Investment Fraud Lawyer Blog

The Federal Home Loan Bank of Seattle has filed 11 lawsuits against an array of Wall Street banks, seeking rescind $4 billion of mortgage-backed securities with interest, according to a Feb. 16 Wall Street Journal article by Nick Timiraos, “Home Loan Bank Sues Wall Street Firm.” The lawsuits were filed in late December in King County Superior Court in Washington. A spokeswoman for The Federal Home Loan Bank of Seattle said the institution had "a responsibility to its member shareholders to enforce its rights."

Continue reading "Federal Home Loan Bank Sues Securities Firms to Recover Subprime Losses" »

Charles Schwab Corp. added a record number of independent investment advisors in 2009 as thousands of brokers left Wall Street firms, like Bank of America, Merrill Lynch, and Morgan Stanley Smith Barney, to launch their own investment advisory firms. See Reuters “Schwab says ‘breakaway broker’ trend has legs,” by Joe Rauch, Jan. 25.

Continue reading "Charles Schwab Confirms Trend of Brokers Breaking Away from Major Firms" »

How short their memories. Wall Street firms on the brink of failure until rescued by a controversial taxpayer bailout continue to show their unabashed greed by claiming entitlement to massive amounts of money earned on funds "invested" by American taxpayers. Without those bailouts, most, if not all the Wall Street firms would be bankrupt or teetering on failure. Nevertheless, undeterred by the rising anger on Main Street and the populist backlash in Washington D.C., and flush with record revenues of $449.6 billion, Wall Street firms are on track to pay over $145 billion in bonuses for 2009, according to the Wall Street Journal.

Continue reading "Wall Street Firms "Thumb Their Noses" at Taxpayers and Washington Politicians - Award Obscene Bonuses Anyway" »

The first public hearings by the Financial Crisis Inquiry Commission were notable for what did not happen. The well-prepared Wall Street bankers faced the cameras with apparent humility, parried Commission clunkers with their own platitudes, and left pretty much unperturbed. Those who expected the reprise of the 1930s Pecora hearings must have been disappointed. “Pecora’s revelations enraged the public and stampeded Congress into creating the SEC and separating commercial banks from investment banks,” according to Paul Wiseman in his USA Today column, “Depression-era star muckraker shapes Wall Street inquiry.” He added: “In public hearings, Pecora squared off against the elite financiers of the age, pointing at them with his cigar and coaxing them into what [Senate historian Donald] Ritchie calls ‘startling admissions of wrongdoing.”

Continue reading "The Reason Real Change is Needed - Wall Street Maintains a Business as Usual Stance as Public Hearing Begin on the Financial Crisis" »

Wall Street banks like Goldman Sachs, Deutsche Bank, Morgan Stanley, as well as smaller firms like Tricadia Inc., and certain of favored hedge fund clients that were tipped off by the banks, reaped huge profits by shorting (betting against) “synthetic” collateralized debt obligations (CDOs) linked to residential mortgages, which the banks created and sold to other clients, according to Gretchen Morgenson and Louise Story in their recent New Times article, “Banks Bundled Bad Debt, Bet Against It and Won.”

Continue reading "Wall Street Firms Bet Against Toxic Subprime Investments that they were Recommending to Unsuspecting Investors" »

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 year at 10,428 and, on Monday, the market soared 156 points.

• On Tuesday, the Dow Jones Industrial Average dropped 12 points.

• On Wednesday, the Dow Jones Industrial Average gained 2 points.

• On Thursday, the Dow Jones Industrial Average rose 33 points.

• On Friday, the Dow Jones Industrial Average moved up 11 more points and closed the week at 10,618.

Continue reading "Page Perry's Market Monitor - January 8, 2010" »

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" »

So many investors have lost money in investments mis-marketed under assurances the investment was “principal-protected,” or “capital guaranteed,” that the Financial Industry Regulatory Authority (FINRA) has found it necessary to issue a notice (Notice to Member 09-73) reminding brokerage firms of their sales practice duties when recommending investments such as so-called Principal Protected Notes. These securities are structured products that are typically comprised of a zero-coupon linked to the performance of some other asset. That asset might be, for example, a derivative product based on a stock index or a basket of securities as obscure as the Brazilian Real-U.S. Dollar exchange rate and the price of copper.

Continue reading "Regulators Express Concerns about "Principal-Protected" and "Capital Guaranteed" Investments" »

If you were sold Main Street Natural Gas Bonds that were guaranteed by Lehman Brothers, you are likely to have a compelling claim to recover any losses that you sustained when Lehman Brothers went bankrupt. These bonds were sold to income oriented investors as relatively safe investments. However, the brokerage firms that sold them, in many cases, did not do their homework. If they had, they would have realized that these bonds were totally inappropriate for almost any investor.

Continue reading "Investor Alert: Main Street Natural Gas Bonds Backed by Lehman Brothers" »

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 9996 and, on Monday, the market rose 96 points.

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

• On Wednesday, the Dow Jones Industrial Average dropped 92 points.

• On Thursday, the Dow Jones Industrial Average moved up 132 points.

• On Friday, the Dow Jones Industrial Average sunk 109 points and closed the week at 9972.

Continue reading "Page Perry's Market Monitor - October 23, 2009" »

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 9605 and, on Monday, moved up 22 points.

• On Tuesday, the Dow Jones Industrial Average rose 57 points.

• On Wednesday, the Dow Jones Industrial Average soared 108 points.

• On Thursday, the Dow Jones Industrial Average dropped 8 points.

• On Friday, the Dow Jones Industrial Average rebounded 36 points and closed the week at 9820.

Continue reading "Page Perry's Market Monitor - September 18, 2009" »

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 9441 but, on Monday, the markets were closed for Labor Day.

• On Tuesday, the Dow Jones Industrial Average rose 56 points.

• On Wednesday, the Dow Jones Industrial Average rose 50 points.

• On Thursday, the Dow Jones Industrial Average jumped 80 points.

• On Friday, the Dow Jones Industrial Average dropped 22 points and closed the week at 9605.

Continue reading "Page Perry's Market Monitor - September 11, 2009" »

Investors are bringing an increasing number of legal claims against brokerage firms as a result of inappropriate sales of preferred stocks issued by financial institutions. For example, Merrill Lynch has been hit with an arbitration claim filed by an elderly couple that lost $650,000 in the preferred stocks of financial companies according to Sue Asci in her August 16 article in InvestmentNews called “Merrill Lynch confronts arbitration claim involving financials’ preferred stock.” The claim, filed with FINRA, alleges that Merrill engaged in fraudulent sales practices, including self-dealing (more on that below).

Continue reading "More Investor Claims Focus on Sales of Preferred Stocks Issued by Financial Institutions" »

Investors are leaving big, full service firms like Morgan Stanley Smith Barney and Bank of American Merrill Lynch, and investing their money through online discount firms like Schwab and TD Ameritrade, according to a recent CNBC.com article called “Investors Dump Brokers to Go It Alone.” This has been happening for some time now, but the trend has accelerated since investors were badly burned by the toxic securities sold by major financial institutions and the related collapse and near-collapse of many of those financial institutions.

Continue reading "Major Wall Street Firms Losing Customers" »

Fidelity Investment has joined Charles Schwab and Morgan Stanley Smith Barney in warning customers about the complexity and risks of Leveraged Exchange Traded Funds (ETFs), reported Daisy Maxey in her article, “Fidelity the Latest to Caution on ETFs,” published in the August 4 Wall Street Journal. Fidelity’s web site now states: “Most [Leveraged ETFs] reset daily and seek to achieve their objectives on a daily basis. Due to compounding, performance over longer periods can differ significantly from the performance of the underlying index.”

Continue reading "Sales of Leveraged and Inverse ETFs Expose Wall Street Firms to Liability for Misrepresentation and Unsuitable Recommendations" »

In her recent article in the Wall Street Journal, Eleanor Laise reports that sales of Leveraged and Inverse Exchange Traded Funds (ETFs) have exploded to $32.8 billion as of June 2009, almost tripling the $11 billion held at the start of 2008. The number of such ETFs has increased to 119, an increase of 86%, over the same period. “The explosive growth in this area over the past year reflects an aggressive sales effort,” said William F. Galvin, Secretary of the Commonwealth of Massachusetts. These products are unsuitable for and should not have been sold to most investors.

Continue reading "Regulators Investigate Sales of Leveraged and Inverse ETFs" »

In the wake of a FINRA Regulatory Notice and a number of articles in the financial press, some brokerage firms say they are either issuing warnings about the products or silently following the discussions surrounding them. So reports Daisey Maxey of the Wall Street Journal in her July 30 article entitled “Warning Signs Up for Leveraged ETFs. Morgan Stanley Smith Barney says its sales of leveraged and inverse ETFs is “under review.” Charles Schwab says it is warning clients to “proceed with extreme caution” because “these funds may not give you the returns you may be expecting.” Schwab says that, while it does not “recommend” leveraged ETFs, investor may purchase them on their own through Schwab. Likewise, TD Ameritrade says it does not “actively sell” leveraged ETFs but they are available on its web platform.

Continue reading "Beware Leveraged and Inverse Exchange Traded Funds" »

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" »

Morgan Stanley will pay $500,000 to settle SEC charges that it recommended unapproved money managers to clients without any due diligence review. From 2000 to April 2006, Morgan Stanley made “material misrepresentations about a program through which the firm assigned clients in developing investment objectives and in selecting properly vetted money managers,” according to the SEC. “Morgan Stanley said one thing and did another when recommending managers who had not been approved for participation in the firm’s advisory programs and had not been subject to its due-diligence review,” added Scott W. Friestad, associate director of SEC’s enforcement division. Morgan Stanley, which received brokerage commissions or fees from the unapproved managers, said through a spokesperson that it is “pleased to settle this matter.”

Continue reading "Morgan Stanley Sanctioned for Misleading Investors about Money Managers" »

Here they go again. In the wake of the trillion dollar write downs of toxic structured finance products, the frozen credit markets, and the global financial crisis, Wall Street banks are re-packaging downgraded collateralized debt obligations (CDOs) and other structured finance products for sale as new debt investments with top AAA ratings, Bloomberg.com reported recently. The article, by Pierre Paulden, Caroline Salas and Sarah Mulholland, flows from marketing documents obtained by Bloomberg and focuses on Morgan Stanley’s plans to sell downgraded loan CDOs as AAA rated bonds, even though they should not be rated as AAA.

Continue reading "Wall Street Firms Still Don't Get It - They Continue to Sell Toxic Securities as AAA Investments" »