One of the buildings belonging to the headquarters of Wachovia Securities is seen Thursday, July 17, in St Louis. Securities regulators from several US states raided the St Louis headquarters of Wachovia Securities on Thursday, seeking documents and records on the company's sales practices. - ap

Securities regulators from several states in America on Thursday raided the St Louis headquarters of Wachovia Securities, seeking documents and records on the company's sales practices.

The move is part of a broad investigation into questionable practices involving auction rate securities, Missouri officials said.

Missouri Secretary of State Robin Carnahan's office said the "special inspection" at the Wachovia division, the former AG Edwards, concerned the US$330 billion auction rate securities crisis.

Wachovia Securities is part of the Charlotte-based bank, Wachovia Corp, the fourth-largest US bank.

"Hundreds of Missouri investors have called my office because of inability to access their money," Carnahan said in a statement. She added that she aims to take actions to "to make these investors whole".

70 formal complaints

The action, which also sought information on internal evaluations and marketing strategies, comes after more than 70 formal complaints were filed with the Missouri Securities Division over the last four months, representing more than US$40 million of frozen investments.

In April, the Securities Division launched a full-scale investigation, requesting documents, emails, transcripts and other records from Wachovia Securities and other banks.

Wachovia Securities has not fully complied with these requests, prompting Thursday's onsite inspection, Missouri officials said.

However, a Wachovia spokeswoman said, "Most securities firms, including Wachovia, are responding to inquiries from regulators about the auction rate securities industry."

"The discussions that are occurring today are a part of this ongoing process," spokeswoman Christy Phillips-Brown said.

Wachovia is the subject of arbitration claims and a class action lawsuit that was filed in New York in March.

In a regulatory filing in May, Wachovia said the Securities and Exchange Commission and other regulators are seeking information concerning the underwriting, sale and subsequent auctions of municipal auction-rate securities and auction-rate preferred securities. The interest rates on such securities are reset at regular auctions. Troubles have arisen as demand for some high-rate securities dries up as rates fall.

"Further review and inquiry is anticipated by the regulatory authorities and Wachovia will cooperate fully," the company said in the filing.

According to the filing, the bank and Wachovia Securities have also been named in a lawsuit filed in March in New York. The lawsuit seeks class action status for customers who purchased and continue to hold such securities based on alleged misrepresen-tations concerning the quality, risk and characteristics of the securities. The bank said it "intends to vigorously defend the civil litigation".