Investment Fraud Lawyer Blog

What’s the difference between a Wall Street bank and a whistleblower? Nothing! While Wall Street railed against whistleblower protections for employees in Dodd-Frank, turns out they are falling all over themselves to blow the whistle on each other. Why? Because the first to tattle gets protections that are not offered to the second to tattle. (“UBS Turning Whistleblower in Libor Probe,” Bloomberg). But wouldn’t it be better to encourage more employee whistleblowers so as not to have to dispense protections to corporate wrongdoers that make getting caught just a cost of doing business?

Continue reading "Now Even Wall Street Firms Are Becoming Whistleblowers" »

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).

Continue reading "High Risk Options Trading Is Being Pushed By Some Brokerage Firms" »

MF Global Holdings, Ltd. (“MF Global”) filed the eighth largest bankruptcy petition in U.S. history on Monday November 1, seeking to reorganize its debt structure and continue to operate. MF Global, the broker-dealer unit, faces liquidation. The filings occurred after a potential buyer of MF Global’s assets, Interactive Brokers Group, “bolted over a discrepancy of hundreds of millions of dollars in the beleaguered securities firm’s books,” according to the Wall Street Journal (“MF Global Collapses as Books Questioned”).

Continue reading "Everything is not 'Fine' at MF Global Holdings" »

Bank of New York Mellon has been sued in separate civil lawsuits filed by the U.S. Department of Justice and the Attorney General of New York seeking damages in excess of $2 billion related to BNY’s alleged practice of fraudulently misleading and overcharging public pension funds, universities, and other clients for foreign exchange (FX) currency transactions. In essence, the complaints allege that BNY Mellon profited by giving its foreign exchange clients the worst exchange rates of the day, and even created fake trades.

Continue reading "Forex Fraud Case Reveals the Value of Whistleblowers" »

In recent years, hedge funds have become dominant players in the investment markets and the evidence suggests that hedge fund trading (which regularly involves thousands, if not hundreds of thousands, of shares) has been a significant contributing factor to market volatility.

Continue reading "Do Hedge Funds Create and Burst Bubbles for their Own Benefit?" »

A UBS exchange-traded-fund director has lost $2 billion of the firm’s money, raising questions about the bank’s proprietary trading and risk management systems just three years after it lost over $39 billion and had to be rescued by the Swiss National Bank.

Continue reading "Rogue Trader Reportedly Costs UBS $2 Billion" »

SEC Commissioner Luis Aguilar called for the SEC’s Office of Investor Education and Advocacy to issue an investor alert warning retail investors about the risks of trading off-exchange foreign currency contracts. This comes in the wake of the SEC’s recent approval of a temporary rule allowing the sale of retail forex contracts to unsophisticated investors until the SEC decides whether or not to issue more comprehensive rules. (“SEC Official Seeks Investor Alert on Retail Forex,” Reuters, CNBC.com).

Continue reading "Investor Alert - Forex Trading Can Be Lethal" »

A lot of retail investors are getting involved with Forex trading, according to Stephen L. Bernard’s Wall Street Journal article entitled “Is Currency Trading Worth the Risk?” It is only worth the risk if you can afford to lose every penny you put into it, and quickly. Regulators are seeking to warn retail investors of the risks, but retail forex trading is increasing.

Continue reading "Forex Trading is Unsuitable for Most Retail Investors" »

“That’s the easiest $250,000 you’ll never see,” quipped the judge who had just granted a motion for summary judgment in a recent case. Collectibility of judgments is something that private attorneys usually consider in deciding whether to expend resources to pursue a case. The attorneys who work for the U.S. Securities and Exchange Commission and the Commodities Futures Trading Commission often face the same collection issues, according to Jean Eaglesham’s Wall Street Journal article entitled, “Chasing Fraud, Then Cash.” As Ms. Eaglesham put it: “It is easier for regulators to get their man than it is to get their money.”

Continue reading "Investment Regulators Often Fail to Collect Monetary Sanctions" »

Massachusetts may join California, Virginia and Florida in suing Bank of New York Mellon Corp. for allegedly overcharging the state's pensioners for foreign exchange trades, according to Carrick Mollenkamp’s Wall Street Journal article entitled “New Front Opens in Massachusetts for Forex Dispute.” Federal agencies are reportedly investigating.

Continue reading "Massachusetts Claims it was Overcharged for Forex Trades" »

Carolyn Cui’s Wall Street Journal article entitled “Tripped Up by the Margin” makes the point that increasing margin requirements, a step sometimes taken by exchanges to reduce market volatility, can actually increase downward volatility as a result of ensuing forced liquidations.

Continue reading "Fluctuating Margin Requirements Impact the Volatility of Commodities" »

In his Wall Street Journal article “All ‘Commodities’ Aren’t Equal,” Liam Pleven makes the simple point that the performance of broad-based commodities index exchange traded funds may vary significantly because of varying portfolio composition. The fungibility of commodities, or inaccurate advertising, may have led some investors to believe that commodity funds are fungible. They aren’t. The recent sell-off in commodities, particularly oil, drove that point home and “reinforced a painful lesson for some investors,” according to the article.

Continue reading "The Performance of Commodities Exchange Traded Funds Can Vary Significantly " »

Bank of New York Mellon Corp. admits it did not act in its clients’ best interest in pricing foreign currency trades but says its clients are to blame because they knew or should have known what was going on, according to a Wall Street Journal article by Carrick Mollencamp and Tom McGinty entitled “Inside a Battle Over Forex.”

Continue reading "The Forex Mess Gets Nasty" »

Goldman Sachs disclosed that it has been notified that the Commodity Futures Trading Commission’s staff will recommend that the agency bring "aiding and abetting, civil fraud and supervision-related charges" against its division, Goldman Sachs Execution & Clearing, according to a Wall Street Journal article by Liz Moyer entitled “Goldman Discloses CFTC Probe.” The charges reportedly have to do with its role as a clearing broker for an unnamed registered broker-dealer.

Continue reading "Goldman's Legal Woes Keep Growing" »

Silver futures plummeted to their biggest decline since March 1983 after Comex’s owner, CME Group Ltd., raised margin requirements for new speculative positions by 84 percent in less than two weeks, according to according to an InvestmentNews article entitled “Silver investors holding ‘a falling knife.’” Gold also fell.

Continue reading "Silver Investments Plummet" »

The U.S. government is trying to recruit new talent with “Wall Street experience and retool antiquated surveillance systems,” according to Rachelle Younglai of Reuters. In the past the SEC and other government regulators have been unable to attract the top talent because they could not match the high salaries of top Wall Street firms. The gap between Wall Street and government regulators could become closer with the help of the Dodd-Frank reform law. However, because of a “congressional budget standoff depriving promised funding increases to the SEC and Commodity Futures Trading Commission,” their ability to better regulate the financial industry is being compromised.

Continue reading "The New Congress Appears Determined to Undermine the Integrity of the U.S. Capital Markets" »

The Wall Street Journal is reporting that the Arkansas Teacher Retirement System has filed a putative class action lawsuit against State Street Corp. alleging that the bank overcharged the it and other similarly situated customers in foreign exchange (Forex) currency transactions. See article by Jeanette Neumann, “State Street Is Sued by Arkansas Fund.” The suit was filed on February 10, 2011 in the U.S. District Court for the District of Massachusetts.

Continue reading "Forex Fraud Claims Just Keep Coming" »

Banks overcharged major investment firms for currency trades, according to a Wall Street Journal article by Gregory Zuckerman, Carrick Mollenkamp and Lingling Wei, titled “Suspicion of Forex Gouging Spreads. The article cites bank insiders and the apparent broadening scope of alleged abuses in the $4 trillion foreign-exchange market.

Continue reading ""Gouging" Issues Permeate Forex Trades" »

Despite the upbeat partying and business cultivation by bankers in Davos, Switzerland, at least one attendee – 38 year-old Barrie Wilkinson, a Cambridge grad and UK-based risk management analyst – foresees a financial catastrophe that governments will not be able to handle. See InvestmentNews article, “Next banking crisis will hit in 2015 – and be much worse: Analyst.”

Continue reading "Expert Predicts a Much Worse Financial Crisis in 2015" »

Prosecutors have taken over whistleblower lawsuits against Bank of New York Mellon and State Street Corp. that accuse the banks of fraud in overcharging public pension funds by tens of millions of dollars for foreign-exchange transactions, according to a Reuters article edited by Lincoln Feast, entitled “Prosecutors widen currency probes: report.”

Continue reading "Prosecutors Probe Forex Abuses by Bank of New York Mellon and State Street Corp." »