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:

• The Dow Jones Industrial Average opened the week at 8078 and increased 38 points on Monday.

• On Tuesday, the Dow Jones Industrial Average rose 59 points.

• On Wednesday, the Dow Jones Industrial Average jumped 201 points.

• On Thursday, the Dow Jones Industrial Average fell 226 points.

• On Friday, the Dow Jones Industrial Average plunged 257 points and closed the week at 7994.

Continue reading " Page Perry's Market Monitor - January 30, 2009 " »

The Wall Street banks and other major financial institutions that have received hundreds of billions of dollars of bailout money from U.S. taxpayers “just don’t get it.” Even as these firms plead for the support of American taxpayers in order to survive, their executives and employees continue to waste billions of dollars on unreasonable excesses. As President Obama has concluded, Wall Street’s actions are “the height of irresponsibility.”

Continue reading " Wall Street's Greed Knows No Bounds " »

The SEC recently sued Citigroup Global Markets for continuing to sell massive amounts of auction-rate securities despite the knowledge that “there are definitely cracks forming in the market” and that “inventories are starting to creep higher in the market and failed auction frequency is at an all time high.” The SEC’s complaint alleged that Citigroup continued selling auction-rate securities months after the warning flags concerning auction-rate securities were known at Citigroup. During the fall and winter of 2007, Citigroup had never let an auction fail and was using that fact to assure its clients of the safety and viability of the auction-rate securities market.

Continue reading " Citigroup Continued to Sell Auction-Rate Securities Despite Knowledge of "Cracks Forming in the Market" " »

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 U.S. markets were closed.

• On Tuesday, the Dow Jones Industrial Average plunged 332 points.

• On Wednesday, the Dow Jones Industrial Average jumped 279 points.

• On Thursday, the Dow Jones Industrial Average fell 105 points.

• On Friday, the Dow Jones Industrial Average dropped 45 points and closed the week at 8078.

Continue reading " Page Perry's Market Monitor - January 23, 2009 " »

With the recent developments in the financial industry and the significant losses incurred by both individual and institutional investors as a result of complicated derivative securities, it is a good time to revisit one of the obligations and duties that brokers owe to their clients.

Continue reading " Understanding Brokers' Suitability Obligations in the Era of CDOs, Interest Rate Swaps and Auction-Rate Securities " »

Time may be running out on certain auction-rate securities claims. Some investors may need to act promptly if they wish to protect their rights. The laws of each state establish time limits (statutes of limitations) within which legal claims must be asserted. Those time limits vary from state to state. Claims not brought within the applicable statute of limitations may be disallowed. To be conservative, investors should assume the clock starts ticking on the date of the transaction in question (although discovery and tolling rules that delay the running of the clock may apply).

Continue reading " Tick-Tock: Spurned Auction-Rate Securities Investors Need to Monitor the Clock " »

Even sophisticated investors can be defrauded. M&T Bank Corporation, a bank holding company with a market capitalization of $4.4 billion, is suing Deutsche Bank to recover over $80 million in losses relating to an investment in a a collateralized debt obligation (CDO) called Gemstone, reported Vikas Bajaj in the January 20th edition of the New York Times. The suit alleges that Deutsche Bank misrepresented and omitted to disclose material facts about Gemstone, calling it “fully rock solid,” and “a layup,” when it was actually a piece of “subprime dross,” according to the article. In a nutshell, Gemstone consisted of bonds backed by subprime homes loans (a dubious asset) and credit default swaps (a contingent liability) pursuant to which Gemstone ended up owing millions of dollars to Deutsche Bank when the loans defaulted. The swaps represented a huge conflict of interest for Deutsche Bank, which stood to benefit when things did not go well for Gemstone.

Continue reading " Sophisticated CDO and Structured Finance Investors Have Rights Too " »

Ameriprise Financial Services, formerly known as American Express Financial Advisers, has been cited and fined by regulators extensively in recent months for so-called "selling-away violations." Selling-away occurs when a financial adviser sells a client an investment product that has not been vetted and approved by the brokerage firm. Because they have not been subjected to a rigorous investigation, these products often turn out to be highly risky and sometimes outright scams like ponzi schemes. Regulators have fined Ameriprise for failing to properly supervise the activity of sales persons who have sold the unapproved products. The firm also faces significant exposure to defrauded investors as a result of these situations.

Continue reading " Unapproved Investments Cause Ameriprise Big Problems " »

Investors holding auction-rate securities (“ARS”) sold by Raymond James will have to initiate legal action against the firm to recoup their ARS losses or prepare for a long wait as they continue to hold the illiquid securities. Although under investigation from the SEC, the Florida Office of Financial Regulation and the New York Attorney General’s Office, Raymond James recently sent out a letter to its purchasers of ARS indicating that it refuses to buy back their securities due to lack of funds.

Continue reading " Raymond James Refuses Auction-Rate Securities Buyback - Leaves Its Clients "Out In The Cold" " »

On January 16, 2009, Merrill Lynch paid $550 million to settle a collateralized debt obligation (CDO) lawsuit brought by the Ohio State Teachers Retirement System, among others. This development confirms that even larger, more sophisticated investors can recoup damages when they are misled into purchasing complex investments such as CDOs that are virtually incomprehensible for normal people.

Continue reading " CDO Investors Recover $550 Million From Brokerage Firm " »

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 lost 125 points.

• On Tuesday, the Dow Jones Industrial Average fell another 25 points.

• On Wednesday, the Dow Jones Industrial Average dropped 248 points.

• On Thursday, the Dow Jones Industrial Average rose 12 points.

• On Friday, the Dow Jones Industrial Average rose 69 points and closed the week at 8281.

Continue reading " Page Perry's Market Monitor - January 16, 2009 " »

Investors owning variable annuities should carefully review their investments from several perspectives. Investors should evaluate the risks that they have been exposed to in the past and consider whether they wish to continue being exposed to such risks in the future. This is particularly important for variable annuity investors, many of whom sought a relatively safe haven from market volatility.

Continue reading " Variable Annuities Warrant Close Scrutiny " »

Many institutions and corporations who invested significant amounts of money in CDOs (collateralized debt obligations), auction-rate securities and other structured-finance vehicles recently received bad news from the SEC. On December 31, 2008, the SEC announced that it would not suspend the “Fair Value” accounting rules. As a result, corporate and institutional investors must value these exotic securities at their actual market values. Under FAS 157 (the fair-value accounting rule), market value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Accordingly, corporations and institutions can no longer blindly accept valuations provided by their brokerage firms or value their holdings based on cost and guesswork. In many cases, institutions and corporations will be required to value these exotic securities at much lower prices than previously reported.

Continue reading " Clock Strikes Midnight for Many CDO and Structured Finance Investors " »

The Kenosha, Wisconsin School Board has sued brokerage firm Stifel Nicolaus, Royal Bank of Scotland and others for alleged fraud and negligence in connection with the sale of synthetic Collateralized Debt Obligations, or CDOs to the board. The board invested $200 million, most of it borrowed from Irish bank Depfa, in the CDOs, which were allegedly touted by Stifel Nicolas as safe and reliable. "Every three months you're going to get a payment," Stifel's representative allegedly told the board. "There would need to be 15 Enrons," for the investments to fail, he said, according to a November 2, 2008 report in the New York Times.

Continue reading " School Districts Face Huge Losses in CDOs " »

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 fell 82 points.

• On Tuesday, the Dow Jones Industrial Average advanced 62 points.

• On Wednesday, the Dow Jones Industrial Average dropped 245 points.

• On Thursday, the Dow Jones Industrial Average slipped 27 points.

• On Friday, the Dow Jones Industrial Average fell 143 points and closed the week at 8599.

Continue reading " Page Perry's Market Monitor - January 9, 2009 " »

Just as a falling tide can reveal shipwrecks, a falling market can reveal financial industry abuses of investors. Thus, while certain recent investor losses may be attributable to market conditions, many recent losses are attributable to Wall Street’s excesses and failures to provide the professional services promised.

Continue reading " Many Investors Discover That It's Not "Just the Market" " »

Most investment experts agree that you should carefully evaluate your investment plan regularly -- not less often than once per year. January seems to be as good a time as any to reconsider your overall investment plan and to implement any new changes.

Continue reading " Considerations for your Annual Investment Checkup " »

Following a year in which stocks have dropped by more than 40%, brokers and insurance salesman are aggressively pushing the Equity Indexed Annuity (EIA) as an investment by which an investor can participate in the upside of the stock market without any exposure to the downside. As a smart investor, you shouldn't fall for this sales pitch because it is not true.

The Securities and Exchange Commission has recognized the abusive sales practices and confusing nature of these products. It recently passed a rule requiring strict regulation of EIAs.

Continue reading " Don't Fall into the Equity Indexed Annuity Trap " »

Auditors find themselves on the “hot seat” as a result of the SEC’s recent mandate that corporations and other institutional investors report investment holdings based on a “market value” basis. As 2008 came to a close, many companies and institutional investors were hoping that the SEC would suspend the “fair-value” accounting rules that require companies to report actual market values for illiquid securities. Last week, those hopes were dashed. On December 31, 2008, the SEC announced that it would require mark-to-market valuations for these holdings and many companies are now facing significant write-downs. Under FAS 157 (the fair-value accounting rule), market value is defined as the price that would be receive to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.”

Continue reading " "Fair Value Accounting Rule" Puts Auditors on the "Hot Seat" " »

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 fell 32 points.

• On Tuesday, the Dow Jones Industrial Average advanced 184 points.

• On Wednesday, the Dow Jones Industrial Average rose 108 points and closed the year at 8776.39.

• On Thursday, the market was closed.

• On Friday, the Dow Jones Industrial Average rose 258 points and closed the week at 9035.

Continue reading " Page Perry's Market Monitor - January 2, 2009 " »

Unless you are one of the lucky few who did not lose a significant amount of value in your investments during 2008, you should scrutinize your accounts for undue risk and potential abuses. At year-end, stocks are down on average over 30%, bonds about 18%. Economic conditions continue to deteriorate. There is considerable risk to both stocks and bonds going forward for a number of reasons, including the fact that the federal reserve’s attempt to slay the dragon of deflation by printing money like mad may well conjure up the evil genie of inflation. See Is the Medicine Worse Than the Illness?, by James Grant, Wall Street Journal, December 20, 2008.

Continue reading " Investors Need to Scrutinize their Year-end Brokerage Statements " »