Investment Fraud Lawyer Blog

Recently many investors in variable annuities have experienced unanticipated losses. Since some people purchase variable annuities based on the assumption that they are immune to market fluctuations, many have learned the hard way that, like mutual funds, variable annuities invested in equity "sub-accounts" can lose significant value. However, if a variable annuity is sold to a customer with a promise of safety or without adequate disclosure of risk, the customer may have valid legal claims for fraud or misrepresentation.

Continue reading " Is Your Variable Annuity Safe ? " »

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 dropped by 127 points.

• On Tuesday, the Dow Jones Industrial Average rose by 151 points.

• On Wednesday, the Dow Jones Industrial Average plunged 427 points.

• On Thursday, the Dow Jones Industrial Average tumbled 445 points.

• On Friday, the Dow Jones Industrial Average rebounded 494 points and closed the week at 8046.

Continue reading " Page Perry's Market Monitor - November 21 , 2008 " »

The loss of jobs in investment banking and brokerage is truly a worldwide phenomenon. Duetsche Bank announced that it is cutting 900 jobs in its investment banking operations in New York and London. According to James Wilson reporting on FT.com today, these cuts are the deepest yet by Germany’s largest bank. The move amounts to a reduction of about 12% of Deutsche Bank’s 7000-person investment banking team.

Deutsche Bank is also cutting jobs in credit origination, bond underwriting, and proprietary trading. The bank is not accepting any capital or liquidity guarantees from Germany’s government-backed financial sector stabilization fund.

This latest news on the job front demonstrates that employees of overseas financial firms are certainly not immune to the ongoing heavy job cuts that American-based firms such as Citigroup are experiencing.

The hoopla surrounding the presidential election and the promise of a new team in Washington does not change the reality that we are still mired in a seemingly unending financial mess. But, according to New York Times business columnist Gretchen Morgenson, the lack of transparency surrounding both Wall Street’s activities and the financial bailout present serious problems going forward. President-Elect Barrack Obama needs to signal investors and taxpayers that he will be looking out for them. Morgenson argues that an essential first step is to insure that the officials in charge of taxpayer finance bailouts operate in the sunshine. It would also be helpful if those same people were more forceful in extracting concessions from the recipients of billions of taxpayer dollars.

Continue reading " Where is the Transparency ? " »

Citigroup is planning to eliminate an additional 50,000 jobs and reduce expenses by 20 percent from their peak as the world recognizes that it has slipped into recession. According to a report by Zachary R. Mider in Bloomberg.com, CEO Vikram Pandit will announce the layoff plan today.

Continue reading " Citigroup To Lay Off 50,000 More Employees " »

Fidelity Investments, the world’s largest mutual fund company, will lay off 1,300 employees, or 3% of its work force this month. It will also conduct a second round of job cuts in the first quarter of 2009 that is anticipated to impact another 1,700 employees.

Continue reading " World's Largest Mutual Fund Company Lays Off Employees " »

In 2005, Merrill Lynch CEO Stanley O’Neal boasted that Merrill Lynch had “the right people in place as well as good risk management and controls.” In a devastating article in The New York Times Business Section on November 9th, Gretchen Morgenson demonstrated that O’Neal was wrong on all counts, especially when it came to Merrill’s decision in 2006 to invest heavily in the mortgage industry. Merrill had the wrong people overseeing a line of business that they did not understand and whose risks they did not appreciate.

Two indispensable members of O’Neal’s clique of trusted lieutenants – Osman Semerci and Ahmass L. Fakahany – helped orchestrate Merrill’s belated push into the mortgage industry. Semerci oversaw Merrill’s mortgage operation, and, according to former Merrill executives, often played the role of tough guy who silenced the critics warning about the risks the firm was taking. At the same time, Fakahany, who oversaw Merrill’s risk management, kept the machinery humming along by loosening internal controls, according to the same former executives. Their actions ultimately left Merrill vulnerable to the increasingly risky business of manufacturing and selling mortgage securities.

Continue reading " The Fall Of The House Of Merrill " »

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 dropped by 73 points.

• On Tuesday, the Dow Jones Industrial Average fell by 176 points.

• On Wednesday, the Dow Jones Industrial Average plunged 411 points.

• On Thursday, the Dow Jones Industrial Average surged 553 points.

• On Friday, the Dow Jones Industrial Average dropped 338 points and closed the week at 8497.

Continue reading " Page Perry's Market Monitor - November 14 , 2008 " »

The bloodletting continues unabated at Citigroup. The bank has announced layoffs of at least 10,000 employees in its investment bank and other divisions worldwide, according to an article by David Enrich and Robin Sidel in today's Wall Street Journal. Citigroup’s senior management has ordered budget cuts to employee compensation of at least 25%. Managers can limit the number of layoffs by getting rid of higher paid bankers and traders.

Citigroup has shed approximately 23,000 jobs over the past year and, as of September 30th, had 352,000 employees. The latest round of layoffs is expected to be the deepest one yet. The goal is to shrink Citigroup’s work force to 290,000 employees.

According to the New York Times' Eric Dash, author of "Worst May Be Yet To Come for Citigroup," also in today's edition, the ax could keep falling. According to Dash's sources, Citigroup could shed an additional 25% of its work force by the end of next year, reducing the total number of employees to 264,000.

Continue reading " Citigroup Slashes More Jobs " »

The hoopla surrounding the presidential election and the promise of a new team in Washington does not change the reality that we are still mired in a seemingly unending financial mess. But, according to New York Times business columnist Gretchen Morgenson, President-Elect Barack Obama needs to signal investors and taxpayers that he will be looking out for them.

Morgenson argues that an essential first step is to insure that the officials in charge of taxpayer finance bailouts operate in the sunshine. It would also be helpful if those same people were more forceful in extracting concessions from the recipients of billions of taxpayer dollars.

In all of the Government’s attempts to deal with this financial mess, major decisions have been made in a hurry, behind closed doors, and with many unidentified participants. Some analysts, financiers, and politicians suspect that special pleaders may be behind the scenes securing special favors.

Continue reading " Excessive Secrecy And The Bailout " »

Many investors who purchased supposedly “principal protected” structured notes and “return optimization securities” issued by Lehman Brothers have compelling legal claims. While these investors are unsure whether they will recover any of their principal in the Lehman bankruptcy according to Eleanor Laise of the Wall Street Journal in a November 11, 2008 article entitled “Another ‘Safe’ Bet Leaves Many Burned”, many such investors have claims against the brokerage firms that sold these investments.

Continue reading " Structured Notes Issued by Lehman, Freddie and Fannie Leave Conservative Investors Burned " »

In a stunning turnaround, Bank of America has agreed to abide by the “Protocol for Recruiting Brokers” after it acquires Merrill Lynch, according to Bruce Kelly of Investment News.

Continue reading " Bank of America Agrees to Recruiting Protocol " »

According to a report by CNBC.com, the British newspaper Financial Times has written that US financial services firms could layoff another 70,000 workers to cut costs. Layoff plans will be finalized this month as firms prepare next year’s budgets.

Financial Times based the estimate of 70,000 job losses on opinions of “executives and analysts.” About 150,000 financial services jobs have already been lost worldwide. The paper said that investment banks and trading business would be the hardest hit.

Continue reading " Wall Street to Cut 70,000 Additional Jobs ? " »

Fidelity Investments, the world’s largest mutual fund company, will lay off this month 1,300 employees or 3% of its work force. It will also conduct a second round of job cuts in the first quarter of 2009.

As reported by Jennifer Levitz recently in The Wall Street Journal, Fidelity has 44,400 employees and $1.24 trillion in mutual fund assets under management. It is likely that the entire fund industry will contract in the coming months because of a diminished asset base, just as it grew during the recent bull market. Fidelity, for example, now has 15,000 more employees than it did five years ago.

Continue reading " World's Largest Mutual Fund Company To Lay Off 1300 Workers " »

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 dropped by 5 points.

• On Tuesday, the Dow Jones Industrial Average jumped 306 points.

• On Wednesday, the Dow Jones Industrial Average lost 486 points.

• On Thursday, the Dow Jones Industrial Average lost another 443 points.

• On Friday, the Dow Jones Industrial Average rose 248 points and closed the week at 8943.

Continue reading " Page Perry's Market Monitor - November 7 , 2008 " »

401(k) Plans – the primary retirement savings vehicles for most Americans – have lost more than $500 billion over the past 12 months as a result of the market crisis, as reported by Eleanor Laise of the Wall Street Journal on October 11, 2008 in an article entitled “Statement Shock Hits 401(k)s.” The average 401(k) balance had dropped roughly 18% to 23% as of October 30, 2008, depending on the participant’s age and tenure with the plan, according to another Journal article by Ms. Laise entitled “Financial Crisis Highlights Shortcomings of 401(k) Plans” published on November 3, 2008. There are $4.5 trillion in defined contribution plans, including $3 trillion in 401(k) plans. The situation is especially dire for workers who recently retired or are on the brink of retirement.

Employees who have lost money and were unsuitably invested should understand that they may have legal remedies. In a recent landmark decision, the United States Supreme Court held that 401(k) plan participants can now bring claims against their employers and other plan fiduciaries. Employers and other retirement plan fiduciaries may be liable for any unsuitable investment recommendations or choices offered to plan participants who have suffered losses. A 401(k) plan participant who has suffered a loss can and should have his or her account evaluated at no charge by counsel experienced in such matters.

Continue reading " Employees May Have Legal Claims For Sharp Declines In 401(k) Accounts " »

Many Merrill Lynch brokers are reportedly considering leaving the firm now that it has been acquired by Bank of America. Some are disturbed by a dramatic change in policy that may affect the portability of their client base in the future -- prompting many to consider whether now is the best time to jump ship.

Continue reading " Will Merrill Brokers Stay at Bank of America ? " »

Is late in the day trading being used to manipulate stock prices ? During the month of October there was unprecedented volatility in the stock market, and a lot of this volatility occurred near the close of the trading day. As Keith Wirtz, chief investment officer of Fifth Third Bank, recently told Reuters, “There’s been material turnarounds in the last 15 to 30 minutes of trading over a couple of trading sessions and there has been no fundamental reason.”

Continue reading " Market Volatility Under Investigation " »

UBS AG is facing a growing number of arbitration claims from U.S. investors who were sold supposedly “100 per cent principal protected notes” issued by Lehman Brothers Holdings, Inc., according to a November 3, 2008 article in Bloomberg by Bradley Keoun and David Scheer. About $8 billion Lehman structured notes were outstanding in September of this year, including $2.8 billion sold this year. UBS sold about $1 billion of Lehman structured notes, according to the article. The notes are unsecured obligations of Lehman, and are now virtually worthless in the wake of the Lehman bankruptcy.

Continue reading " UBS Faces a Deluge of Claims for Selling Risky Lehman Structured Notes as Safe Investments " »

Congressional inquiries into the credit ratings issued by Standard & Poor's, Moody's and Fitch, Inc., the leading credit rating agencies, revealed the same kind of corruption that brought stock market analysts under the microscope just seven short years ago, suggesting that Wall Street firms do not learn any lessons and are, in effect, ungovernable. In an internal email that came to light during hearings on the Hill, one S&P analyst admitted that their credit ratings were inflated and unsupported, saying, "it could be structured by cows and we would rate it." In other words, the credit ratings were a bunch of bull.

In another internal exchange, a different analyst told a co-worker, "let's hope we are all wealthy and retired by the time this house of cards falters."

Continue reading " Are Credit Ratings Agencies Just a Bunch of Bull? " »

Martin Lipton, one of the leading mergers and acquisitions lawyers in the country, told an audience at a seminar held at New York University School of Law on October 23, 2008, that a full economic recovery could take between three and five years. Mr. Lipton said that until the housing and mortgage situation is stabilized and until the value of banks' assets stops declining, "we will not be out of this problem."

Continue reading " Market Rebound Could Take Five Years " »