Investment Fraud Lawyer Blog

A recent Bloomberg News report has raised serious questions about (i) the independence and objectivity of the Financial Industry Regulatory Authority (“FINRA”) and (ii) the closeness of relationships between brokerage firms and FINRA which is responsible for regulating brokerage firms. The report questions how and why FINRA disposed of some $862.2 million of auction rate securities in the months before the auction rate securities markets froze and thousands of investors were left holding illiquid securities.

Continue reading " Auction Rate Securities Article Raises Questions about FINRA's Commitment to the Protection of Investors " »

Fidelity Brokerage Services LLC has had trouble retaining some of the most successful brokers in its Private Client Group as a result of questionable sales practices. According to an article in Investment News, dozens of brokers serving Fidelity’s most affluent clients recently left the firm because, even though they were required to obtain certified financial planner certifications (CFP), they were prohibited from disclosing details of their bonus compensation, thereby violating the certification they were required to obtain. In addition, some former brokers claim that Fidelity required them to push proprietary products that were unsuitable for some of their clients.

Continue reading " Questionable Sales Practices Haunt Fidelity " »

OppenheimerFunds, Inc. is facing a number of class actions, investor claims and investigations by five states into losses associated with its bond funds. According to Morningstar, Inc. of Chicago, the funds lost 29% last year compared with a 7.9% average decline for bond mutual funds overall.

Continue reading " OppenheimerFunds Confronting Big Mutual Fund Problems " »

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 8131 and, on Monday, plunged 290 points.

• On Tuesday, the Dow Jones Industrial Average bounced back 128 points.

• On Wednesday, the Dow Jones Industrial Average fell 83 points.

• On Thursday, the Dow Jones Industrial Average rose 70 points.

• On Friday, the Dow Jones Industrial Average jumped 119 points and closed the week at 8076.

Continue reading " Page Perry's Market Monitor - April 24, 2009 " »

The liability exposure of registered investment advisors for imprudent recommendations of hedge funds and other managed investments is increasing. On April 22, 2009, the U.S. Securities and Exchange Commission (“SEC”) censured Hennessee Group LLC and Charles J. Gradante and ordered them to pay, jointly and severally, over $800,000 for violating Section 206(2) of the Investment Advisors Act of 1940 (the “Act”) and their fiduciary duties owed to clients who relied on their services and recommendations in investing in a group of fraudulent hedge fund known as Bayou Superfund, LLC; Bayou Accredited Fund, LLC; Bayou Affiliates Fund, LLC; and Bayou No Leverage Fund, LLC; all successors to Bayou Fund LLC (“Bayou”).

Hennessee, a “hedge fund consultant” and registered investment advisor subject to the Act, and its chief executive and investment officer, Gradante, operated in New York City. In 2005, Hennessey had approximately 100 clients and $1.35 billion in client assets under management. The SEC found that Hennessee held itself out as “pioneers in Hedge Fund Consulting” with years of experience in helping clients achieve “higher investment returns with lower risk” by recommending “a customized portfolio of hedge funds, properly diversified and managed. Hennessee routinely represented to clients and prospects that it would not recommend investments in hedge funds that did not satisfy all phases of its due diligence.

Continue reading " Registered Investment Advisors Have Liability Exposure for Imprudent Recommendations of Asset Managers " »

Ashland Inc., the maker of Valvoline motor oil, has filed sit against Oppenheimer & Co. for selling the company $194 million of illiquid auction-rate securities after lying about the nature of auction-rate securities and the stability of the auction-rate securities market. So reported Morgan Bettax in an April 17, 2009 article entitled “Valvoline Maker Lodges ARS Suit Against Oppenheimer” posted on Law360.com.

Continue reading " Ashland, Inc Sues Oppenheimer for Mismarketing Auction-Rate Securities " »

Citigroup has been hit with a $30 million auction-rate securities lawsuit filed by Braintree Laboratories, Inc., a specialty pharmaceutical company, reported Christine Caufield in an April 17, 2009 article posted on Law360.com. The suit comes less than two weeks after Texas Instruments Inc. filed a similar suit in Texas state court (Dallas County) against Citigroup Global Markets and others alleging misrepresentations relating to the sale of auction-rate securities. Braintree’s suit also follows an auction-rate securities lawsuit by two financial firms - Ocwen Financial Corp. and Bankruptcy Management Solutions Inc. – against Citigroup filed in the U. S. District Court for the Southern District of Florida, according to the article.

Continue reading " More Corporate Clients Sue Citigroup Over Auction-Rate Securities " »

On March 11, 2009, an Alabama Financial Industry Regulatory Authority (FINRA) arbitration panel awarded Phillip Willingham and Melinda Oates $187,000 for their claim against Memphis-based Morgan Keegan. Morgan Keegan later asked the FINRA Panel to correct its award, which was amended and clarified by the Panel on April 14, 2009. The newly amended award finds that Morgan Keegan is liable to the claimants for the same $187,000, which it allocated as $100,000 in compensatory damages, $25,000 in costs, and $62,000 in attorney fees.

Continue reading " Investor Awarded Losses, Costs and Attorneys Fees in Morgan Keegan Bond Case " »

An arbitration panel recently awarded $2 million to a husband and wife who were private banking clients of Bank of America. The arbitrators found that the bank had breached its fiduciary duty to the couple, and awarded an amount intended to force disgorgement of any profits that the bank had derived from the private banking services it had provided to the clients.

Continue reading " Bank of America Ordered To Pay $2 Million To Atlanta Couple " »

Washington is doing far too little to strengthen the government’s ability to investigate and prosecute the type of corporate and mortgage fraud that led to the economic collapse, The New York Times opined in an Editorial dated April 18, 2009. The Times points out that focus has shifted away from financial fraud to anti-terrorist activities, and that this has resulted in fewer fraud investigators to police the huge infusion of federal money into the economy.

Continue reading " Corporate Fraud Needs to be a Government Priority " »

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 8083 and, on Monday, dropped 26 points.

• On Tuesday, the Dow Jones Industrial Average dropped 138 points.

• On Wednesday, the Dow Jones Industrial Average jumped 109 points.

• On Thursday, the Dow Jones Industrial Average rose 96 points.

• On Friday, the Dow Jones Industrial Average drifted up 6 points and closed the week at 8131.

Continue reading " Page Perry's Market Monitor - April 17, 2009 " »

All around the country local franchises are closing their doors due to lack of sales. This has led to a proliferation of franchise lawsuits and arbitrations filed by franchisees claiming they were promised support, equipment, and in some cases guaranteed revenue, which never materialized.

A number of federal and state laws carefully regulate the franchisor-franchisee relationship. Both federal and state law generally prohibit fraud. Federal law also prohibits franchisors from predicting future earnings to perspective or actual franchisees. Despite the legal framework in place, the Federal Trade Commission, however, rarely takes action against franchisors for abuses.

Continue reading " Franchise Fraud Claims Increase as Economy Deteriorates " »

Banks such as Citigroup, Bank of America, U.S. Bancorp and Wells Fargo, which have received billions of dollars of taxpayers’ money, are “tightening the screws” on the very people who bailed them out. Since the Troubled Asset Relief Program (“TARP”) began, banks have increased charges on a wide range of routine transactions, hiked rates on credit cards and continued making loans criticized by consumer groups as predatory, report David Enrich, Marshall Eckblad and Maurice Tamman of the Wall Street Journal, in a April 13, 2009 article entitled “Bailed-Out Banks Face Probe Over Fee Hikes.” Congress is investigating.

Continue reading " Big Banks Continue "to Bite the Hand that Feeds Them " »

Morgan Keegan recently suffered it sixth straight loss in arbitration related to its collapsed bond funds. Jerome Woods, who played defensive back for the Kansas City Chiefs, recently received an arbitration award of $950,000 in connection with losses he suffered as a result of an investment in the Morgan Keegan bond funds. A review of the award also indicates that one of the arbitrators on the panel felt compelled to file a dissenting opinion indicating the evidence supported an even greater monetary award. The award to Mr. Woods brings the total awarded to investors harmed by the funds to a total of more than $1.6 million over the past two months.

Continue reading " Morgan Keegan Hit for $950,000 Loss on Toxic Bond Fund Case " »

After having axed 3% of its Asia-Pacific workforce on Tuesday, banking sources say that Swiss bank UBS could cut thousands more jobs as early as Wednesday, when UBS holds its annual meeting. So reported Saeed Azhar and Lisa Jucca of Reuters in their April 14, 2009 article entitled “Thousands more UBS job cuts seen.” The latest cuts could amount to 15% to 20% of its already depleted workforce.

Continue reading " UBS Expected to Cut Thousands of More Jobs " »

Many investors suffered losses in 2008 because they owned Tobacco Settlement Bonds. These bonds, which are tax exempt, were sometimes marketed by brokers as “municipal bonds”. They lost up to 50% of their value as a result of Wall Street’s self-induced credit crisis.

Other than their "tax-exempt" status, Tobacco Settlement Bonds have absolutely nothing in common with traditional municipal bonds.

Continue reading " Tobacco Settlement Bonds Give Rise to Legal Claims " »

Tax time is an excellent time for investors to evaluate their investments, to determine whether their investments have been appropriately handled, and to reevaluate their investment objectives and risk tolerance. Taxpayers or their accountants have assembled and are reviewing (or have already reviewed) a number of financial documents in preparation for the filing of income tax returns. Investors should carefully review the status of their investments and their asset allocation to determine whether these items are in accordance with their objectives and status in life.

Continue reading " Now is the Best Time to Review your Investment Portfolio " »

Desperate people often resort to desperate measures to meet their needs. In many cases, however, these situations become catastrophic for trusting investors who give custody of their money to criminals, reports Russell Grantham of the Atlanta Journal-Constitution, Sunday, April 12, 2009, Business, in an article entitled “Desperation Feeds Rising Rates of Fraud.”

Continue reading " Financial Scams Are Becoming More Common as the Economy Deteriorates " »

Corporate purchasers of auction-rate securities continue to file lawsuits and arbitration claims against sellers claiming that the securities were misrepresented as liquid, short-term, cash equivalent investments. In one recent case, Texas Instruments, Inc. sued Citigroup Inc., Morgan Stanley and Bank of New York Mellon Corp. for misrepresenting and omitting to disclose the true risks and characteristics of the $524 million of auction-rate securities it purchased. Texas Instruments cannot liquidate its auction-rate securities, because the auction rate securities market collapsed in February 2008 when the banks and other dealers stopped participating.

Continue reading " Corporations and Institutions Are Actively Pursuing Auction-Rate Securities 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 Dow Jones Industrial Average opened the week at 8018 and, on Monday, dropped 42 points.

• On Tuesday, the Dow Jones Industrial Average dropped 186 points.

• On Wednesday, the Dow Jones Industrial Average jumped 153 points.

• On Thursday, the Dow Jones Industrial Average soared 246 points and closed the week at 8083.

• On Friday, the markets were closed for the Easter holiday..

Continue reading " Page Perry's Market Monitor - April 10, 2009 " »

Foreign currency trading scams have always occurred in the investment markets, but, recently, enhanced scrutiny of the financial services industries has resulted in a dramatic increase of enforcement activity in the area of commodities fraud. Just as the Madoff fiasco has led the SEC to announce prosecution of operators of Ponzi schemes, the Commodity Futures Trading Commission, or CFTC, has ramped up prosecutions for commodities fraud.

Continue reading " Investors Beware: Commodities Scams are on the Rise " »

An Atlanta attorney is under investigation by the FBI for allegedly operating a Ponzi scheme that defrauded approximately 100 victims from various states out of more than $30 million. The victims, who are from Georgia, Florida, Texas, Missouri, and South Carolina, invested anywhere from a few thousand dollars to more than a million dollars with Robert Price Copeland, doing business as Robert P. Copeland, P.C., Axiom Development Group, Inc., We Buy, Inc., HBV Services, Inc., and other entities.

Continue reading " Financial Advisors May Have Legal Exposure in Atlanta Ponzi Scheme " »

Representatives of the North American Securities Administrators Association (NASAA) requested federal funds to enhance their regulation and enforcement of state securities laws in testimony before the House Financial Services Committee on March 20, 2009. Delaware Securities Commissioner James Ropp, while touting state enforcement efforts, said that additional resources were needed during the economic downturn in order to "help vulnerable investors looking to recover their losses." Among other things, Ropp suggested deputizing state securities attorneys to serve as special prosecutors for complex securities cases and strengthening penalties for those who commit securities fraud, especially against seniors. Ropp also suggested increasing opportunities for fraud victims to seek compensation through private actions.

Continue reading " State Securities Regulators: An Essential Component of Investor Protection " »

Another asset class is “feeling the heat” of the unstable investment market. The historically reliable asset class of money funds has been hit by the financial crisis, providing minimal yields, at best. The money fund, typically investing in short-term, high-grade IOUs, was once considered “a pillar of safety.” In the past, even if the fund invested in commercial paper, it would only do so in extremely creditworthy corporations, thereby preserving an investors’ principal and paying interest, minus expenses, by investing in highly rated securities. Recent practices of money funds have left investors questioning the integrity of and regulators debating an overhaul of these funds.

Continue reading " Money Market Funds "Feeling the Heat" " »

The Financial Industry Regulatory Authority (“FINRA”) is facing an explosion of arbitration claims in the wake of recent financial frauds, reported Marcia Coyle in the March 30, 2009 edition of Law.com. Many of the claimants and potential claimants are elderly victims of securities fraud perpetrated by brokerage firms they trusted.

Continue reading " Securities Arbitration Claims Explode " »

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 7776 and, on Monday, dropped 254 points.

• On Tuesday, the Dow Jones Industrial Average rose 86 points.

• On Wednesday, the Dow Jones Industrial Average jumped 153 points.

• On Thursday, the Dow Jones Industrial Average soared another 216 points.

• On Friday, the Dow Jones Industrial Average trended up 40 points and closed the week at 8018.

Continue reading " Page Perry's Market Monitor - April 3, 2009 " »

Today, the Financial Accounting Standards Board endorsed misleading accounting practices by relaxing mark-to-market or fair-value accounting rules. Rather than requiring companies to value assets based on what their market value is, the new changes allow companies to use significant judgment in valuing assets at what they could arguably be sold for in an “orderly” market (whatever that is). Since the markets have been anything but orderly for almost two years now, the rules change effectively endorses fictitious valuations. These changes were reportedly the result of intense pressure on the Financial Accounting Standards Board from large banks and companies. Recently, mark-to-market accounting rules have been under fierce attack by bank CEOs and others who are trying to blame it (instead of their own reckless risk management) for the current financial crisis.

Continue reading " Financial Accounting Standards Board Approves Fictitious Valuations - Is Anything Sacred Anymore? " »

Another investor received an arbitration award last week in connection with losses suffered as a result of an investment in the Morgan Keegan bond funds. Last week, an arbitration panel in San Francisco awarded an investor $267, 711 plus interest as a result of an investment in the collapsed funds. The award in San Francisco follows a series of recent awards made to investors who suffered tremendous losses when the Morgan Keegan bond funds collapsed.

Continue reading " The News Continues to get Worse for Morgan Keegan and its Toxic Bond Funds " »