Investment Fraud Lawyer Blog

The big four Wall Street wirehouses have lost market share since the financial crisis in part because of their role in the crisis and “customer distrust,” according to Bing Waldert, a director of Cerulli Associates Inc. (See “Wirehouse market share has shriveled since crisis,” InvestmentNews). Merrill Lynch Wealth Management, Morgan Stanley Smith Barney, UBS AG and Wells Fargo & Co. have also lost market share by terminating lower producing brokers. While the wiehouses have tried to focus on high net worth clients, their share of that lucrative market has declined as well.

Continue reading "Are Wall Street Wirehouses 'Killing the Goose that Laid the Golden Egg?'" »

The amount of dollars at stake in FINRA securities arbitrations has grown in recent years. Of the 7,000 claims currently pending, approximately 200 involve claims of $10 million or more. “The claims coming in now are substantially larger than what we had a few years ago,” Linda Fienberg, president of FINRA Dispute Resolution, was quoted as saying. (“FINRA flooded with multimillion-dollar cases,” Nate Raymond, The American Lawyer).

Continue reading "The Number of Very Large Securities Arbitration Cases is on the Rise" »

Unsophisticated state and local government officials have been sold billions of dollars of flawed financial products by Wall Street banks, leaving taxpayers on the hook for even more. The banks advised the governments to issue auction rate bonds to lower their financing costs and purchase interest rate swaps to protect the governments if the market moved in the wrong direction. The officials did not understand that the market was controlled by the banks and that the banks could impose penalties when the products unraveled, which they did.

Continue reading "Wall Street Professionals Fleece Government Amateurs - Main Street Suffers" »

Sixty-five years ago, the Justice Department filed an antitrust suit against 17 investment banks seeking to break them up for creating “an integrated, overall conspiracy and combination … to eliminate competition and monopolize” the investment banking business. It failed. Today, the investment banking business is much larger and more profitable, and much more concentrated than it was back then. Only 6 Wall Street firms monopolize the even richer investment banking business today, according to William D. Cohan’s Bloomberg article (“Cohan: How Wall Street Turned a Crisis Into a Cartel”).

Continue reading "Is Wall Street Evolving into an Illegal Monopoly?" »

Wells Fargo will pay $148 million to settle charges that its Wachovia Bank unit conspired to rig bids on investment contracts for municipalities. (“Wells to Pay $148 Million to Settle Wachovia Bid-Rig Case,” Wall Street Journal). As part of the settlement, the Justice Department will not prosecute the bank. Wachovia reportedly admitted and accepted responsibility for the illegal conduct (which the SEC has so far not required settling defendants to do).

Continue reading "Wells Fargo Pays $148 Million for Defrauding Municipalities" »

Fitch Ratings issued a report on November 16 on the U.S. banking sector saying that “the risks of a negative shock are rising” if the effects of European debt crisis keep spreading. (“Fitch’s Warning Spooks Investors, “ Wall Street Journal).

Continue reading "Concerns Rise Regarding Wall Street Banks" »

JP Morgan Chase and Goldman Sachs have sold credit default swaps that put them on the hook for $5 trillion of debt – but they won’t say whose debt they are on the hook for. That leaves investors worried that it may be debt issued by Greece, Italy, Ireland, Portugal and/or Spain. Greece and Italy are insolvent, and the others are not very creditworthy, according to experts.

Continue reading "Wall Street Firms Refuse to Disclose Exposure to European Debt" »

Citigroup plans to cut 3,000 or more jobs, about 1 percent of employees, and BNP Paribas plans to cut about 1,400 jobs, or 7 percent of its employees, according to the New York Times (“Citi to Shed 1% of Its Workers; BNP Paribas Plans to Cut 7%”). The NY Times was told unofficially that one third of the cuts at Citigroup will come from its securities and banking unit, but the timing is uncertain.

Continue reading "Wall Street's Job Cuts Continue" »

AIG and other institutional bond investors, which were not part of a proposed $8.5 billion settlement of Bank of America Corp's mortgage-backed securities liability, complained that the proposed settlement was struck in a “shroud of secrecy.” They have objected to the settlement, want to intervene, and want to review negotiations and documents that led to the proposed settlement, according to Reuters (“Investors want ‘secrecy’ lifted in BofA MBS deal,” by Karen Freifeld).

Continue reading "Institutional Investors Challenge Secrecy of Bank of America Settlement Negotiations" »

Unfortunately, many investors are experiencing first hand the truism that hedge fund managers rarely outperform the market on consistent basis.

John Paulson, the hedge fund manager who made a killing when Goldman Sachs let him select bad CDO assets, which he turned around and bet against, is having a tough time in 2011. His hedge fund has declined nearly 50% this year as a result of a massive positions in Bank of America, which had lost half of its value by October, Rupert Murdoch’s scandal-plagued News Corp., which owns Fox News, and Sino-Forest Corp., which imploded after an accounting scandal.

Continue reading "Hedge Fund Heroes Getting Battered" »

Occupy Wall Street has swept the globe and is generating enormous sympathy and interest in Asia as well as Europe. The spread of Occupy Wall Street to Asia – especially Japan – is further evidence that it is a mistake to dismiss a global groundswell of anger over the flow of money from banks to governments that concentrates wealth in the hands of the 1 percent.

In Japan, the protesters gathered at the swanky Roppongi Hills complex where Goldman Sachs maintains offices. Bloomberg News columnist William Pesek was there, reporting signs saying “No Greed,” “Taxiderm the Rich” and “Stop Vampire Squids,” a reference to Goldman Sachs, which Rolling Stone colorfully characterized as a “great vampire squid wrapped around the face of humanity” (See “The 1 percent meets 2 billion in search of answers,” Daily Report).

Continue reading "Occupy Wall Street As A Global Phenomenon" »

The securities industry in New York City has lost 22,000 jobs since January 2008, and will lose another 10,000 by the end of next year, according to a report by New York City’s Comptroller Thomas P. DiNapoli. If his predictions are correct, Wall Street will have lost 17% of its jobs. Wall Street has shed 4,100 jobs since April. Bonuses and other compensation are declining as well. (See “Wall Street Shrinkage,” by Andrew Grossman, Wall Street Journal).

Continue reading "Wall Street: Under Siege and Contracting" »

Merrill Lynch agreed to pay $1 million to settle charges by the Financial Industry Regulatory Authority (FINRA) that it failed to supervise Bruce Hammonds, a San Antonio-based representative, who was ‘selling away’ from the firm by operating a $1 million dollar Ponzi scheme for more than 10 months. The ponzi scheme, named B&J Partnership, used Merrill Lynch accounts.

Continue reading "'Selling Away' Abuses Result in Merrill Lynch Being Fined $1 Million" »

Jobs at Wall Street banks are being eliminated at an increasingly rapid pace and this bodes ill for many employed in the financial services sector.

Bloomberg’s recent article “UBS Bankers Face Dwindling Options for Jobs” underscores this situation. Those pushed out at UBS will doubtless find few opportunities on Wall Street. The bigger story, however, is that what is happening at UBS is just a small part of the overall “brain drain” occurring all across Wall Street these days, as the larger global banks are cutting jobs at the fastest rate since 2008.

Continue reading "Job Cuts at UBS - A Microcosm of What's Happening on Wall Street" »

A Bank of America employee will collect $930,000 from his former employer, Bank of America, for being fired in violation of the whistleblower protections. The employee blew the whistle on fraud at Countrywide Financial Corp. and led internal investigations that found “pervasive wire, mail and bank fraud involving Countrywide employees,” according to the U.S. Department of Labor. He was terminated soon after the bank acquired Countrywide in 2008. In addition, Bank of America must reinstate the whistleblower. He claimed that others who tried to report fraud to Countrywide’s employee-relations department suffered persistent retaliation. The $930,000 includes back wages, interest, compensatory damages and attorney fees.

Continue reading "Whistleblower Problems Add to Bank of America's Woes" »

The risks are increasing for investors in principal protected notes, reverse convertibles and other structured products associated with Bank of America, Citigroup and Wells Fargo. Moody’s recently announced that it has downgraded the debt of those financial institutions. One reason given: the U.S. government is unlikely to bail them out again. “It is more likely now than during the financial crisis to allow a large bank to fail should it become financially troubled, as the risks of contagion become less acute,” said Moody’s.

Continue reading "Risks Increase for Structured Products Involving Bank of America, Citigroup and Wells Fargo" »

What in the world is going on with corporations today? How does one draw the line between capitalism and greed? Whatever happened to the theory that when employee hard work contributes in a positive way to the corporate bottom-line, everyone prospers? These are some issues addressed by Sally Kohn writing for The Guardian, a British national daily newspaper.

Continue reading "Wall Street Versus Main Street: Greed Versus Common Sense" »

Unemployment is due to remain at 9 to 10% and the nation’s poor continue to increase. Incomes across the board have declined over the last several years but the poor show a greater loss than the rich. As Hope Yen points out in an article for the Associated Press, the statistics behind this phenomenon are abundant and all point to the fact that one in six Americans, 46.2 million people are now living in poverty and those without health insurance are at a 20 year high of 49.9 million.
The figures just released by the Census Bureau show the numbers increasing faster than in the early 1980s when we had severe government cutbacks creating high inflation, unemployment, high interest rates and an energy crisis. Mississippi claims the largest share of poor people at 22.7 percent and New Hampshire the lowest at 6.6 percent.

Continue reading "Unemployment and Poverty Continue to Grow in America" »

Many investors, both individuals and corporations, were misled by their brokers and harmed during the credit crisis. For various reasons, however, many such investors have not yet taken action to recover their losses. Some have delayed taking action in order to see whether the misconduct warranted legal action while others just put it off until a later time. Investors need to appreciate that time is running out on their claims, and they should act now or forever hold their peace.

Continue reading "Time Is Running Out On Credit Crisis Legal Claims" »

Investors who bought toxic mortgage-backed bonds from Bank of America’s Countrywide, and homeowners seeking loan modifications are proposing drastic measures to better enable BofA to deal with the onslaught of their litigation without a bankruptcy or a receivership imposed by the Federal Deposit Insurance Corporation. According to a Reuters/CNBC.com article entitled “Will Bank of America Tale a Play Out of the Asbestos Handbook,” the proposed approaches include an asbestos litigation-style trust to deal with claims and litigation, a so-called “bad bank” managed by federal regulators, or the sale of litigation warrants by which public investors would purchase the right to receive whatever is left in a settlement trust. The bond investor litigants include American International Group (AIG) and the Federal Housing Finance Agency, among others.

Continue reading "Bank of America Must Deal with Exposure of $50-$100 Billion Associated with Toxic Mortgages Securities" »