Investment Fraud Lawyer Blog

The Financial Industry Regulatory Authority (FINRA) has issued an investor alert warning against chasing yield with structured products, junk bonds and floating-rate bank-loan funds. The alert was prompted by "significant recent inflows" into high-yield products. Investors may find enhanced yields attractive in the current market environment of low yields on conventional fixed-income investments and higher stock market volatility.

Continue reading " FINRA Warns Investors about Structured Products and Other Non-Conventional Securities " »

Two subsidiaries of SunTrust Banks, SunTrust Robinson-Humphrey and SunTrust Investment Services have agreed to pay a combined total of $5 million to settle FINRA charges that they misled clients about the liquidity risks of auction rate securities, according to an article in the Atlanta Journal by J. Scott Trubey entitled “Regulator fines two units of SunTrust.”

Continue reading " SunTrust Settles Auction Rate Securities Case with Regulators " »

The Massachusetts securities division regulator has filed an administrative action against RBC Capital Markets LLC and one of its former registered representatives, Michael D. Zukowski relating to sales of inverse, leveraged, inverse-leveraged, and other non-traditional exchange traded funds. The regulator seeks an order, among other things, requiring RBC and Zukowski to make full restitution to investors who lost money in as a result of unsuitable sales such funds, and pay fines.

Continue reading " Massachusetts Files Action Against RBC for Improper Sales of Exotic Exchange Traded Funds (ETFs) " »

The Georgia Securities Commissioner has launched an investigation into sales of structured products called reverse convertible notes made by broker-dealer firms to Georgia residents. The brokerage firms under investigation include UBS AG, Morgan Stanley and Ameriprise Financial. The investigations were begun after the Commissioner received complaints from investors who lost money in these purportedly safe investments.

Continue reading " Georgia Securities Regulators Initiate Investigation of Reverse Convertible Securities " »

Professional athletes and coaches are often prime targets of investment promoters, some of whom purport to be their trusted friends and advisers. Unfortunately, the investments these “advisers” sell sometimes turn out to be something entirely different from what they were represented to be, resulting in hundreds of thousands, even millions, of dollars in losses, according to Andy Katz’s ESPN.com article entitled “Source: No NCAA plans for fraud inquiry.”

Continue reading " Professional Athletes and Coaches Fall Prey to Scams Operated by 'Friends' and 'Advisers' " »

The United Kingdom’s Serious Fraud Office, which prosecutes white collar crime, the Financial Services Authority, and the Bank of England's Financial Policy Committee have issued warnings about the risks of exchange traded funds, which include (i) lack of transparency in the exchange traded funds market, (ii) failure of exchange traded funds to track underlying indexes, (iii) risk of a exchange traded funds providers going bankrupt, and (iv) exchange traded funds’ vulnerability to short-selling, according to an InvestmentNews article entitled “Coming to America? U.K. probe casts light on dark side of ETFs.”

Continue reading " Foreign Regulators Issue Warnings about Exchange Traded Funds (ETFs) " »

Senior financial abuse is a growing problem and financial advisors and accountants are best able to detect senior financial abuse, even better than a family member, according to Liz Skinner’s InvestmentNews article entitled “Identifying elder financial fraud.” That is because knowledgeable professionals who regularly review their financial documents are more apt to see changes in spending and investing that even family members might not notice. Seniors may tell their adviser about falling for a scam when they are unwilling to tell their own children. Additionally, financial professionals are generally better equipped to dissuade seniors from unsuitable purchases and investments.

Continue reading " Professionals Are Often Best Suited to Detect Financial Abuse of Seniors " »

“Burned by bear markets, investors have pulled $8 billion from U.S. equity funds in 2011—and $51 billion over the past 10 years,” according to Charles Stein’s Bloomberg Businessweek article entitled “Americans Lose Faith in Stock Pickers.”

Continue reading " Wall Street is Losing Main Street's Trust " »

Many non-traded (private) REITs are very dangerous for retail investors. These investments typically charge extremely high fees, are illiquid and are virtually impossible to value. Many non-traded REITs have routinely been valued at their original cost on reports provided to investors when such valuations are highly suspect given the tumultuous conditions that have existed in the economy and real estate markets during the past four years. Such valuations are often deceptive and misleading.

Continue reading " Investor Alert - Non-Traded (Private) REITs Involve a Dangerous Mix of Risks for Retail Investors " »

SEC Commissioner Luis Aguilar called for the SEC’s Office of Investor Education and Advocacy to issue an investor alert warning retail investors about the risks of trading off-exchange foreign currency contracts. This comes in the wake of the SEC’s recent approval of a temporary rule allowing the sale of retail forex contracts to unsophisticated investors until the SEC decides whether or not to issue more comprehensive rules. (“SEC Official Seeks Investor Alert on Retail Forex,” Reuters, CNBC.com).

Continue reading " Investor Alert - Forex Trading Can Be Lethal " »

Widely read Wall Street Journal columnist Brett Arends paints a gloomy picture of what is in store for the United States in his article entitled “The next, worse financial crisis.” He cites 10 reasons why the next financial crisis is inevitable and will be worse. To paraphrase, here they are:

Continue reading " Financial Crises - Those Who Do Not Learn From History Are Doomed To Repeat It " »

A financially devastated middle class is holding back economic growth, and that will not be fixed anytime soon, according to Rex Nutting’s MarketWatch article (“How the bubble destroyed the middle class”) and Scott Patterson’s USA Today article (“Recovery has largely left out the have-nots”). The biggest single cause of middle class devastation is the loss of $7.38 trillion from the bursting of the housing bubble, on average, a 55% loss of the value of American homes, according to Mr. Nutting.

Continue reading " U.S. Loses the 'Backbone of the Country' as Middle Class Deteriorates " »

Large Wall Street banks like Goldman Sachs, Morgan Stanley and others, are cutting compensation for big producers, not just laying off lower producers and back-office employees, and are requiring even the biggest producers to bring in more business for the same amount of compensation, according to a CNBC article entitled “Wall Street Slashing Pay—Even for Best Performers.”

Continue reading " Wall Street Pressures Brokers to Generate More Commissions " »

A Federal Industry Regulatory Authority (“FINRA”) arbitration panel recently ordered Wedbush Securities to pay a former municipal trader $3.5 Million Dollars related to his claims that it failed to pay him for a year’s worth of incentive based compensation. The FINRA panel specifically noted “Wedbush Morgan’s morally reprehensible failure in refusing to compensate Claimant in a timely fashion.”

Continue reading " Wall Street Trader Wins Big Incentive Compensation Claim " »

Bank of America plans to take another $13 billion in charges related to a pending settlement with private label mortgage-backed securities investors, including the Federal Reserve Bank of New York, Pimco Investment Management, and Blackrock Financial Management, according to a Reuters article entitled “BofA to take $13 billion more in charges: Bernstein.”

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

A lot of retail investors are getting involved with Forex trading, according to Stephen L. Bernard’s Wall Street Journal article entitled “Is Currency Trading Worth the Risk?” It is only worth the risk if you can afford to lose every penny you put into it, and quickly. Regulators are seeking to warn retail investors of the risks, but retail forex trading is increasing.

Continue reading " Forex Trading is Unsuitable for Most Retail Investors " »

A Financial Industry Regulatory Authority (FINRA) arbitration panel in New York has awarded $880,000 to elderly clients of Phil Scott of Bank of America Merrill Lynch's Bellevue, Washington, office, who were unsuitably 100% invested in stocks, according to Dan Jamieson’s InvestmentNews article entitled “Merrill hit for $880K arbitration award.” The arbitrators also assessed 100% of the hearing session fees against Merrill Lynch. A claim for punitive damages was denied.

Continue reading " Elderly Investors Concentrated in 100% Stock Portfolio Win $880,000 Award " »

“That’s the easiest $250,000 you’ll never see,” quipped the judge who had just granted a motion for summary judgment in a recent case. Collectibility of judgments is something that private attorneys usually consider in deciding whether to expend resources to pursue a case. The attorneys who work for the U.S. Securities and Exchange Commission and the Commodities Futures Trading Commission often face the same collection issues, according to Jean Eaglesham’s Wall Street Journal article entitled, “Chasing Fraud, Then Cash.” As Ms. Eaglesham put it: “It is easier for regulators to get their man than it is to get their money.”

Continue reading " Investment Regulators Often Fail to Collect Monetary Sanctions " »

Wells Fargo & Co. has agreed to pay $125 million to a group of pension funds to settle a class action filed by various public pension funds that purchased billions of dollars of mortgage-backed securities believing their money was in AAA-backed investments, according to a Wall Street Journal article by David Benoit entitled “Wells Fargo Settles Pension-Fund Mortgage Suit.” The proposed settlement is subject to court approval.

Continue reading " Wells Fargo Settles Mortgage-Backed Securities Claims filed by Pension Funds " »

Only 18,000 new jobs were created in June, far fewer than the 125,000 expected, and 44,000 fewer than previously reported for April and May (which were revised downward), and the unemployment rate rose 0.1% to 9.2% from 9.1 percent, rekindling fears of a double dip recession, according to Patti Domm’s CNBC article entitled “’Horrific’ Jobs Report Renews Fears of Double-Dip Recession.”

Continue reading " Do Recent Unemployment Numbers Indicate that the Worst is Yet to Come? " »

JP Morgan Chase will pay $228 million to settle SEC charges that it rigged nearly 100 transactions involving municipal-bond auctions, according to David Benoit’s and Jessica Holzer’s Wall Street Journal article entitled “J.P. Morgan Settles Bid-Rig Case.” There are concurrent settlement agreements with various states. The SEC has settled similar cases against Bank of America for $137 million and UBS AG for $160.2 million.

Continue reading " JP Morgan Pays $228 Million to Resolve Bid-Rigging Charges " »

Investors whose money is managed by a “registered investment advisor” should not be too comfortable with that designation or the fact that their advisor may be bound by a fiduciary duty, according to Elizabeth Ody’s Bloomberg article entitled “RIAs Offer Little Investor Protection Beyond Fiduciary Label.”

Continue reading " Investors That Use Registered Investment Advisors Face Their Own Set of Risks " »

In “Would a Greek default be automatic doom?” Mark Hulbert of MarketWatch makes the point that both those who predict that a Greek default would be like the Lehman disaster and those who predict that it would be more like the stock market advances after the last four sovereign debt crises (Mexico 1994, Thailand 1997, Russia 1998, and Argentina 2001) are on equally shaky statistical ground and are just speculating. But the conclusion that no one has a valid statistical basis for predicting the systemic effect of a Greek default is unsettling in itself.

Continue reading " A Greek Default Could Impact Money Market Funds " »

The Financial Industry Regulatory Authority (FINRA) is lobbying Congress to become the regulator of 12,000 investment advisors and their firms, but critics say that should not happen. These critics claim that FINRA has done a poor job of protecting investors from unlawful sales practices by its member brokerage firms, according to an InvestmentNews article entitled “Finra’s fines don’t match the crimes, critics say.”

Continue reading " Is FINRA Just a Trade Association for the Securities Industry? " »

Regions Financial Corp. is trying to find a buyer for Morgan Keegan, but the clock is ticking, and the longer it takes, the greater the likelihood that its most valuable asset, the advisor reps, will leave, thereby reducing the value, and making a sale unlikely to happen at all, according to Andrew Osterand’s InvestmentNews article entitled “Morgan Keegan’s 1,200 reps are waiting to see if parent bank Regions can find a buyer.”

Continue reading " Morgan Keegan for Sale? " »

SEC Enforcement Chief Robert Khuzami recently stated that the SEC’s decision not to charge top executives of Wall Street banks with wrongdoing in cases involving structured products was appropriate, according to Suzanne Barlyn’s Wall Street Journal article entitled “SEC: Structured-Product Cases Haven’t Reached Top Bank Officers.” According to Mr. Khuzami, top executives were not involved in, and did not know about, the key decisions relating to structured product problems.

Continue reading " SEC Refuses to Take Action Against Senior Executives in Structured Product Cases " »

Raymond James Financial has agreed to buy back $300 million in auction-rate securities from clients and pay a fine of $1.7 million as part of a settlement the Securities and Exchange Commission and the states of Florida, Texas, Indiana, Missouri, New York, North Carolina, Pennsylvania and South Carolina, according to Bruce Kelly’s InvestmentNews article entitled “Raymond James to pony up $300M to buy back ARS.” The agreement reportedly calls on Raymond James to extend an offer to repurchase the securities within 30 days, and leave it open for 75 days.

Continue reading " Raymond James Settles Auction Rate Securities Dispute with Regulators " »

A U.S. district court judge granted Morgan Keegan’s motion for summary judgment, dismissing the Securities and Exchange Commission allegations that the brokerage firm misled investors in connection with its sales of $2.2 billion in auction-rate securities, according to an InvestmentNews article entitled “SEC claim that Morgan Keegan misled ARS investors is nixed,” and David Benoit’s and Suzanne Barlyn’s Wall Street Journal article entitled “Morgan Keegan Judge: No Fraud.”

Continue reading " Judge Gives Morgan Keegan a 'Free Pass' on Auction Rate Securities Claims " »