Investment Fraud Lawyer Blog

As reported in the May 29, 2009 issue of the Sydney Morning Herald, Australian businessman David Waterhouse has accused Merrill Lynch (and its subsidiary Berndale Securities) of engaging in the largest case of insider trading in Australia history.

These allegations arise from a legal dispute between Berndale and How Trading, an account Mr. Waterhouse used to trade options. Berndale sued How Trading for $9.2 million and How Trading has counterclaimed for $4 million. According to the Morning Herald, the securities firm allegedly used the How Trading accounts to short-sell $55 million in Australian stocks just days before “awful” news was going to be reported by Merrill Lynch’s head office in New York in January 2008.

Continue reading " Merrill Lynch Accused Of Insider Trading "Down Under" " »

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 8277 and, on Monday, the markets were closed for Memorial Day.

• On Tuesday, the Dow Jones Industrial Average rose 196 points.

• On Wednesday, the Dow Jones Industrial Average fell 173 points.

• On Thursday, the Dow Jones Industrial Average soared 104 points.

• On Friday, the Dow Jones Industrial Average jumped another 97 points and closed the week at 8500.

Continue reading " Page Perry's Market Monitor - May 29, 2009 " »

The SEC has taken action that should send shivers up the spines of many of Wall Street investment banks. The SEC recently charged 10 brokers associated with the now-defunct Brookstreet Securities Corp. (out of Irvine, California) with fraud for falsely marketing investments in complex derivative securities backed by mortgages as safe and suitable for retirees and as appropriate for those with conservative investment goals. In particular, the defendants portrayed risky collateralized mortgage obligations as safe investments to more than 750 customers. The customers subsequently incurred over $35 million in losses investing in these “low risk” investments. Seven of the ten brokers were based in West Palm Beach, Florida, and the others were based in Hawaii, Oregon, and Montana. FINRA, the Financial Industry Regulatory Authority, has brought a similar complaint alleging fraud against six other former Brookstreet brokers.

Continue reading " Is the SEC Willing to Sue the "Big Boys" for Misleading the Public Regarding the Risks of Structured Finance Securities? " »

With the decline in the major stock market indexes, many life insurance agents are now urging their customers to buy Equity Indexed Universal Life Policies, or EIUL's. These policies have a life insurance component that pays a benefit when you die plus an investment component which usually earns a portion of the gains of a particular index or, if the index declines, a minimal guaranteed return of approximately two percent.

Continue reading " Equity Indexed Universal Life - Typically a Bad Idea " »

According to recent surveys, the public now views the U.S. Securities and Exchange Commission more unfavorably than the “always hated Internal Revenue Service,” reported Bruce Canton in his column called “Enforcement Action,” published on complianceweek.com. In its National Juror Survey, Litigation PostScript found that 55% of the respondents expressed an unfavorable opinion of the SEC compared with a 46% unfavorable rating for the IRS.

Continue reading " Public Confidence in SEC Sinks to New Low " »

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 8269 and, on Monday, soared 235 points.

• On Tuesday, the Dow Jones Industrial Average lost 29 points.

• On Wednesday, the Dow Jones Industrial Average fell 53 points.

• On Thursday, the Dow Jones Industrial Average dropped another 130 points.

• On Friday, the Dow Jones Industrial Average slipped 15 points and closed the week at 8277.

Continue reading " Page Perry's Market Monitor - May 22, 2009 " »

The state of Virginia has sued Stifel, Nicolaus & Company on behalf of investors in the state who purchased over $8 million worth of auction rate securities from the firm. This is the latest of many similar suits which are being filed by all over the country on behalf of investors who were misled about the risk and liquidity of auction rate securities. These securities were routinely misrepresented as conservative cash equivalents.

Continue reading " Virginia Files Suit Over Auction Rate Securities " »

Certain states have recently proposed legislation requiring additional penalties for financial firms/advisors targeting seniors in scams. In addition, some states are staging undercover “stings,” sending investigators to the “free lunch seminars” that seem to be a breeding ground for scams. These seminars are often billed as “educational;” however, in many cases, seniors may experience a “hard sell” of investments which are inappropriate for their individual needs, or be given misleading information about an investment’s merit.

Continue reading " States Are Acting to Deal with Financial Frauds Aimed at Seniors " »

The news just doesn’t seem to be getting any better for Regions Financial Corp. An Alabama Judge recently filed a shareholder derivative suit in Jefferson County Alabama against the top executives and board of directors of Regions Financial Corp. The suit alleges that the defendants’ mismanagement led to the huge losses suffered by the company and its shareholders.

Continue reading " Alabama Judge Files Shareholder Derivative Action Against Regions' Executives " »

Seven months after the Atlanta Journal and Constitution (AJC) reported that SunTrust Bank was negotiating with regulators to buy back $500 million in auction rate securities from SunTrust customers, the bank has decided not to pay back all of its customers. According to a statement released by the Financial Industry Regulatory Authority (FINRA) in May 2009, four (4) other investment firms agreed to repurchase $554 million worth of auction rate securities from investors who were misled about the liquidity of their investments, but SunTrust Investment Services, Inc. and SunTrust Robinson Humphrey, Inc. – both of which are subsidiaries of SunTrust Bank based in Atlanta – withdrew a previous offer to settle with FINRA.

Continue reading " SunTrust Backs Out Of Deal To Pay Back Investor Losses " »

On May 13, 2009, the U.S. Securities and Exchange Commission (“SEC”) approved a rule change that requires brokers to disclose alleged sales practice violations made by a customer against a securities broker in the body of a civil lawsuit or arbitration claim, even if that broker is not named as a defendant or respondent. The SEC received a total of 1,654 comment letters on the proposed rule change. Approximately 1,451 of the letters were “form letters” from financial advisors and insurance agents (who sell insurance products such as variable annuities) opposing the change.

Continue reading " Regulators Require Financial Firms to Provide More Public Disclosure Regarding Customer Complaints " »

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 8575 and, on Monday, fell 156 points.

• On Tuesday, the Dow Jones Industrial Average rose 50 points.

• On Wednesday, the Dow Jones Industrial Average fell 184 points.

• On Thursday, the Dow Jones Industrial Average jumped 46 points.

• On Friday, the Dow Jones Industrial Average dropped 62 points and closed the week at 8269.

Continue reading " Page Perry's Market Monitor - May 15, 2009 " »

Morgan Keegan's problems seem to keep growing. Already facing massive claims over its sale of toxic bond funds, the company is now being confronted with auction rate securities problems. According to an article published by Reuters, the SEC may begin a civil proceeding against the Morgan Keegan & Co brokerage unit of Regions Financial Corp. over the alleged improper sale of auction-rate securities.

Continue reading " Auction Rate Securities - Morgan Keegan's Latest Problem " »

In view of the role of credit derivatives in the collapse of the financial markets, the Obama administration is proposing to regulate such investments. Credit derivatives are investments backed by mortgages, student loans, commercial paper, or credit card debts that have been bundled and sold to investors in the form of bonds, fund shares or other securities. One reason for the credit crisis was the fact that so many subprime mortgages and other high-risk loans were made by lenders who knew that they were going to sell the paper before the first payment was due, so there was less vigilance on the part of loan originators who at the same time had more money to lend due to falling interest rates and increased leverage that required less operating capital to make loans. When the subprime credit market collapsed, the demand for credit-based securities fell sharply and the holders of those instruments took a big hit. Many, such as the holders of auction rate securities whose interest rates were set by periodic auctions, had a complete loss of liquidity because there was no longer a functioning market where they could cash out.

Continue reading " The Obama Administration Proposes to Regulate Derivatives " »

Recent media reports have confirmed that Bank of America Corp. is barring ex-employees from accepting job offers from competitors unless they release claims against the bank or voluntarily forego their deferred compensation. As a general rule, this type of tactic is of doubtful legal validity.

Continue reading " Bank of America's Attempts to Strong-Arm Fired Employees May Result in Legal Liability " »

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 8212 and, on Monday, soared 214 points.

• On Tuesday, the Dow Jones Industrial Average fell 16 points.

• On Wednesday, the Dow Jones Industrial Average jumped 102 points.

• On Thursday, the Dow Jones Industrial Average lost 102 points.

• On Friday, the Dow Jones Industrial Average rose 165 points and closed the week at 8575.

Continue reading " Page Perry's Market Monitor - May 8, 2009 " »

Lest you believe that Wall Street has changed its stripes, and is now in the business of financial advising and consulting rather than selling, look at the hiring and firing going on these days at the big firms. Firms are terminating lower-producing brokers and replacing them with big producers. Production means gathering customer assets and selling securities. In the eyes of the firms, the most successful brokers are not necessarily those who provide sound financial advice to their clients, but rather those who gather the most customer assets and sell the most securities. It’s still all about the fees and commissions.

Continue reading " Wall Street Firms Still Preoccupied with Big Sales not Good Advice " »

The Wall Street Journal reports that the Securities and Exchange Commission (SEC) is now ready to police Wall Street firms which have engaged in unlawful practices involving CDO’s (collateralized debt obligations) and other credit derivatives., which are investments backed by mortgage, student loan, or credit card debt which has been bundled and sold to investors in the form of bonds and other securities. Many such investments were misrepresented as low-risk alternatives to money market funds and other cash equivalents. Unfortunately, many investors lost money or found that they were unable to cash out because the markets for certain products had literally dried up. Some investors have already filed civil suits or arbitration claims against broker-dealers, fund managers, and the issuer of certain credit derivatives alleging that they were defrauded by misrepresentations about the risk, yield and liquidity of such securities. Now the SEC says that it is going to get involved.

Continue reading " Is the SEC Really Serious about its Vow to Regulate Credit Derivatives? " »

Pro-business advocates continue to lobby for establishing the United States as a “free fraud zone” where “anything goes” conduct is acceptable. A recent advertisement by the Washington Legal Foundation, a self-described “advocate for freedom and justice” which campaigns for pro-business legal reform, claims that securities fraud lawsuits “are lawful Ponzi schemes,” and that “the lawyers who enrich themselves at the expense of their clients are no different from the high-living CEOs who do the same to their shareholders and employees.” In its ad titled “Bull Market for Plaintiff’s Lawyers,” the Foundation tries to deflect attention from the abuses of Wall Street by complaining that, “amid all the discussion about increasing business regulation, no one has considered protecting consumers from the unaccountable litigation industry’s excesses.” The Washington Legal Foundation conveniently ignores that what it describes as the “unaccountable litigation industry’s excesses” are, in fact, lawsuits spawned by true Ponzi schemes, massive frauds in the sales of securities and excessive risk taking by so-called investment professionals in an effort to pad their own pockets without regard for the consequences to others.

Continue reading " Wall Street Firms Try to Make Others the Scapegoat for Problems of their Own Making " »

The securities credit ratings process needs an overhaul. Fortunately, there is renewed interest in replacing the credit rating agencies that gave high ratings to the trillion of dollars of toxic structured products that catalyzed the market meltdown, according to an April 29, 2009 Bloomberg article by David Evans and Caroline Salas entitled “Flawed Credits Ratings Reap Profits as Regulators Fail.” Three agencies control 98% of the ratings market: Standard & Poors, Moody’s and Fitch. Ever since the Enron scandal, investors and regulators have questioned the efficacy and wisdom of our rating-based market and regulatory system.

Continue reading " Securities Credit Ratings Agencies Under Attack " »

Morgan Keegan recently suffered two more arbitration losses related to its collapsed bond funds. On April 23, 2009 an arbitration panel in Alabama awarded two investors compensatory damages totaling over $76,000 as well as an award of costs in connection with losses they suffered as a result of an investment in the Morgan Keegan bond funds. Four days later, an arbitration panel in Kentucky awarded an investor in the Morgan Keegan funds $67,860 in compensatory damages, $16,828 in interest and $30,428 in attorneys’ fees.

Continue reading " Morgan Keegan Loses Two More Toxic Bond Fund Cases " »

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 8076 and, on Monday, plunged 51 points.

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

• On Wednesday, the Dow Jones Industrial Average jumped 169 points.

• On Thursday, the Dow Jones Industrial Average lost 18 points.

• On Friday, the Dow Jones Industrial Average rose 44 points and closed the week at 8212.

Continue reading " Page Perry's Market Monitor - May 1, 2009 " »

Investors in auction rate securities have begun suing issuers of the securities and their executive officers in an effort to recoup damages. An investor who lost money in the auction rate securities market recently filed a federal class action lawsuit against the executive officers of MRU Holdings, Inc., a student loan lender that is now in bankruptcy. The lawsuit alleges that MRU’s CEO, CFO, President and VP failed to disclose material facts about the risk and illiquidity of the student loan-backed auction rate securities that the company sold to investors.

Continue reading " Issuers of Auction Rate Securities And Their Executive Officers Are Being Hit With Legal Actions " »