Investment Fraud Lawyer Blog

In the Medical Capital Receiver case, the SEC Receiver recently filed the “Receiver’s Proposed Plan for Distribution” (the “Plan”) which contains some disturbing news for those investors who were pro-active and obtained recoveries against third-parties through litigation (including class actions) or arbitration. As proposed in the Plan (set forth on Page 14 section 4) the Receiver would deduct any funds that an investor received from third-parties in arbitration or litigation dollar for dollar against any sums that would be due from the Receiver.

Continue reading "SEC Receiver's Plan is Unfair to Proactive Medical Capital Noteholders" »

In another example of brokerage firms catering to retail investors’ worst instincts, supposedly investor-friendly firms like Charles Schwab and TD Ameritrade are focusing on expanding their trading business beyond traditional investment like stocks and bonds into alternative investments like options because the commissions are so high. (“’Easy Money’ Options Pushed by Online Brokers,” Bloomberg).

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Investment advisors and brokers continue to go independent, and they are taking more assets with them when they leave their firms, according to an InvestmentNews article by Lavonne Kuykendall entitled “When going indie, advisers take more assets: Fidelity,” which cites Fidelity Investments’ 2011 Broker and Advisor Sentiment Index.

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Some exchange traded funds are just plain dangerous, and investors should not be lured by the “siren song of ETF marketers,” according to Dave Kansas’ Wall Street Journal article, “Exchange-Traded Funds Gone Wild.” Leveraged ETFs are unusually volatile and high-risk. They are designed for day-trading and unsuitable for buy-and-hold investors. All 52 leveraged ETFs in existence since Jan. 1, 2008, have lost money, according to Morningstar.

Continue reading "Many Exchange Traded Funds (ETFs) Provide Investors with a Wild and Dangerous Ride" »

Expecting licensed professionals who provide investment advice to act in their clients’ best interests “should be a basic tenet of the business,” but brokerage firms and their brokers don’t want that fiduciary yoke, says Karen Blumenthal in her InvestmentNews article, “When Your Adviser Can’t Be Trusted.” Moreover, they don’t want the public to know that they don’t want to be held to a fiduciary standard. So, while brokerage firms profess to be trusted advisers or like a member of a client’s family in their advertising, their lobbyists are working hard to persuade the SEC to weaken the “devil in the details” definition of the term “fiduciary” for purposes of governing brokers’ relationships with customers.

Continue reading "Are Brokerage Firms Really the Trusted Financial Advisers that Their Advertisements Claim that They Are?" »

The new whistleblower program that pays big cash rewards for tips about investment fraud has already resulted in a large number of high quality tips to the SEC, according to a news story this week on CNBC. According to the report, the SEC expects to receive 30,000 tips this year—just one year after the program was created under the Dodd-Frank financial reform act. SEC Enforcement Director is quoted as saying “we’re gonna get information hopefully sooner on in the life cycle of a fraudulent scheme, so there’s less investor loss, less harm.” In addition to helping the feds detect fraud in the securities industry, however, the program promises to pay big financial rewards to the whistleblowers whom report it.

Continue reading "Wall Street Whistleblower Program Already Paying Off" »

Wall Street may face a wave of lawsuits under an expanded version of the Martin Act, New York’s securities anti-fraud statute, if the newly elected Governor of New York has his way, according to a Wall Street Journal Deal Journal blog entitled, “And the Next Mortal Threat to Wall Street Is…”.

Continue reading "Proposed Changes to New York Law Would Make Wall Street More Accountable" »

The upheaval in the financial industry has prompted long time brokers in the full-service brokerage firms like Morgan Stanley Smith Barney, Bank of America Merrill Lynch, and UBS Wealth Management Americas to make a break for independence. New smaller firms with strategic alliances within the industry have rewarded these brokers with more flexibility to be more client-centered. But all of this freedom comes with risks as well.

Continue reading "Disillusioned Brokers Seek "Greener Pastures"" »

"Socialized" or "social" investing is the latest way that some brokerage firms are creating a casino-like atmosphere and catering investors’ worst instincts, according to a Forbes article by Zack O’Malley Greenburg called “Tweets on the Street.” “Social networking is coming to the brokerage business. It’s unlikely to do much to enrich your retirement,” Greenburg writes.

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Pennsylvania regulators have charged TD Ameritrade with fraud in selling its Reserve Yield Plus Fund, according to an August 4, 2010 Wall Street Journal article by Daisy Maxey, “TD Ameritrade Faces Civil Fraud Complaint Over Reserve Fund.” The Reserve Yield Plus lost money in the midst of the financial crisis in September 2008.

Continue reading "Regulators Charge TD Ameritrade and Amerivest Investment Management with Fraud" »

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" »