Investment Fraud Lawyer Blog

There have been various developments over the past several weeks which investors may consider relevant in allocating their resources or evaluating alternatives that are available to them. Some of the more significant developments include, but are not limited to, the following:

• On Monday, the Dow Jones Industrial Average drops by 203 points.

• On Tuesday, the Dow Jones Industrial Average surged 889 points.

• On Wednesday, the Dow Jones Industrial Average lost 74 points.

• On Thursday, the Dow Jones Industrial Average rose 190 points.

• On Friday, the Dow Jones Industrial Average rose another 144 points and closed the week at 9325.

Continue reading " Page Perry's Market Monitor - October 31, 2008 " »

Trustees and other fiduciaries of plans established under The Employment Retirement Income Security Act of 1974 (ERISA) must protect plan assets “with the care, skill, prudence, and diligence … that a prudent man acting in a like capacity and familiar with such matters would use….” In other words, ERISA fiduciaries must not merely act like prudent person, but instead like prudent experts. This applies to smaller ERISA plans as well as larger ones. If ERISA trustees do not possess the requisite expertise, it behooves them to retain experts to advise them.

Continue reading " ERISA Fiduciaries May Have Obligations to Seek Recovery of Portfolio Losses " »

Harvey Pitt, a former Chairman of the SEC, thinks that the fox should watch the chickens. At a Panel discussion at the Securities Industry and Financial Markets Association's annual meeting Mr. Pitt declared that, in the wake of the financial crisis, a new regulatory structure is needed to improve regulatory standards. As reported by Aaron Siegel in the Investments News, Mr. Pitt suggested that a private-sector task force create a new set of regulations for a new regulatory structure. Mr. Pitt claimed that such a task force would be more effective than having Congress or the next presidential administration or the Federal Reserve draft the legislation. "There are issues that are too important to deal with political whims that will fly around on both sides of the aisle," Mr. Pitts said.

Continue reading " Former SEC Chief Wants to Put the Fox in Charge of the Henhouse - They Still Don't Get It " »

A stream of emails and other documents that have been released reveal, in unflattering detail, how far the credit rating agencies, especially Moody's and Standard & Poor's, went to accommodate bond issuers that generated giant fees for the two firms. These documents were released during a five hour hearing held by The House Oversight and Government Reform Committee on October 22 during its review of the role played by the credit rating agencies ( Moody's, Standard & Poor's, and Fitch Ratings) in the global credit freeze.

Continue reading " Credit Ratings Agencies Offer Excuses to Congress " »

Merrill Lynch may be facing a mass exodus of its most productive brokers. For years, Merrill Lynch's logo of a bull was the premiere brand in the financial services industry. But with brokers leaving Merrill Lynch to go to other broker-dealers or to set up independent shops, that brand is likely to suffer.

As detailed by Louise Story in The New York Times, brokers have been caught in the middle of the credit squeeze and stock market downturn. As they comfort their nervous clients, they find themselves having to explain write-downs, losses, lay-offs, and capital infusions that they had nothing to do with. Additionally, because some of their income was paid in company stock, their own net worths have dropped along with that of the company stock.

Continue reading " Merrill Brokers Likely to Flee Tarnished Brand " »

The hypocrisy meter for New York Times Business Columnist Gretchen Morgenson had a rough time last week as she recounted in her Sunday column.

It started when the executives from the nations leading credit-rating agencies testified before Congress that their firms' inability to see problems in toxic mortgages was an honest mistake. The woefully inaccurate ratings that have cost investors billions of dollars were not the result of the issuers paying rating agencies handsomely for their optimistic opinions. Of course, they had no response to e-mails which suggested that they would give high ratings to an instrument structured by a cow if the price was right.

Continue reading " Wall Street and Government Officials are "Shocked" about the Current Mess " »

Restless registered representatives of AIG Advisor Group are showing signs they may leave in droves to move to other advisors. These departing broker dealers should exercise caution to assure that their interests are legally protected.

The advisors from three broker dealers -- FSC Securities Corp. of Atlanta, AIG Financial Advisors of Phoenix, and Royal Alliances Associates of New York -- are uncertain about their future with the company in light of the events of the past month that included the federal bailout of their parent company. Top executives of AIG have announced plans to sell the broker dealers to raise cash, in part, to help repay the federal government. As of yet, however, no deal has materialized.

Continue reading " AIG Brokers in Turmoil - Advisors Who Jump Ship Should Protect Themselves Legally " »

The loss of jobs on Wall Street is keeping many attorneys busy as the need for legal representation increases. Contracts are being terminated and litigated, severance benefits are being proposed and fights for customers are escalating. Terminated employees are negotiating new arrangements, forming their own broker/dealers or investment advisory firms and entering into various contracts ranging from leases to client agreements. New registrations are being filed while licenses are being transferred. The need for experienced securities counsel has never been greater.

Continue reading " Wall Street's Downsizing Increases the Need for Legal Services " »

There have been various developments over the past several weeks which investors may consider relevant in allocating their resources or evaluating alternatives that are available to them. Some of the more significant developments include, but are not limited to, the following:

• On Monday, the Dow Jones Industrial Average jumped up by 275 points.

• On Tuesday, the Dow Jones Industrial Average fell 232 points.

• On Wednesday, the Dow Jones Industrial Average plunged 514 points.

• On Thursday, the Dow Jones Industrial Average rose 172 points.

• On Friday, the Dow Jones Industrial Average dropped another 312 points and closed the week at 8378.

Continue reading " Page Perry's Market Monitor - October 24, 2008 " »

John Thain, Merrill Lynch's Chief Executive, said earlier this week at a speech in Dubai that, of Merrill’s 61,000 employees, thousands would lose their jobs when Merrill is merged into Bank of America. As reported in the Financial Times by Simeon Kerr and Greg Farrell, Mr. Thain said that jobs would be lost in the corporate and service sectors, such as information technology. Mr. Thain expects that Bank of America's acquisition of Merrill's investment and wealth planning businesses would be completed by year-end.

New York City is bracing itself for the loss of up to 35,000 jobs in the financial sector, according to estimates from William Thompson, the New York City Comptroller. Many of these job losses were the result of the collapses this year of Bear Stearns and Lehman Brothers. According to Mr. Thompson, New York City will lose as many as 165,000 private sector jobs over the next two years.

Barclay's is also preparing to cut at least 3,000 jobs from its United States payroll. Barclay's inherited almost 10,000 Lehman employees when it purchased some of Lehman’s business operations shortly after the firm’s bankruptcy filing.

Continue reading " Some Layoffs Are More Equal Than Others " »

Is the crisis consuming global markets merely part of a fundamental shift of power from the United States to emerging economies in China and the Middle East? As reported this week by Katherine Griffiths of Great Britain's Telegraph.com, Steven Green, the Chairman of HSBC Bank, answered this question in the affirmative at a financial conference in Dubai.

Mr. Green said that the underlying trend of movement from west to east would "not be derailed. The rebalancing of the global economy towards Asia, home to over half the world's population, and its implications for the Middle East, is the shift that will affect financial markets most profoundly." He pointed to the implosion of sub-prime mortgage lending in the United States as the flash point but claimed that it was far from the only villain in town. "The complexity and opacity of certain financial instruments reached the point where even senior and experienced banks had trouble understanding them, let alone investors," Mr. Green said.

Continue reading " Has Wall Street Destroyed Itself As A Financial Center? " »

If you own bank stocks, you may not be told by that bank if the US Treasury decides that the bank was unworthy or “too troubled” to receive government cash. That’s right, you heard us, the bank not deemed solvent enough to receive bailout cash may not have to inform its shareholders of that fact.

According to an article by Deborah Solomon and David Enrich in today’s Wall Street Journal, the federal government’s $250 billion plan to bolster US financial institutions may “foster further consolidation in the industry.” Some banks have already announced that they intend to use bailout monies to help make acquisitions.

But that is the subject of a different blog post, perhaps. What is troubling to this author is the revelation by the Treasury on Monday of this week that it will not make public the names of banks that are rejected by the Treasury but instead will only announce the names of those that qualify for assistance.

Continue reading " Bank Shareholders: Is Your Bank Too Troubled And You Won't Find It Out? " »

Although the jury is still out on whether the latest version of the bailout plan will save the financial markets from meltdown, we may be seeing a glimpse of the proverbial light at the end of the tunnel. Fifteen countries, led by the British, are directly injecting capital into their respective banking systems in exchange for partial ownership of the banks. In this country, Treasury Secretary Hank Paulson has changed his mind and, instead of activating his original $700 billion taxpayer "trouble asset relief program," or TARP, to buy troubled mortgage securities, the program will now take direct ownership stakes in banks.

As noted in a recent column, Gretchen Morgenson of The New York Times believes that this is a positive development. While regulators are making up the rules as they go along, Ms. Morgenson opines that this is not necessarily a bad thing. TARP never answered the question of how much taxpayers would pay for troubled mortgages. Investors and taxpayers suspected that the government would pay too much money for these toxic waste mortgages simply to improve the banks’ bottom lines. The direct investment plan also raises serious questions including who will decide which banks receive the help, which will be allowed to fail, and what standards will be used to reach those decisions. Ms. Morgenson notes that these decisions will fall to Neel T. Kashkari, Assistant Treasury Secretary for Financial Stability. Not surprisingly, Mr. Kashkari is a 35-year-old former banker at Goldman Sachs who has just been out of business school for six years.

Continue reading " Regulatory Rehab " »

There have been various developments over the past several weeks which investors may consider relevant in allocating their resources or evaluating alternatives that are available to them. Some of the more significant developments include, but are not limited to, the following:

• On Monday, the Dow Jones Industrial Average rocketed up 936 points, its largest gain ever.

• On Tuesday, the Dow Jones Industrial Average fell 76 points.

• On Wednesday, the Dow Jones Industrial Average plunged 733 points.

• On Thursday, the Dow Jones Industrial Average rose 401 points.

Continue reading " Page Perry's Market Monitor - October 17, 2008 " »

Wall Street's last surviving chieftains are apparently still unaware of the tremendous damage their financial miscalculations and greed have caused this country and, in turn, the world. As reported by Dennis K. Berman on October 14th in The Wall Street Journal’s Game column, Lloyd Blankfein, (Goldman Sachs), James Dimon (J.P. Morgan Chase), Stephen Schwarzman (Blackstone Group), Larry Fink (BlackRock), and Glen Hutchins (Silver Lake), were part of a Panel discussion at the New York Stock Exchange earlier this month.

For the Wall Street insiders in attendance, the discussions were nothing out of the ordinary. For the rest of us, we would have come away convinced that these Wall Street titans still lived in fantasyland. While most Americans getting ready for years of sacrifice, the five chiefs still clung with a wish list of things the federal government could do for them. Unbelievably, they are still lobbying for Wall Street tax breaks, the repeal of the regulations under Sarbanes-Oxley, and for further restrictions on class-action lawsuits. In light of a bailout already approaching one trillion dollars, including the direct injection of taxpayer money into bank shares, it seems that the stewards of this taxpayer money must not remain so politically inept and so out of touch.

Continue reading " Wall Street Still Doesn't Get It " »

Investors who purchased shares of Lehman Preferred Stocks and other Lehman securities based upon advice from their broker may be able to recover their losses under several legal principles.

Continue reading " Investors May Be Able to Recover Losses in Lehman Securities " »

Merrill Lynch has reported its fifth straight quarterly loss. It its most recent quarter, Merrill has taken at least $9.5 billion of write-downs resulting in a loss of $5.15 billion. Since the beginning of last year, Merrill has suffered over $50 billion in losses attributable to the ongoing credit crisis. Banks and brokerage firms worldwide have now taken more than $640 billion of write-downs and credit losses in the credit crisis.

Switzerland has provided UBS a $59.2 billion rescue package. Switzerland is providing UBS with $5.2 billion and allowing UBS to put as much as $60 billion of risky assets into a fund supported by the country’s central bank. UBS has taken over $44 billion of write- downs and credit losses since the beginning of 2007.

Citigroup, the United States’ second biggest bank, has reported a third quarter loss of $2.8 billion. This loss was the result of at least $13.2 billion of loan losses and securities write downs that the firm took during the quarter. Among other things, Citigroup wrote down securities linked to mortgages, real estate and other assets totaling $4.4 billion. The bank also wrote down loan losses by $4.9 billion and increased its reserves for future losses by $3.9 billion. It is believed that many of these losses were taken as part of an industry-wide recognition that various mortgage-related securities are worth significantly less than previously reported.

Variable annuities have long been known to be poor products for almost all investors. Insurance companies, however, made tremendous profits in selling them and paid high commission to brokers. Now, in the wake of massive stock market declines,
variable annuities are starting to drag down the profits at such insurers.

According to a recent article by Lavonne Kuykendall in The Wall Street Journal, the damage is coming as insurers are also taking losses on the massive investment portfolios that back their insurance policies. Losses have come from holdings in the financial sector, from falling values in mortgage-backed securities, and unrealized losses in investment grade corporate bonds.

Since stock markets have fallen, insurers face reduced fee revenue as their annuity assets under management shrink. For accounting reasons, they also face charges against earnings related to the cost of acquiring the business.

Continue reading " Variable Annuities: Usually Bad For Investors, Now Bad For Insurers As Well " »

“If a financial plan is the roadmap, then asset allocation is the road itself,” said E. Stanley O’Neil, Former CEO, Merrill Lynch in The Top Five Wealth Management Needs of Investors, June 15, 2001. The basic investment principle of asset allocation was conveniently forgotten by the financial services industry during the technology bubble that caused the 2000 market downturn. Failure to use reasonable asset allocation strategies remains a problem today. This year billions of dollars have been lost due to incompetent investment advice that has ignored the importance of asset allocation.

Continue reading " Brokers' Failures to Recommend Reasonable Asset Allocation Strategies Have Caused Huge Losses " »

An arbitration panel in Minnesota has ordered Charles Schwab to pay $542,340 to an investor in the Schwab YieldPlus Fund. The amount of the claimed loss was $667,000.00. Schwab had recommended that the investor exchange his money market holdings for shares of the YieldPlus Fund. Schwab advertised the YieldPlus Fund as a suitable alternative to a money market fund, and said that its share price could only fluctuate minimally. Since January 1, 2007, however, the YieldPlus Fund has lost over 38% - hardly comparable to a money market fund. The YieldPlus fund was among the worst performing funds in the ultra-short term bond fund category due to its undisclosed over-concentration in and big bets on mortgage-backed securities and other asset-backed obligations.

Continue reading " Schwab Loses Big in a YieldPlus Case " »

John Helyar, co-author of the well known Barbarians at the Gate and an editor-at-large at Bloomberg News in Atlanta, wrote a concise history of how we arrived at the current financial “king-hell combination of Hurricanes Gustav and Ike,” published in the November 2008 issue of Bloomberg Markets.

Helyar begins his opinion piece with the observation that there is just one thing wrong with the genius of capitalism: it occasionally veers off into “barking madness.” This is a time in which we find ourselves.

Continue reading " "Barking Madness" or How Excessive Ambition Kills " »

There have been various developments over the past several weeks which investors may consider relevant in allocating their resources or evaluating alternatives that are available to them. Some of the more significant developments include, but are not limited to, the following:

• As expected, late last week Congress passed a revised financial bailout bill.

• On Monday, the Dow Jones Industrial Average dropped 369.88 points.

• On Tuesday, the Dow Jones Industrial Average dropped 508.39 points.

• On Wednesday, the Dow Jones Industrial Average dropped 189.01 points.

• On Thursday, the Dow Jones Industrial Average dropped 678.91 points.

Continue reading " Page Perry's Market Monitor - October 10, 2008 " »

According to data compiled by Compliance-insights.com, the “top 20” financial services stocks (which includes Bank of America, Citigroup, Goldman Sachs, Merrill Lynch, and Wachovia) fell 12.1% yesterday. During the four-day period ending October 9, 2008, these 20 stocks have fallen 183 points or 27%. By comparison, the Dow has dropped 17% and the NASDAQ has fallen 16%.

Page Perry, LLC is an Atlanta-based law firm with over 125 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 30 occasions. Page Perry’s attorneys are actively involved in representing individual and institutional investors regarding their investment problems. For further information, please contact us.

If UBS’s recent SEC filing is any indication, auction-rate securities investors are in for many headaches in trying to receive settlements from brokerage firms. On October 7, 2008, UBS filed a Form F-3 Registration Statement with the SEC as part of the process to effect its auction-rate securities settlement with investors. According to the filing, UBS anticipates sending a prospectus to each auction-rate securities investor that defines the mechanism by which settlements will be implemented. Under the prospectus each auction-rate securities investor will be given the opportunity to exchange his auction-rate securities for one or more of seven series of auction-rate securities rights each of which has certain terms and conditions. The prospectus is written in a lot of legalese and is highly technical.

Continue reading " Auction-Rate Securities Settlements Likely to Offer Many Complexities and Pitfalls for Investors " »

Page Perry has noticed a significant increase in legal claims associated with investor losses in financial firm securities, including bonds, preferred stocks, and common stocks. These claims are generally based on unsuitability abuses and/or misrepresentations in connection with the sale of the securities. Some of the securities most at issue were those issued by Freddie Mac, Fannie Mae, Lehman Brothers, Washington Mutual and Wachovia.

Continue reading " Losses on Securities Issued by Financial Firms Give Rise to Unsuitability and Misrepresntation Claims " »

There have been various developments over the past several weeks which investors may consider relevant in allocating their resources or evaluating alternatives that are available to them. Some of the more significant developments include, but are not limited to, the following:

• The Bush Administration proposed a $700 billion bailout plan to purchase bad mortgage investments from financial companies.

• On Monday, September 29, Congress rejected President Bush’s proposed $700 billion bailout plan.

• On Monday, September 29, the Dow Jones Industrial Average plunged 778 points.

• Later in the week, the markets rebounded somewhat as Congress decided to reconsider a modified bailout proposal. Indications are that some form of this bailout will pass.

Continue reading " Page Perry's Market Monitor -October 3,2008 " »