Investment Fraud Lawyer Blog

Roche International has sued Credit Suisse for over $270 million in losses that the drug company incurred after the bank’s brokers invested $545 million of its money in auction rate securities. Roche’s Credit Suisse relationship managers were Julian Tzolov and Eric Butler, who are now serving federal prison sentences for securities fraud in connection with auction rate securities. In its lawsuit, Roche alleges that it was among Tzolov and Butler’s victims, accusing them of investing the company’s money in risky auction rate securities while claiming it was invested in highly liquid, government-backed student loan securities.

Continue reading " Credit Suisse Sued Again over Auction Rate Securities Abuses " »

The Financial Industry Regulatory Authority (FINRA) announced the expansion of a two-year pilot program that gives some investors an opportunity to select an arbitration panel composed of three public arbitrators instead of two public and one non-public in certain cases. To be eligible, a case must be against one of 14 participating firms (out of 4,800 member firms), the firm must not have reached its agreed-upon limit on the number of such cases, and the case must have been received by FINRA on or after October 6, 2009. Cases enter the pilot program on a first-come, first-served basis, not automatically, but only if the Claimant makes an election to participate in the program.

Continue reading " It's Time to Eliminate Industry Bias from Securities Arbitration " »

InvestmentNews reported on October 25 that Ameriprise Financial Services reached a settlement with Massachusetts over accusations of deceptive sales practices. The $200,000 settlement centers on the Ameriprise’s failure to supervise their financial representatives, allowing them to charge fees for financial plans that were never delivered to clients. In addition, the reps failed to disclose the fees behind the plans to clients.

Continue reading " Ameriprise Settles Deceptive Sales Practices Charges " »

A recent InvestmentNews op-ed on September 27 endorsed Judge Jed Rakoff’s action in the Bank of America settlement process. Bank of America is accused of lying to shareholders about $5.8 billion in bonuses paid to Merrill Lynch employees immediately preceding a merger between the two companies. The Bank approved the bonuses but did not disclose the payment to shareholders.

Continue reading " The SEC Must Adopt an Aggressive Enforcement Program if it is to Restore its Credibility " »

Merrill Lynch has apparently pulled a fast one on unsuspecting brokers who thought they could resolve promissory note disputes with the firm through FINRA arbitration – it (cleverly) issued the notes through a non-member of FINRA and is now taking the brokers to court in New York, where the courts are generally business-friendly and inclined to grant summary judgment to promissory note holders. This according to Dan Jamieson in his recent article in InvestmentNews, “Merrill avoids arbitration in loan cases.”

Continue reading " Court or Arbitration - Brokerage Firms Want to have their Cake and Eat it Too " »

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 9996 and, on Monday, the market rose 96 points.

• On Tuesday, the Dow Jones Industrial Average fell 51 points.

• On Wednesday, the Dow Jones Industrial Average dropped 92 points.

• On Thursday, the Dow Jones Industrial Average moved up 132 points.

• On Friday, the Dow Jones Industrial Average sunk 109 points and closed the week at 9972.

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

The Wall Street Journal reported on October 20th that California Attorney General Jerry Brown has sued State Street Bank and Trust. Brown is seeking to recover $200 million in illegal overcharges and penalties that the bank misappropriated from two state agencies, the California Public Employees’ Retirement System and the California State Teachers’ Retirement System.

Continue reading " California Sues State Street Bank and Trust " »

A federal judge in Atlanta recently dismissed a class action lawsuit brought against SunTrust for fraud in the sale of auction rate securities. The case was not dismissed on the merits of investors’ claims against SunTrust, but based on technical legal requirements about what it takes to plead a claim. Those requirements are strict in securities fraud cases that get filed in federal court, especially class actions, but they do not apply to cases that get filed in arbitration.

Continue reading " Arbitration or Class Action - Which is Better for Investors? " »

A Special Review Committee (the “Special Committee”) appointed by the Board of Governors of the Financial Industry Regulatory Authority (“FINRA”) issued a report finding that FINRA missed opportunities to detect the Ponzi Schemes perpetrated by Bernard Madoff and Allen Stanford, according to an October 2 article in InvesmentNews by Sue Asci. The fraudulent schemes perpetrated by Stanford and Madoff are striking due to their size and duration. The Madoff scheme spanned decades, defrauded thousands of investors, and caused an estimated $64 billion in investor losses. According to the SEC, Stanford sold numerous investors approximately $7.2 billion of fraudulent products, purported to be certificates of deposit (“CDs”), over at least a decade. Despite conducting examinations of the Madoff and Stanford firms, FINRA did not uncover these frauds.

Continue reading " FINRA "Missed Opportunities" to Stop Madoff and Stanford Ponzi Schemes " »

The threatened SEC enforcement action against The Charles Schwab Corp. relating to sales of its YieldPlus Fund increases the likelihood that Schwab will need to settle a class action and FINRA arbitrations involving the YieldPlus Fund, according to industry analysts, as reported by Bruce Kelly on October 18 in InvestmentNews. On October 14, Schwab disclosed that it had received a Wells notice from the staff of the U.S. Securities and Exchange Commission that the staff intends to recommend the filing of a civil enforcement action against Schwab Investments, Charles Schwab Investment Management, Charles Schwab & Co., Inc. and the president of the funds for possible violations of the securities laws with respect to the Schwab YieldPlus Fund and the Schwab Total Bond Market Fund.

Continue reading " SEC Threatens Action Over Schwab YieldPlus Fund " »

Congress is finally working on legislation to regulate the $592 Trillion market for over-the-counter-derivatives, according to a recent article in USA Today by Paul Wiseman and Pallavi Gogoi. Derivatives include futures contracts to take delivery of an underlying asset, such as oil, at an agreed price on a certain date. These contracts are used by dealers in the underlying assets to manage the risk of price variations. They are also used by speculators to place bets on the direction of the price. Speculators provide the liquidity needed to have a market in which some derivatives are bought and sold.

Continue reading " Congress Considers Regulation of OTC Derivatives " »

A four-year class action lawsuit brought on behalf of hundreds of thousands of American consumers against insurance giant Allianz Life Insurance Company of North America has come to a confusing and contradictory end, reported the Minnesota StarTribune in its October 14, 2009 article entitled, “A split decision in Allianz Life annuity lawsuit.” Or has it?

A Minnesota jury found earlier this week, on Monday, October 12th, that Allianz Life Insurance Company used a misrepresentation or deceptive practice in the course of selling its two-tiered annuities by falsely promising in its pre-sale marketing materials that consumers would receive a 10% “upfront” bonus when they purchased those annuities. In reality, the class action complaint alleged, the bonus was not “upfront” and was not available to policyholders for 15 years, if ever.

Continue reading " Jury Finds That Allianz Life Insurance Company Used Misrepresentation Or Deceptive Practice In Selling Its Two-Tiered Annuities " »

Two victims of Bernard Madoff’s Ponzi scheme have sued the Securities and Exchange Commission, alleging that the agency was negligent in performing its duties to protect investors. The plaintiffs argue that the SEC should have “done its job” and uncovered the scheme. They claim that the SEC’s failure to detect the fraud led directly to losses by the plaintiffs, Phyllis Molchtasky and Stephen Schneider. Ms. Molchtasky had previously filed an administrative claim against the SEC in December of 2008. The Commission refused to negotiate a settlement, which resulted in the present suit. Ms. Molchtasky and Dr. Schneider lost a combined $2.45 million in the scheme.

Continue reading " Investors Sue the SEC " »

Investors in Charles Schwab’s YieldPlus Fund have important decisions to make. Recently, a California Federal court tentatively certified a class action brought by YieldPlus investors against Schwab. YieldPlus investors need to determine (i) whether they are members of one or more of the designated classes, (ii) if so, whether they wish to remain in the class action or pursue individual claims against Schwab, and (iii) what actions, if any, they need to take.

Continue reading " Investor Alert: Schwab YieldPlus Class Notice Issued " »

Citigroup Global Market, Inc. has filed a motion to dismiss an action against it by KV Pharmaceuticals Co. arising out of sales of auction rate securities, according to an August 25 article in Law360 by Christine Caufield entitled "Citigroup Argues KV Pharma Knew ARS Risks." The case is pending in the United States District Court for the Eastern District of Missouri. Citigroup appears to following the playbook of other Wall Street firms, arguing that KV was a "sophisticated investor" that knew the risks of ARS, that KV failed to identify any material misrepresentations by Citigroup, failed to allege it relied on any Citigroup statements in deciding to invest, failed to establish any actual loss, and failed to file suit before the statute of limitations ran out.

Continue reading " Wall Street's Defense Tactics Confirm Betrayal of Corporate Clients " »

With the one-year anniversary of the legislation authorizing the $700 billion banking system bailout approaching, Congress is gearing up to legislate major regulatory reform, reports Albert Bozzo of CNBC.com in his article, “Financial Reform Package Picking Up Steam in Congress.” The push being spearheaded by House Financial Services Committee Chairman Barney Frank and Senate Banking committee Chairman Chris Dodd. On the House side, the tentative schedule calls for public hearings on the creation of a system regulator, new federal authority over too-big-to-fail institutions, and executive pay limits, followed by markups of bills covering expanded oversight over OTC derivatives, the creation of a consumer financial protection agency, and capital markets regulator reform, according to the article. The House has already approved pay legislation.

Continue reading " Now is the Time for Serious Financial Reform " »

Credit card companies, like brokerage firms, have typically required customers to agree to binding arbitration to settle any disputes that may arise between them, and waive their right to tale the company to court. The practice of inserting mandatory arbitration clauses in consumer contracts has been targeted for reform by the Obama administration.

Continue reading " Abuses in Credit Card Arbitration Raise Similar Questions about Securities Arbitration " »

On September 15, 2009, Denise Voigt Crawford, the Securities Commissioner for the State of Texas, was installed as the new President of the North American Securities Administrators Association (NASAA). NASSA is comprised of 67 state, provenance, and territorial securities regulators throughout North America, including regulators from all 50 U.S. States and the District of Columbia.

Continue reading " More Criticism is Leveled at Federal Securities Regulators " »

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 9665 and, on Monday, soared 124 points.

• On Tuesday, the Dow Jones Industrial Average fell 47 points.

• On Wednesday, the Dow Jones Industrial Average dropped 30 points.

• On Thursday, the Dow Jones Industrial Average plunged 200 points.

• On Friday, the Dow Jones Industrial Average sunk 22 more points and closed the week at 9488.

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

A Los Angeles based Financial Industry Regulatory Authority (FINRA) arbitration panel awarded damages to a California resident as a result of losses sustained in the Charles Schwab YieldPlus Fund. The panel awarded the Eliots $80,000, plus an additional $16,000 designated as expert witness fees, plus $300.00 as reimbursement for the non-refundable portion of the initial filing fee, and assessed the entire cost of the arbitration proceeding against Charles Schwab (SCHW).

Continue reading " The Beat Goes On - Hedge Fund Manager Wins Large Award in Schwab YieldPlus Case " »