a representative party

for a class in an action under the federal securities laws within the past three years.

7. I understand that this is not a claim form, and that the Rubin Entities'

ability to share in any recovery as class members are not affected by the decision to serve

as a representative party.

8. The purchases and sales of auction rate securities sold to the Rubin

Entities through Raymond James during the class period are attached as Attachment A

to this document:,

I declare under penalty of perjury that the foregoing is true and correct :

Executed this th day ofJune, 2008.,

,./

Laurie RubinTrustee of the Laurie Rubin Revocable TrustTrustee for Cole GoldenbergPresident of Laurie Rubin Inc.

,

2 ,

ATTACHMENT A

TRANSACTIONS OF LAURIE RUBIN IN AUCTION RATE SECURITIES SOLDBY RAYMOND JAMES BETWEEN

APRIL 8, 2003 AND FEBRUARY 13, 2008,AND HELD AS OF FEBRUARY 13, 2008

Account: Laurie Rubin Revocable Trust dated Oct. 20, 1988

TRADE

NUMBER OF PRICE PER BUY ORAUCTION RATE SECURITYDATE SHARES SHARE/UNIT SELL

Nuveen Investment Quality5/14/2004

2 $25,000 BoughtMunicipal Fund Inc., Series F

Nuveen Insured Quality Municipal4/13/2006

1 $25,000 BoughtFund Inc., Series TH

Nuveen Performance Plus12/26/2006

3 $25,000 BoughtMunicipal Fund, Series T

Nuveen Performance Plus1/24/2008

1 $25,000 BoughtMunicipal Fund, Series TH

Nuveen Premium Income1/18/2007

1 $25,000 BoughtMunicipal Fund Inc., Series C

Nuveen Premium Income6/14/2007

1 $25,000 BoughtMunicipal Fund Inc., Series C

Nuveen Premium Income2/8/2008

1 $25,000 BoughtMunicipal Fund Inc., Series D

Nuveen Premium Income3/26/2006

1 $25,000 BoughtMunicipal Fund 2, Inc., Series M2

Nuveen Premium Income9/13/2005

2 $25,000 BoughtMunicipal Fund 2, Inc. Series T

Nuveen Premium Income2/26/2004

2 $25,000 BoughtMunicipal Fund 2, Inc., Series TH

Nuveen Premium Income7/13/2006

2 $25,000 BoughtMunicipal Fund 2, Inc., Series TH

1

Nuveen Premium Income7/16/2007

1 $25,000 BoughtMunicipal Fund 2, Inc., Series M

Nuveen Dividend Advantage11/26/2007

7 $25,000 BoughtMunicipal Fund, Series T

Nuveen Insured Premium Income9/11/2007

2 $25,000 BoughtMunicipal Fund 2, Series T

Nuveen Premium Income1/17/2006

1 $25,000 BoughtMunicipal Fund 4, Inc., Series T2

Nuveen Premium Income9/12/2006

1 $25,000 BoughtMunicipal Fund 4, Inc., Series T2

Nuveen Premium Income1/11/2006

6 $25,000 BoughtMunicipal Fund 4, Inc., Series W

Nuveen Premium Income9/26/2007

1 $25,000 BoughtMunicipal Fund 4, Inc., Series W

Nuveen Dividend Advantage7/12/2004

1 $25,000 BoughtMunicipal Fund 2, Series M

Nuveen Dividend Advantage12/18/2006

1 $25,000 BoughtMunicipal Fund 2, Series M

Nuveen Dividend Advantage2/7/2006

1 $25,000 BoughtMunicipal Fund 2, Series T

Nuveen Dividend Advantage11/6/2007

1 $25,000 BoughtMunicipal Fund 2, Series T

Nuveen Dividend Advantage2/28/2007

1 $25,000 BoughtMunicipal Fund 3, Series W

Nuveen Insured Dividend9/19/2006 Advantage Preferred Municipal, 1 $25,000 Bought

Series T

Nuveen Select Quality Municipal7/18/2005

4 $25,000 BoughtFunds, Inc., Series M

Nuveen Select Quality Municipal8/10/2006

1 $25,000 BoughtFunds, Inc., Series TH

Nuveen Quality Income Municipal4/5/2007

1 $25,000 BoughtFund, Series F

2

Nuveen Quality Income Municipal9/23/2003

5 $25,000 BoughtFund, Series T

Nuveen Premier Municipal Income2/14/2006

1 $25,000 BoughtFund, Series T

Nuveen Premier Municipal Income12/20/2007

6 $25,000 BoughtFund, Series TH

Account: Cole Goldenberg, UTMA Custodial Account

TRADE

NUMBER OF PRICE PER BUY ORAUCTION RATE SECURITY

DATE SHARES SHARE/UNIT SELL

Nuveen Insured Municipal5/25/2006

4 $25,000 BoughtOpportunity Fund, Series TH

Account: Laurie Rubin Inc.

TRADE

NUMBER OF PRICE PER BUY ORAUCTION RATE SECURITY

DATE SHARES SHARE/UNIT SELL

Nuveen Premium Income3/14/2006

1 $25,000 BoughtMunicipal Fund 2, Inc., Series T

Nuveen Premium Income5/15/2007

3 $25,000 BoughtMunicipal Fund 4, Inc., Series T2

Nuveen Select Quality Municipal1/16/2008

3 $25,000 BoughtFunds, Inc., Series W

3

CERTIFICATION OF PROPOSED LEAD PLAINTIFFPURSUANT TO THE FEDERAL SECURITIES LAWS

1, Jonathan Gold, declare the following as to the claims asserted, or to be asserted,

under the federal securities laws:

I. I have reviewed the complaint against Raymond James Financial, Inc. and

its affiliates ("Raymond James"), prepared by Girard Gibbs LLP, whom I designate as

my counsel in this action for all purposes.

2. I did not acquire any auction rate securities from Raymond James at the

direction of counsel or in order to participate in any private action under the federal

securities laws.

3. I am willing to serve as a lead plaintiff either individually or as part of a

group. I understand that a lead plaintiff is a representative party who acts on behalf of

other class members in directing the litigation, and whose duties may include testifying at

deposition or trial.

4. I will not accept any payment for serving as a representative party beyond

my pro rata share of any recovery, except reasonable costs and expenses, such as lost

wages and travel expenses, directly related to the class representation, as ordered or

approved by the Court pursuant to law.

5. I have not sought to serve or served as a representative party for a class in

an action under the federal securities laws within the past three years.

6. I understand that this is not a claim form, and that my ability to share in

any recovery as a class member is not affected by the decision to serve as a representative

party.

1

7. My transactions in auction rate securities sold to me through Raymond

James during the class period are attached as Attachment A to this document.

I declare under penalty of perjury t e foregoing is true and correct.

r-TOetd,Executed this 6 th day of-gertcrrther, 2009

Jonathan G• d

2

ATTACHMENT A

TRANSACTIONS OF JONATHAN GOLD IN AUCTION RATE SECURITIESSOLD BY RAYMOND JAMES BETWEENAPRIL 8, 2003 AND FEBRUARY 13, 2008,AND HELD AS OF FEBRUARY 13, 2008

TRADE

NUMBER OF PRICE PER BUY ORAUCTION RATE SECURITYDATE SHARES SHARE/UNIT SELL

Jefferson County Alabama Limited1/24/08

100 $1,000 BoughtObligation School Warrants

1

CERTIFICATE OF SERVICE

I, Anne von Goetz, hereby declare as follows:

I am employed by Girard Gibbs, A Limited Liability Partnership, 601 California

Street, Suite 1400, San Francisco, California 94108. I am over the age of eighteen years

and am not a party to this action. On October 16, 2009, I caused a true and correct copy

of the foregoing Second Amended Class Action Complaint for Violation of the Federal

Securities Laws, to be served via Electronic Mail and U.S. Mail, with proper prepaid on

counsel of records for defendants at the following addresses:

Christian R. Bartholomew, Esq.Morgan, Lewis & Bockius, L.L.P1111 Pennsylvania Avenue, N.W.Washington, D.C. 20004Phone: 202.739-6400Facsimile . 202.739.3001Email: cbartholomew@morganlewis.com

Jill M. Baisinger, Esq.Morgan, Lewis & Bockius, L.L.P1701 Market StreetPhiladelphia, PA 19103Phone: 215.963.5251Facsimile: 215.963.5001Email: jbaisinger@morganlewis.com

I declare under penalty of perjury under the laws of the State of California that the

above is true and correct. Executed on October 16, 2009, at San Francisco, California.

AllahAl A f_ habb_Wiffir

Anne vrwi oet ."1"