Investment Fraud Lawyer Blog

Some judges are starting to question lenient settlement deals proffered by Wall Street firms and their arguably captive regulator, the SEC, according to an August 19, 2010 article in the Wall Street Journal by David Weidner called “In Search Of Justice for Wall (Street).” Two U.S. District Court Judges, Jed S. Rakoff and Ellen Segal Huvelle, have rejected settlements on the ground that the penalties were too small to be fair to the investing public. Another federal judge, Emmet G. Sullivan, threatened to reject but ultimately accepted a settlement proposed by the SEC and Barclays PLC. Judge Sullivan reportedly had earlier called it a "sweetheart deal."

Continue reading "Judges Begin to Question "Sweetheart" Securities Regulatory Settlements" »

Investors who purchased MAT/ASTA municipal arbitrage funds between 2002 through 2005 may mistakenly believe that they have waited too long and it is too late to pursue a claim for damages against Citigroup. Fortunately, this is not the case.

Continue reading "It's Not Too Late for Investors to Obtain Recovery of MAT/ASTA Municipal Arbitrage Losses" »

Citigroup was “negative” on subprime mortgages at least as early as 2006. Despite that, Citigroup continued to originate subprime mortgages and underwrite subprime mortgage-backed securities in large quantities. In 2007, Citigroup originated $19.7 billion in subprime mortgages and underwrote $13.4 billion in subprime mortgage-backed securities. Senior management says it did not have a clue what was going on. See April 8, 2010 article in the Huffington Post by Shahien Nasiripour, “Citi ‘Negative On Subprime mortgages As Early As 2006, Yet Firm Continued to Pump Out Subprime Mortgage Products.”

Continue reading "Citi Knew of Subprime Problems and Risks in 2006" »

The law firms of Page Perry, LLC and Robert Wayne Pearce, P.A. are proud to announce their agreement to join together in investigating and pursuing MAT/ASTA municipal arbitrage cases against Citigroup and its affiliates. Both firms have extensive experience in prosecuting MAT/ASTA cases and already have been involved in representing almost fifty (50) MAT/ASTA clients between them.

Continue reading "Law Firms Announce New Joint Venture to Pursue MAT/ASTA Municipal Arbitrage Claims" »

Scams will always be with us but they are especially plentiful when traditional investments like stocks and bonds are not doing well, according to John Waggoner of USAToday in his August 5, 2010 article, “Investment Scams Thriving.”
"It's pretty bad out there," Texas Securities Commissioner Denise Voigt Crawford was quoted as saying. The primary victims are those trying to make up losses in their 401(k) plans and stock portfolios, she added.

Continue reading "Regulators Report that Investment Scams are on the Rise" »

In a recent Financial Industry Regulatory Authority (FINRA) arbitration, a South Florida panel specifically found that Respondents Citigroup Global Markets, Inc. f/k/a Citigroup Investment Services, and Citigroup Alternative Investments, LLC were guilty of negligent mismanagement of MAT/ASTA funds, as well as negligent supervision of their registered representatives. This award should open the door for many investors to recover the damages they sustained, particularly in early MAT/ASTA deals.

Continue reading "Citigroup Affiliates Found Liable for Mismanaging the MAT/ASTA Municipal Arbitrage Funds" »

Citigroup has consented to charges by the Securities and Exchange Commission that it misled public investors about the extent of its exposure to sub-prime mortgage-related assets during 2007. Citigroup will pay $75 million to settle the charges, as widely reported in the financial press.

Continue reading "Citi Pays a Cheap Price for Lying to the Public - When is the SEC Going to get Serious about Fraud?" »

Investors in the MAT Municipal Arbitrage Funds sold by Citigroup/Smith Barney recently won a total of $2.1 million in separate arbitration proceedings and these awards may just be the tip of the iceberg. In fact, Wall Street brokerage firms are being ordered to pay millions to investors who incurred significant losses on what they thought were low-risk investments, but were, in fact, leveraged municipal arbitrage hedge funds, according to a Wall Street Journal article by Randall Smith (“Crisis-Era Munis Haunt Wall Street,” July 27, 2010).

Continue reading "Investors Are Winning MAT/ASTA Claims Against Citigroup/Smith Barney" »

A United States District Court judge has ruled that a class action may proceed against Citigroup and others for making an array of material misrepresentations and omissions in public offering materials associated with bonds purchased by the plaintiffs (Reuters, “Judge Rules Bondholders Can Pursue Citigroup Suit,” July 12, 2010).

Continue reading "Bondholders Sue Citigroup for Misrepresntations Regarding CDOs and Other Toxic Securities" »

The sale of billion of dollars of Fannie Mae and Freddie Mac preferred stock in 2007 and 2008 was accomplished by fraud on unsuspecting public investors and the complicity of mortgage originators that bought the shares knowing they were poison, according to attorney and professor Seth E. Lipner in his July 7th Forbes article entitled “How Fannie And Freddie Unloaded Their Trash.”

Continue reading "Wall Street's Dump of Freddie Mac and Fannie Mae Preferred Stocks Cost Investors Billions" »

The Securities and Exchange Commission is investigating the sale of $200 million in collateralized debt obligations (CDOs) to several Wisconsin school districts, according to a recent Wall Street Journal article by Meena Thiruvengadam and Kelly Nolan (“SEC Investigates Failed CDOs Sold to Wisconsin Schools”). The schools have also filed a lawsuit alleging that the CDOs were misrepresented and that important risk disclosures were omitted.

Continue reading "Wall Street's Sale of Toxic CDOs Undermines Education and Other Government Services" »

It’s crunch time for financial reform, and Wall Street banks are lobbying hard to keep a central pillar of financial reform from becoming law, and, at the same time, are planning ways of getting around whatever financial reform restrictions do become law, according to a recent New York Times article by Eric Dash and Nelson D. Schwart titled “Banking Lobbyists Make a Run at Reform Measures.”

Continue reading "Wall Street Intensifies Efforts to Thwart Financial Reform as Greed Trumps Common Sense" »

Another member of the bewildering zoo of derivative products dreamed up and sold by Wall Street – this time a constant proportion debt obligation (CPDO) named Rembrandt – has imploded wiping out unsuspecting investors, according to a June 21 article on Bllomberg.com by Christine Harper, Shannon D. Harrington and James Sterngold, titled “Failed AAA Rated Rembrandt on Wall Street Spurs Opacity Outcry.” As the title says, Rembrandt was an opaque “black box” whose inner workings could only be modeled by computers, and so, of course, was given the highest investment grade rating of AAA. Rembrandt was reportedly linked to credit-default swaps on investment-grade companies, and lost 93 percent of its value in two years.

Continue reading ""Financial Innovation" Benefits Wall Street at Investors' Expense" »

In recent weeks, two Financial Industry Regulatory Authority (FINRA) arbitration panels have awarded more than $2.2 million to clients of Page Perry, LLC, Maddox, Hargett and Caruso, P.C., and David R. Meyer & Associates in connection with their purchases of MAT municipal arbitrage fund investments. MAT Five and MAT Three were leveraged municipal arbitrage hedge funds offered by Citigroup Fixed Income Alternatives and sold through Smith Barney. Both MAT Five and MAT Three were marketed only to high net worth clients of the firm as fixed income alternatives. In truth the MAT funds were risky investments that exposed investors to a 100 percent or more loss of principal. The funds imploded in early 2008 causing catastrophic losses to investors.

Continue reading "Page Perry Clients Win MAT Municipal Arbitrage Claims Against Citigroup/Smith Barney" »

Merrill Lynch and other Wall Street firms sold the riskiest tranches of collateralized debt obligations (“CDOs”), not just to institutions, but to individual investors, as safe investments, according to a recent Wall Street Journal article by Dan Fitzgerald titled “Didn’t See Risk, and Got Stung.” Now that the CDOs have imploded, and investors are seeking recovery of their losses, Merrill is telling them that risk disclosure documents and the investors’ supposed sophistication mean they cannot recover. Merrill is wrong for a number of reasons.

Continue reading "Wealthy Individuals Have Been Victimized By Wall Street's CDO Fraud" »

According to a recent article in the Atlanta Journal Constitution, “at least a dozen local governments and other institutions that used derivative deals called swaps to try to lower the cost of bond issues have ended up owing as much as $394 million in fees to the Wall Street investment banks that set up the deals….” AJC, 5/30/10, “Paying a Price for Risky Schemes.” That article looked at how much money a small number of governmental and institutional investors in Georgia have paid to buy their way out of interest rate swaps in the wake of the financial crisis, but it is likely that this is a nationwide phenomenon. The article raised a number of questions—including whether it was appropriate for taxpayer money to be invested in securities with such a high level of risk—but it did not raise the question of whether there are legal remedies that would allow government officials and others to recover the financial losses resulting from such investments.

Continue reading "Local Governments and Non-Profits Have Suffered Catastrophic Losses as a Result of Wall Street's Excesses" »

In “Paying a price for risky schemes,” Atlanta Journal Constitution reporter Russell Grantham presents an excellent overview of how at least a dozen metro governments and nonprofits that issued debt were whipsawed by the “shadow banking system” – the freezing of the auction rate securities markets and complex derivative contracts called swaps. As a result, they have been forced to pay or owe as much as $394 million that they did not expect to, according to the article, which identifies the borrowers as:

“Atlanta airport, Atlanta water/sewer, Underground Atlanta, Children’s Healthcare of Atlanta, Piedmont Healthcare, Woodruff Arts Center, Georgia Tech, Georgia State University, DeKalb Medical Center, Emory University, Gwinnett Medical Center, Marietta, MARTA, Power South Energy Cooperative, and Cobb County Kennestone Hospital Authority. “

Continue reading "Wall Street Abuses Have Significantly Increased the Economic Problems Currently Faced by State and Local Governments" »

“As the U.S. Senate prepares to vote as early as this week on legislation rewriting the rules for Wall Street, the financial industry is holding fundraisers for lawmakers at a rate of almost one every business day this month,” according to a May 17th Bloomberg article by Jonathan D. Salant.

Continue reading "Wall Street Special Interest Groups Are Spending Huge Sums to Thwart Financial Reform" »

Federal prosecutors are conducting a criminal probe into whether multiple major Wall Street banks defrauded investors in selling investments called collateralized debt obligations, or CDOs, that were created, sold and shorted, or bet against, by the banks and certain favored clients. See “Wall Street Probe Widens,” by Susan Pulliam, Kara Scannell, Aaron Lucchetti and Serena Ng, Wall Street Journal, May 12, 2010, and “Wall Street said to face new investigations,” CNNMoney.com, May 13, 2010.

Continue reading "CDO Fraud Probes Explode Across Wall Street" »

Federal prosecutors are assessing whether Morgan Stanley defrauded investors in mortgage-derivatives collateralized debt obligations (“CDOs”) that it helped create and then bet against, according to reports in the Wall Street Journal and Bloomberg. The Securities and Exchange Commission is also investigating. Several rounds of subpoenas have reportedly been issued. Investigators are evaluating whether Morgan Stanley, like others, misrepresented their true roles and conflicting interests in CDO deals sold to investors.

Continue reading "Federal Prosecutors Target Morgan Stanley in CDO Fraud Investigation" »