Investment Fraud Lawyer Blog

Peer–to–peer lending is the latest investment rage in an environment of tight money and costly lending practices. Also called social lending or P2P, internet sites are luring investors with the promise of higher than normal returns with little reference to the risks. While borrowers make out with cheaper money, investors should beware!

Continue reading " Peer-to-Peer Investment Schemes Are Very Risky " »

The Securities and Exchange Commission is investigating Citigroup's involvement in a $1 billion collateralized debt obligation (CDO) deal that the bank created and completed in 2007. The agency is investigating whether Citigroup improperly pressured an independent manager to put specific assets into the deal, according to an article by Jake Bernstein and Jesse Eisinger in Pro Publica entitled “SEC Investigating Citigroup Mortgage Deal.”

Continue reading " Citi CDOs Under Investigation " »

While many investors who lost money when the auction rate securities market collapsed in 2008 have now been made whole by regulatory settlements and redemptions, others have not been as fortunate and are still holding on to illiquid securities. Because regulatory settlements focused on the worst offenders in the industry, not all firms that sold auction rate securities were included in the settlements. Furthermore, most of the regulatory settlements have only benefited smaller investors leaving many corporate, institutional and other investors to fend for themselves. According to Craig T. Jones of Page Perry LLC in Atlanta whose firm has represented many large investors in auction rate securities cases, “we are continuing to file arbitration claims for investors nearly 3 years after the market failure. A lot of investors have patiently waited to be made whole, and now that the statutes of limitations are starting to run out, they are realizing that they must take action in order to protect themselves legally.”

Continue reading " Large Investors Who Have Sustained Losses on Auction Rate Securities Investments Need to Take Action " »

Two Wachovia Securities brokers sold 42 unsophisticated Wachovia clients supposedly “can't-miss” investments that resulted in $8 million of losses, according to a lawsuit filed by the Securities and Exchange Commission, as reported in an InvestmentNews article titled “Ex-Wachovia brokers accused of defrauding client.” Most of the victims were over 50 years of age and a number of them were retired and living on fixed incomes.

Continue reading " Investor Alert - Former Wachovia Securities Brokers William Harrison and Eddie Sawyers (d/b/a "Harrison/Sawyers Financial Services) " »

Matt Krantz’s USAToday article, “Social media shapes new investment strategy,” reports on a new trend in investing that is both surprising and potentially harmful to investors who use it. The practice is called “mirrored investing” and it allows an investor to mirror the trading being done by another individual, essentially giving discretionary trading authority to a stranger.

Continue reading " "Mirrored Investing" Carries Extreme Risks " »

Corporations and their defense lawyers have intensified their complaining about the whistleblower “bounty” provisions of the Dodd-Frank financial reform laws that provide financial incentives for employees to report securities fraud and other wrongdoing to regulators, citing increased costs and undermining of their “internal fraud-detection efforts” and self-reporting to the SEC, according to a Wall Street Journal article by Jean Eagleshaw entitled ““Firms Assail Whistleblower Plan by SEC.”

Continue reading " Corporate America Aggressively Opposes Whistleblower Laws " »

Speculators that specialize in “distressed assets” are coming out of the woodwork offering 20 to 30 cents on the dollar to investors with Madoff claims, according to Peter Lattman and Diana B. Henriques in their New York Times DealBook article, “Speculators Are Eager to Bet on Madoff Claims.” These firms have recently stepped up efforts to contact Madoff victims whose claims have been approved by bankruptcy trustee Irving H. Picard.

Continue reading " Investor Update on the Madoff Ponzi Scheme " »

Interest rate swap agreements, sold by Wall Street banks and bond insurers to governmental and non-profit issuers of tax-exempt bonds, such as hospitals, as a way to lower their interest payment obligations, have failed en masse, resulting in a massive financial hemorrhage for issuers at the worst possible time, according to Michael McDonald’s Bloomberg article, “Wall Street Takes $4 Billion from Taxpayers as Swaps Backfire.”

Continue reading " Interest Rate Swaps Haunt Municipalities and Non-Profits " »

Corporations and their defense lawyers are complaining about the whistleblower “bounty” provisions of the Dodd-Frank financial reform laws that provide financial incentives for employees to report securities fraud and other wrongdoing to regulators, citing increased costs and undermining of their “internal fraud-detection efforts” and self-reporting to the SEC, according to a Wall Street Journal article by Ashby Jones and Joann S. Lublin called “Critics Blow Whistle on Law.” Whistleblowers should not be permitted to interfere with corporations “blowing the whistle” and “lowering the boom” on themselves, no sir.

Continue reading " Wall Street Banks and Big Business Fear Whistleblower Laws " »

What do all the letters after your financial adviser’s name really mean? Do those letters give you the impression that he/she can be trusted and relied upon to handle your money wisely? Some letters mean more than others but with over 210 different credentials in the financial services industry only a handful are successfully regulated with many downright corrupt. This will leave investors broke and searching for answers if they don’t do their homework first.

Continue reading " Is Your Financial Adviser as Good as He or She Looks? " »

Bank of America has agreed to pay restitution in the amount of $137 million for its part in a vast bid-rigging conspiracy in the municipal-investment contracts market, according to a Bloomberg article by Martin Z. Braun and Jeff Bliss called “Bank of America Deal in Muni Case May be ‘Tip of the Iceberg.’” See also “BofA settles muni bond probe for $137M,” by Adam O’Daniel of the Atlanta Business Chronicle. The settlement arose out of an anti-trust investigation by the U.S. Department of Justice. As the Bloomberg article suggests, many other co-conspirators could be poised to fall.

Continue reading " Bank of America Pays $137 Million in Restitution for Fraudulent Bid-Rigging in the Muni Markets " »

Operation Broken Trust is a newly announced financial fraud enforcement program run by an assemblage of federal law enforcement agencies known as the Fraud Enforcement Task Force. Attorney General Eric Holder recently presented it as an aggressive new program involving 343 criminal and 189 civil defendants and more than $8 billion in investor losses that is sending a “strong message” to scammers. But critics say the program is neither new nor aggressive. Instead, it is a collection of old cases against small-time fraudsters with none being brought against high-level corporate banksters, according to Andrew Ross Sorkin’s New York Times DealBook article, “Pulling Back the Curtain on Fraud Inquiries.” See also “U.S. Touts Its Scam efforts,” by Jessica Holzer (Wall Street Journal) and “Investment Fraud Targeted,” by the Washington Post and Jeremiah McWilliams of the Atlanta Journal Constitution.

Continue reading " Federal Task Force Targets Street Fraud " »

Investment advisers should be wary of structured products such as “principal protected” notes and reverse convertibles, even though they are gaining in popularity, according to Jeff Benjamin in his InvestmentNews article, “Advisers should think twice about structured products.”

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Wall Street banks are looking for a way out of a wide-ranging regulatory investigation into the creation and sale of more than $1 trillion of securitized mortgage pools called collateralized debt obligations (CDOs), which was a major cause of the worldwide financial crisis, according to a Wall Street Journal article by Jean Eaglesham entitled “Banks in Talks to End Probe.”

Continue reading " Wall Street Banks Seek to Bury Their Toxic CDO Problems " »

Real Estate Mortgage Investment Conduits, or Remics, are complex mortgage-backed securities that were pitched to investors as providing favorable tax treatment on the income generated by the underlying loans. Instead, they have generated large losses for big investors during the economic crisis. But gaps and defects in the complex paper trail have provided a potential legal basis for investors to seek to recover their losses from the issuers, according to a recent New York Times article by Gretchen Morgenson entitled “One Mess That Can’t Be Papered Over.”

In October, institutional investors in mortgage securities issued by Countrywide, including the Federal Reserve Bank of New York, sent a letter to Bank of America (which acquired Countrywide in 2008) demanding that the bank buy back billions of dollars of mortgages that Countrywide pooled and issued the securities on. The investors contend that Countrywide was at fault for failing to properly compile required documentation related to the mortgage loans.

Continue reading " Institutional Investors Sue to Recover Mortgage-Backed Securities Losses " »

Brazilian investigators cracking down on income-tax dodging and crimes against the Brazilian financial systems are focusing on Merrill Lynch, Credit Suisse, and UBS, who, they say, have violated laws which prohibit financial firms from opening accounts, making trades, or transferring money abroad, according to a Bloomberg article by Alexander Ragir and Michael Smith called “Merrill Banker Indicted With 18 in Brazil Says He’s Scapegoat.”

Continue reading " Are Wall Street Banks Making Employees "Scapegoats" for the Firms' Misconduct " »

Corporations and their defense lawyers are complaining about the whistleblower “bounty” provisions of the Dodd-Frank financial reform laws that provide financial incentives for employees to report securities fraud and other wrongdoing to regulators, citing increased costs and undermining of their “internal fraud-detection efforts” and self-reporting to the SEC, according to a Wall Street Journal article by Ashby Jones and Joann S. Lublin called “Critics Blow Whistle on Law.” Whistleblowers should not be permitted to interfere with corporations “blowing the whistle” and “lowering the boom” on themselves, no sir.

Continue reading " Why Are Corporations So Afraid of 'Whistleblower" Laws? -What Are They Trying to Hide? " »

Year 2011 may bring a new wave of defaults by municipal-bond issuers as federal stimulus aid declines and budget pressures jeopardize debt payments, said according to a Bloomberg article by Darrell Preston, “Muni Issuers May Face Default ‘Crunch,’ Lehmann Says.” The article cites the “Distressed Debt Securities Newsletter” by Richard Lehmann.

Continue reading " Are Muni Investors in for Trouble in 2011? " »