Investment Fraud Lawyer Blog

White House executive “pay czar” Kenneth Feinberg has decided not to negotiate with 17 Wall Street firms to rescind $1.6 billion in payments to executive that Feinberg himself described as “ill advised” and payments that “[t]hey should not have made,” according to articles in the Atlanta Journal Constitution (“Bank execs get to l]keep $1.6 billion” by Daniel Wagner) and CNNMoney (“Banks paid big $ to execs during crisis” by David Ellis).

Continue reading "Wall Street Executives Get $1.6 Billion, Main Street America Picks Up the Tab" »

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" »

Last week, in an almost unprecedented manner, three groups of securities regulators – the SEC, the Financial Industry Regulatory Authority (FINRA), and various state regulators – almost simultaneously filed enforcement actions against Morgan Keegan for fraud arising out of its sales of 6 toxic bond funds. The regulatory investigations had been going on for several years. The allegations in the regulatory actions are quite serious and sound in egregious fraud.

Continue reading "Regulatory Actions Against Morgan Keegan Raise Grave Doubts about the FINRA Arbitration Process" »

The Securities and Exchange Commission has charged Morgan Keegan and its touted managing director, James Kelsoe, with securities fraud for deliberately inflating the value of subprime securities in order to hide losses in Morgan Keegan’s proprietary toxic bond mutual funds. See Joe Bel Bruno’s recent Wall Street Journal article, “Morgan Keegan and Its Onetime Star Kelsoe Charged by SEC.”

Continue reading "Regulators Sue Morgan Keegan Over Toxic Bond Funds" »

Brokerage firms’ advertising portrays brokers as trusted members of the family, writes Tara Siegel Bernard in her New York Times article, “Trusted Adviser or Stock Pusher? Finance Bill May Not Settle It.” Anyone who has tried to hold a broker to a fiduciary standard of conduct, however, hears a very different response: “We are mere order takers. You never should have trusted us.”

Continue reading "Is Your Financial Adviser Acting in Your Best Interest?" »

According to a recent Bloomberg National Poll, more than 50% of Americans despise Wall Street and favor punishment of the bankers who caused the worst financial crisis since the Great Depression. The majority of poll participants -- 56 percent -- say big financial companies are more interested in enriching themselves at the expense of ordinary people.

Continue reading "It's Official - Most Americans Despise Wall Street" »

In two recently decided arbitrations against Morgan Keegan related to its collapsed bond funds, the investors were awarded over $3.6 million, according to an article by Christopher Sheffield in the Memphis Business Journal, “Morgan Keegan pays out $3.6 million in February.”

Continue reading "Sophisticated Investors Win Millions in Toxic Bond Fund Cases Against Morgan Keegan" »

Morgan Keegan has been aggressively fighting an array of regulatory actions and investor claims. As a result of these "hardball" defense tactics, Morgan Keegan's legal costs have doubled and are consuming a significant chunk of the firm's revenue as a result of investigations by securities regulators and legal actions by aggrieved investors, according to an Feb. 25 article in InvestmentNews by Bruce Kelly.

Continue reading "Morgan Keegan's Legal Costs Soar Under an Avalanche of Claims" »

A Memphis, Tennessee Chancery court has vacated an award in favor of an investor that was issued by a FINRA arbitration panel in a Morgan Keegan bond fund case. Vacatur of an arbitration award is highly unusual, and should not occur without proof of some corruption in the process, such as evident partiality of an arbitrator. The reason given by the Tennessee court was that two of the arbitrators were “biased” because they had previously ruled against Morgan Keegan in another Morgan Keegan bond fund case.

Continue reading "Tennessee State Court Ruling Undermines Securities Arbitration" »

An Illinois-based pension fund has brought a shareholder’s derivative action seeking to recover billions of dollars in executive compensation paid by Goldman Sachs. This could be the first of many such suits, reported James Armstrong of Law360, “Goldman Pay Suit Could Signal New Wave of Litigation,” Jan. 8, 2010.

Continue reading "Institutional Investors Are Fed Up With Wall Street Pay Excesses Too" »

The Wall Street Journal reports that “hundreds of businesses are fighting to recover billions of dollars tied up in frozen auction-rates securities, a year after Wall Street firms agreed to $60 billion in settlements over the collapsed market for the investments.” See “Firms Fight Banks Over Billions in Frozen Notes,” WSJ 1/2/10. While regulators stepped in to help individual investors after the auctions froze in February 2008, many corporate and institutional investors did not benefit from settlements between banks, broker-dealers and the SEC, FINRA and state attorneys general. According to Atlanta attorney Craig T. Jones, investors were left holding about $330 billion in illiquid securities when the auctions froze, so $60 billion in settlements is only a drop in the bucket.”

Continue reading "The Auction Rate Securities Debacle Continues - Corporate America Takes on Wall Street" »

There have been various developments over the past several weeks which investors may consider relevant in allocating their resources or evaluating alternatives that are available to them. Some of the more significant developments include, but are not limited to, the following:

• The Dow Jones Industrial Average opened the week at 9820 and, on Monday, fell 41 points.

• On Tuesday, the Dow Jones Industrial Average rebounded 51 points.

• On Wednesday, the Dow Jones Industrial Average dropped 81 points.

• On Thursday, the Dow Jones Industrial Average fell another 41 points.

• On Friday, the Dow Jones Industrial Average lost 42 points and closed the week at 9665.

Continue reading "Page Perry's Market Monitor - September 25, 2009" »

Regions Bank has agreed to pay $1 million to settle investment fraud charges brought by the Securities and Exchange Commission, according to a September 21 article by AP Legal Affairs writer Curt Anderson. On September 21, the SEC issued a Cease-and-Desist Order finding that Regions, the primary banking subsidiary of Regions Financial Corporation, was a cause of U.S. Pension Trust Corp.'s and U.S. College Trust Corp.'s (collectively, USPT) violations of federal securities laws.

Continue reading "Regions Bank's SEC Problems Grow" »

In her August 4th Wall Street Journal column called Compliance Watch, Suzanne Barlyn reports that Morgan Keegan is engaging in a rarely used hardball tactics in three arbitrations arising out of sales of its proprietary bond mutual funds in which arbitration panels have awards. So far, Morgan Keegan has moved to vacate awards issued in three cases involving more than $1 million in damages, attorneys’ fees and costs.

Continue reading "Morgan Keegan Continues "Hardball" Arbitration Tactics" »

"For nothing is hidden that will not become evident, nor anything secret that will not be known and come to light.” Thus hinteth today’s Wall Street Journal article by Suzanne Barlyn entitled “COMPLIANCE WATCH: SEC Warning May Help Unhappy Investors.”

The United States Securities and Exchange Commission (the “SEC”) Staff’s warning that it intends to recommend an enforcement action against Morgan Keegan for possible violations of the federal securities laws may incline more arbitrators to require Morgan Keegan to disclose documents it supplied to the SEC in its investigation, but wants to keep hidden from investors and arbitrators, according to the article. Here is the background.

Continue reading "It's Time for Arbitrators to Grant Investors Access to the SEC Evidence that Morgan Keegan Is Trying to Hide" »

The Securities Industry and Financial Markets Association, an important Wall Street lobbying group, has decided to support the Obama administration’s proposal to hold brokers to the same standard as a fiduciary when they provide investment advice, according to a recent report in The Wall Street Journal. While investors who sue their brokers have long argued, with considerable success, that a fiduciary duty arises whenever there is a relationship of trust and confidence between broker and investor, that determination is presently made on a case by case basis under laws that vary from state to state. A federal standard, which is more likely to pass now that it has been endorsed by the industry, would make it easier for investors to prevail in claims against brokers.

Continue reading "Wall Street Trade Association Supports Fiduciary Standard" »

On July 21, 2009, the Securities and Exchange Commission (“SEC”) filed a Complaint against Morgan Keegan & Company, Inc. in the United States District Court for the Northern District of Georgia for misleading investors about the liquidity risks of auction rate securities that it sold. Morgan Keegan sold approximately $925 million of auction rate securities between November 1, 2007 and March 20, 2008 after it knew the market for such securities was deteriorating and it had decided to stop supporting the market, according to the SEC. The Complaint alleges that Morgan Keegan’s sales practices violated the anti-fraud provisions of the United States securities laws, and seeks an order directing Morgan Keegan to stop violating those laws, repurchase all auction rate securities it sold before March 20, 2008, disgorge all ill-gotten gains or unjust enrichment it has enjoyed as a result of its unlawful activities, and pay civil monetary penalties pursuant to federal statutes.

Continue reading "SEC Charges Morgan Keegan with Fraud in the Sale of Auction Rate Securities" »

On July 9, 2009, Morgan Keegan & Company, Inc. (“Morgan Keegan”) (a wholly-owned subsidiary of Regions Financial Corporation), Morgan Asset Management, Inc. and three employees, each received a “Wells” notice from the Staff of the Atlanta Regional Office of the United States Securities and Exchange Commission (the “SEC”) stating that the SEC Staff intends to recommend that the SEC bring enforcement actions for possible violations of the federal securities laws. The potential actions relate to the SEC’s investigation of certain mutual funds formerly managed by Morgan Keegan and Morgan Asset Management. Morgan Keegan received another Wells Notice earlier this year related to its unlawful sales practices in connection with sales of auction rate securities.

Continue reading "SEC Notifies Morgan Keegan of Intent to Recommend Enforcement Action Involving Toxic Mutual Funds" »

A new wave of lawsuits and arbitrations are being filed on behalf of investors who purchased auction rate securities but have not been eligible to participate in redemptions offered by big banks as a result of regulatory settlements. See article entitled “’Stranded’ ARS investors sue for a share of pie” by Jed Horowitz in the May 24, 2009 edition of InvestmentNews. These stranded investors purchased auction rate securities from “downstream” broker-dealers who sold but did not underwrite auction rate securities. The firms include Raymond James Financial Inc., Oppenheimer Holdings Inc., E*Trade Financial Corp., and TD Ameritrade Holding Corp., which were among the biggest distributors of auction rate securities, according to the article.

Continue reading "Investors Left Out of the Auction Rate Securities Regulatory Settlements Are Suing to Recover Losses" »

Evergreen Investment Management Company (“Evergreen”), a unit of Wells Fargo & Co., has agreed to pay more than $40 million to settle an enforcement action by the Securities and Exchange Commission (“SEC”) and the Massachusetts Securities Division, according to articles in the Wall Street Journal and Reuters. Evergreen was a subsidiary of Wachovia at the time of the violation, according to Reuters.

Continue reading "Evergreen Pays Over $40 Million to Settle SEC Charges that it Overvalued Mortgage-Backed Investments" »