Investment Fraud Lawyer Blog

In a decision issued on April 27, 2011 by a Supreme Court perceived (rightly or wrongly) as favoring the interests of businesses over consumers, the Court held in AT&T v. Concepcion that the Federal Arbitration Act preempted a judicially-created rule applied by the California courts to strike down mandatory arbitration provisions in consumer contracts that prohibited class actions. In a 5-4 decision (with Justice Kennedy again providing the swing vote), the Court reversed the Ninth Circuit Court of Appeals decision that had found an arbitration provision in an AT&T Mobility agreement for the sale and servicing of cellular telephones to be unconscionable under California law.

Continue reading " Mandatory Arbitration Clauses In Financial Service Contracts After Supreme Court's Decision In AT&T v. Concepcion " »

As the elder population increases, various forms of elder abuse are on the rise. This includes investment fraud and outright theft. Scam artists especially target senior citizens who have seen their investment portfolios decline in value.

Continue reading " Many "Senior Specialists" Are Anything But !!! " »

Wall Street and the financial industry are intensifying their efforts to influence how the Dodd-Frank financial reform act will be implemented, spending more on lobbyists in the first quarter of this year than last year when Congress was the writing the legislation, according to a Wall Street Journal article by Victoria McGrane entitled “Wall Street, Banks Press to Shape Dodd-Frank Rules,” citing the WSJ’s review of recently released lobbying disclosure documents.

Continue reading " Is the Financial Services Industry "Buying" Senators, Congressmen and Regulators? " »

Securities regulators all agree that exploitation of retirees is a significant and growing problem. According to the U.S. Securities and Exchange Commission, 40 million Americans are age 65 or older, and that number will be 89 million in 2050. Seniors make up 15% of the U.S. population but 30% of fraud victims.

Continue reading " Financial Exploitation of Senior Citizens Continues to Increase " »

Securities America is on the shopping block, according to an InvestmentNews article by Bruce Kelly entitled “Ameriprise shopping Securities America.” The firm was sued along with Ameriprise Financial by a class of people who purchased hundreds of millions of fraudulent securities issued by Medical Capital and Provident Royalties. Ameriprise Financial is the corporate parent of Securities America.

Continue reading " Troubled Securities America is "For Sale" " »

The Financial Industry Regulatory Authority (FINRA) has suspended a broker-dealer for operating a “boiler room” selling fraudulent oil and gas investments in defiance of FINRA’s cease-and-desist order, according to Jessica Toonkel’s InvestmentNews article entitled “Finra suspends B-D that it says ‘poses serious risk’ to investors.”

Continue reading " FINRA Suspends Broker-Dealer Involved in Fraudulent Oil and Gas Deals " »

Gretchen Morgenson and Louise Storey have investigated the question so many people have – why no prosecutions have been undertaken in the wake of the financial disaster – and published their findings in a revealing ten page New York Times article entitled, “In Financial Crisis, No Prosecutions of Top Figures.”

Continue reading " Taxpayers Lost Billions in the Recent Financial Crisis - "Where are the Criminal Prosecutions?" " »

The Securities and Exchange Commission has filed a civil action against Nicholas D. Skaltsounis, AIC, Inc., Community Bankers Securities, LLC (“CB Securities”), John B. Guyette, and John R. Graves, all of Virgina (the “Defendants”), for the fraudulent sale of more than $7.7 million in AIC promissory notes and stock.

Continue reading " SEC Files Suit Regarding Virginia Ponzi Scheme " »

The story of a CDO named Hudson-Mezzanine-2006-1 (“Hudson”) shows how Goldman Sachs, the only major Wall Street firm to escape relatively unscathed from the nation's economic meltdown, created and sold CDO deals in which it secretly took a short position to hedge its long bets on the housing market, according to an article by Greg Gordon in the McClatchey Newspapers entitled “While Goldman raked in profits, clients squirmed,” citing the Senate Permanent Subcommittee on Investigations report (“Senate Report”).

Continue reading " Senate Subcommittee Investigation Supports Conclusion Goldman Sachs Bet Against Subprime-Backed CDOs that it Sold to Investors " »

In May of 2008 a small city of Vallejo, which is just north of San Francisco, filed for bankruptcy. According to an article by Roger Lowenstein in the NY Times, the cities bankruptcy could offer "a sneak preview of what could be the latest version of economic disaster." At the time, the nation paid little attention to what happen because the nation was "too busy watching banks fail." Now almost three years later, the banks have recovered but Vallejo still remains in bankruptcy.

Continue reading " Is Bankruptcy a Viable Option for Financially Strapped Cities and Municipalities? " »

Moody's Investors Service and Standard & Poor's colluded with Wall Street investment banks to profit at the expense of investors by giving faulty AAA ratings to pools of mortgage-backed securities that should have been rated as junk, according to Kevin G. Hall’s article in McClatchey Newspapers entitled “Report: Big profits drove faulty ratings at Moody’s, S&P.”

Continue reading " Senate Report on Financial Crisis Criticizes Ratings Agencies " »

Wells Fargo & Co. has agreed to pay $11.2 million to settle SEC charges that Wachovia Capital Markets LLC sold mortgage-backed securities called collateralized debt obligations (CDOs) at prices that were 70% higher than its own estimate of the mark-to-market value of the securities, according to articles by Liz Skinner of InvestmentNews (“Wells Fargo to pony up $11.2M for allegedly overcharging Zunis, other investors”) and Dan Fitzpatrick and Jean Eaglesham of the Wall Street Journal (“Wachovia Targeted Over Sales of CDOs”).

Continue reading " Wells Fargo/Wachovia Settles CDO Price-Gouging Charges " »

Investors in exchange trade funds may experience shock when the ETFs they purchase don’t track the indices on which they are based. For example, exchange traded funds linked to the Japanese stock market have not captured the gains in the rebounded Japanese stock market, according to Sarah Morgan’s Wall Street Journal article entitled “Why ETFs Lag Their Indexes.” To the surprise and dismay of many investors who bought them betting on a rebound in the Japanese stock market, between a March 15 low and April 16, the three U.S. ETFs that track the broad Japanese stock market lost money, even though the indexes they purport to track are up. The ETFs are: iShares MSCI Japanese Index ETF (down 0.6% while index up 8.6%), iShares S&P/TOPIX 150 ETF (down 1.32% while index up 8.6%), and SPDE Russell/Nomura PRIME Japan ETF (down 0.78% while index up 6.6%).

Continue reading " Exchange Traded Funds (ETFs) May Not Produce the Returns Investors Expect " »

Senator Carl Levin, chairman of the U.S. Senate panel that investigated the causes of the financial crisis, said that federal prosecutors should consider bringing perjury charges against Goldman Sachs CEO Lloyd Blankfein and others who testified before Congress last year, according to a Bloomberg article entitled “Goldman Sachs Misled Congress After Duping Clients, Levin Says.”

Continue reading " If Goldman Sachs Didn't Tell Congress The Truth, What Do You Suppose It Told Its Customers? " »

Goldman Sachs manipulated the subprime mortgage derivative market in 2007 for its own benefit, to the disadvantage of its clients, according to a Bloomberg article by Christine Harper and Joshua Gallu entitled “Goldman Traders Tried to Manipulate Market in 2007, Report Says,” which cites a U.S. Senate report.

Continue reading " Senate Report Reveals that Goldman Sachs Tried to Manipulate Mortgage-Backed Securities Market " »

A 650-page Senate report on the causes of the financial crisis, citing internal documents and private communications of bank executives, regulators, credit ratings agencies and investors, identifies culprits whose business practices were rife with conflicts and deception, according to a New York Times article by Gretchen Morgenson and Louise Story called “Naming Culprits in the Financial Crisis.”

Continue reading " Wall Street Firms Were Major Culprits in the Financial Crisis " »

On Monday, April 11, 2011, the Financial Industry Regulatory Authority (FINRA) announced that UBS had accepted and consented to a settlement deal in which UBS would pay a fine of $2.5 million and restitution in the amount of $8.25 million to certain investors for its misconduct regarding Lehman Brothers 100% Principal-Protection Notes sold by UBS. Notwithstanding these sanctions, many investor attorneys believe it falls short of dealing with the real problems.

Continue reading " Was FINRA's Recent Settlement with UBS Concerning Lehman 100% Principal Protected Notes a "Whitewash?" " »

The Spanish bank, Banco Santander SA, agreed to pay $2 million to resolve charges that its Puerto Rico-based brokerage improperly sold a group of structured products known as reverse convertibles to retail customers, including the elderly. (“Sale of reverse convertibles dings another B-D,” InvestmentNews, April 12, 2011).

Continue reading " Victims of Reverse Convertibles Abuses Span the Globe " »

Some exchange traded funds are just plain dangerous, and investors should not be lured by the “siren song of ETF marketers,” according to Dave Kansas’ Wall Street Journal article, “Exchange-Traded Funds Gone Wild.” Leveraged ETFs are unusually volatile and high-risk. They are designed for day-trading and unsuitable for buy-and-hold investors. All 52 leveraged ETFs in existence since Jan. 1, 2008, have lost money, according to Morningstar.

Continue reading " Many Exchange Traded Funds (ETFs) Provide Investors with a Wild and Dangerous Ride " »

A Financial Industry Regulatory Authority (FINRA) arbitration panel in Denver has ordered Citigroup Global Markets, Inc. to pay over $54 million in damages for its abusive conduct in marketing and managing various investments including municipal bond hedge funds known as MAT/ASTA. The arbitration panel issued their award on April 8, 2011.

Continue reading " Arbitration Panel Renders $54 Million Award Against Citigroup in Case Involving MAT/ASTA Municipal Arbitrage Investments " »

A lawsuit recently filed against JPMorgan Chase paints a picture of how JPMorgan “profited in its deals with the weak,” according to a New York Times article by Louise Story called “JPMorgan Accused of Breaking Its Duty to Clients.” In this case, the “weak” are pension funds that lost nearly $500 million that was invested on their behalf by JPMorgan in notes issued by a troubled Structured Investment Vehicle (SIV) called Sigma.

Continue reading " Pension Funds Seek $500 Million from JP Morgan Chase for Breach of Legal Duties " »

The Financial Industry Regulatory Authority (FINRA) announced that it has fined UBS Financial Services, Inc., $2.5 million, and required UBS to pay $8.25 million in restitution to certain investors for its misconduct regarding Lehman Brothers 100% Principal-Protection Notes (PPNs) sold by UBS. UBS’s misconduct includes misleading investors about: (1) the principal protection feature, (2) the risk that they could lose their entire investment, (3) the worsening credit risk of Lehman, (4) inadequate supervisory procedures, and (5) failure to educate its sales force about the risks and how the PPNs work.

Continue reading " Regulators Sanction UBS for Improper Sales of Lehman Principal Protected Notes (a/k/a Structured Notes) " »

Structured products are little more than IOUs from issuers and brokers who have come up with complex ways to take investors’ money. They are marketed as “low risk and high yield” – an oxymoron when dealing with stocks and the market. But to many older, fixed income investors and those tired of low interest money market or CD offerings, the pitch sounds enticing. The promise of double-digit returns in one to three years has actually COST investors over $164 billion over the last two years! John F. Wasik in an article for AARP Magazine took a good hard look at structured products and how they rarely deliver on the hype.

Continue reading " Structured Products Aren't What You Think They Are " »

Bank of America expects to face legal losses this year for anywhere from $145 million to $1.5 billion. And that is just what it can reasonably estimate. Most of these losses stem from the underwriting of mortgage-backed securities.

Continue reading " Mortgage-Backed Securities Problems Continue to Haunt Bank of America " »

According to a recent InvestmentNews article, the Financial Industry Regulatory Authority Inc. (FINRA) is set to come down on Wells Investment Securities, the Georgia-based broker-dealer arm of one of the largest sponsors of non-traded real estate investment trusts for allegedly failing to meet standards for advertising and keeping client data information safe.

Continue reading " Article Reports that Atlanta-Based Wells Investment Securities Faces Regulatory Problems " »

Broker-Dealers are pushing back against FINRA’s attempt to cap commissions on private offerings, also known as Reg D offerings. Most of these offerings are very high risk, involve high commission payments and high fees. Thus serious concerns have developed about whether such investments are sold to investors because they are viable investments or because they generate the most commissions. In an effort to reduce the potential conflicts of interest, FINRA has proposed requiring firms to limit these charges.

Continue reading " Brokerage Firms Oppose Efforts to Restrict Excessive Fees in Private Offerings " »

InvestmentNews has reported that FINRA has issued the first in an anticipated series of sanctions against broker-dealers and executives of firms who sold private placements in two alleged Ponzi schemes. The actions were taken against Workman Securities Corp and Askar Corp for deficient investigation and due diligence associated with the sale of high risk investments.. The investments involved were Medical Capital Holdings Inc and Provident Royalties LLC who were charged with fraud by the SEC in 2009.

Continue reading " Regulators Issue Sanctions Against Brokers for Misconduct in Private Offerings (Reg D Offerings) " »

Every three years the Federal Reserve does a survey of Consumer Finances. Between 2007 and 2010 it was found that median wealth, a household’s total assets minus debts, fell to $96,000 from $125,000. Also the median value of primary residences went from $207,000 to $176,000. The recession hurt households in all income brackets. The assets that suffered the largest losses were stocks. Sandra Block reporting for USA Today looked behind these obvious statistics to examine the psychological impact.

Continue reading " Median Household Wealth Takes A Tumble " »

A Manhattan federal judge has consolidated securities class actions against Goldman Sachs Group Inc. and other affiliated persons (Goldman) and appointed three pension funds as co-lead plaintiffs in a lawsuit relating to a collateral debt obligation called Abacus, according to a Reuters article entitled “Pension funds to lead suit vs. Goldman over Abacus.” The class actions brought by purchasers of Goldman stock allege that Goldman officers and directors made false and misleading statements concerning its sale of a collateralized debt obligation (CDO) known as Abacus 2007 AC-1 (Abacus).

Continue reading " Goldman's CDO Problems Continue " »

Gretchen Morgenson reports that the battle for the safety and soundness of U.S. financial markets is far from won, despite the Dodd-Frank financial reform act, as Wall Street lobbies Congress to relax certain key provisions of that act in an attempt to restart the “assembly line for selling toxic waste to investors.” See “Note to Banks: It’s Not 2006 Anymore.”

Continue reading " Wall Street Banks Lobby to Undercut Financial Reform " »

Securities regulators are expanding their investigation Wall Street’s sales of reverse convertibles, according to Jean Eaglesham’s Wall Street Journal article entitled, “Complex Bond Faces Regulators’ Scrutiny. Earlier this week the Financial Industry Regulatory Authority (FINRA) announced it was conducting “sweeps” of certain firms to gather information about their advertising for these structured products.

Continue reading " Regulators Widen Probe of Reverse Convertibles - SEC Also Jumps into the Fray " »