Investment Fraud Lawyer Blog http://www.investmentfraudlawyerblog.com/ Published by Page Perry, LLC en Copyright 2009 Fri, 03 Jul 2009 13:11:46 -0500 http://www.sixapart.com/movabletype/?v=3.33 http://blogs.law.harvard.edu/tech/rss Broker Defections from Major Wall Street Firms on the Rise Since the middle of March, Smith Barney has lost at least 650 of its approximately 14,000 financial advisors, according to Discovery Database, an industry research firm. The reasons for the Smith Barney departures have been many. First, advisors producing less than $400,000 per year received a pay cut this year and were not offered the same type of retention package that Smith Barney offered to its higher-producing brokers, according to a Wall Street Journal article dated June 15, 2009 by Annie Gasparro and Brett Philbin. Another reason for the departures is that brokers are unwilling to endure the uncertainty of the new Smith Barney joint venture with Morgan Stanley. Still other advisors left in favor of new positions with competitors who offered signing bonuses. Alois Pirker, a brokerage analyst with AITE Group, a research firm, is quoted in the Journal article as citing "possible power struggles, a change in products and potential over wrap," which "opened the door for breaking away." Many anticipate that additional Smith Barney brokers will leave as the dust starts settling from the Morgan Stanley/Smith Barney joint venture.

]]> http://www.investmentfraudlawyerblog.com/2009/07/broker_defections_from_major_w.html http://www.investmentfraudlawyerblog.com/2009/07/broker_defections_from_major_w.html Fri, 03 Jul 2009 13:11:46 -0500 Pending Legislation to End Mandatory Securities Arbitration? Investors who have been defrauded by their brokers and financial advisers are almost universally required to bring their claims through arbitration rather than lawsuits, but that may be about to change. Bills have been introduced in both houses of Congress that, if passed, would put an end to mandatory arbitration clauses in contracts, giving wronged investors the option of going to court if they want to. Both bills are titled The Arbitration Fairness Act of 2009.

]]> http://www.investmentfraudlawyerblog.com/2009/07/pending_legislation_to_end_man.html http://www.investmentfraudlawyerblog.com/2009/07/pending_legislation_to_end_man.html Thu, 02 Jul 2009 12:14:12 -0500 Investors Need to be Careful with Target-Date Mutual Funds Target-Date mutual funds are not always what they appear to be, reports Leslie Wayne in her June 25, 2009 article in the New York Times entitled “Target-Date Mutual Funds May Miss Their Mark.” Target-Date mutual funds are supposed increase the allocation of bonds over time in order to reduce volatility as an investor approaches retirement. Stocks are generally more volatile than bonds, and investors generally increase the percentage of bonds to add the stability to a portfolio of investments.

]]> http://www.investmentfraudlawyerblog.com/2009/07/investors_need_to_be_careful_w.html http://www.investmentfraudlawyerblog.com/2009/07/investors_need_to_be_careful_w.html Wed, 01 Jul 2009 09:49:57 -0500 JPMorgan Sued for Sale of High Risk, Illiquid Real Estate Investments Billionaire Len Blavatnik filed a lawsuit against JPMorgan Chase this week, claiming that the investment bank had mismanaged a $1 billion investment account that held assets on behalf of Blavatnik’s company, Access Industries. The suit alleges that JPMorgan’s brokers invested the company’s assets in risky, illiquid real estate securities that were inconsistent with the conservative investment objectives of the company, causing $98 million in losses that would not have occurred had the money been properly invested.

]]> http://www.investmentfraudlawyerblog.com/2009/06/jpmorgan_sued_for_sale_of_high.html http://www.investmentfraudlawyerblog.com/2009/06/jpmorgan_sued_for_sale_of_high.html Tue, 30 Jun 2009 12:59:46 -0500 Lehman Brothers Hit with $190 Million Suit over Auction Rate Securities Lehman Brothers Holdings Inc is being sued by two of its former clients for more than $190 million based upon allegations the failed bank mislead them about the market for auction-rate securities.

]]> http://www.investmentfraudlawyerblog.com/2009/06/lehman_brothers_hit_with_190_m.html http://www.investmentfraudlawyerblog.com/2009/06/lehman_brothers_hit_with_190_m.html Mon, 29 Jun 2009 10:43:04 -0500 Page Perry's Market Monitor - June 26, 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 8540 and, on Monday, plunged 201 points.

• On Tuesday, the Dow Jones Industrial Average fell 16 points.

• On Wednesday, the Dow Jones Industrial Average dropped 23 more points.

• On Thursday, the Dow Jones Industrial Average surged 173 points.

• On Friday, the Dow Jones Industrial Average lost 34 points and closed the week at 8438.

]]> http://www.investmentfraudlawyerblog.com/2009/06/page_perrys_market_monitor_jun_3.html http://www.investmentfraudlawyerblog.com/2009/06/page_perrys_market_monitor_jun_3.html Sun, 28 Jun 2009 12:56:51 -0500 "100% Principal Protected Notes" - Designed to Deceive? UBS marketed and sold Lehman “structured notes” to ordinary retail investors. It instructed its brokers that the products were suitable for conservative investors who did not want to put their principal at risk. Investors who purchased these structured notes made a loan to Lehman Brothers and received a promissory note that promised that the value of notes would increase according to some formula if an underlying basket of securities increased, but the investor’s principal would never go down, even if the underlying securities tanked, because the notes came with a guaranty of “100% principal protection.” “If you lent me $100 and I drew up a legal documents that said in big, fat letters that you loan to me came with “100% principal protection,” as long as you stuck with our deal for 15 years, would you feel pretty good about getting your money back in 2024?” asks Susan Antilla of Bloomberg, in her June 10, 2009 article entitled “UBS Redefines Meaning of 100% Loss Protected.”

]]> http://www.investmentfraudlawyerblog.com/2009/06/100_principal_protected_notes.html http://www.investmentfraudlawyerblog.com/2009/06/100_principal_protected_notes.html Fri, 26 Jun 2009 18:08:29 -0500 Danger Ahead for Investors in Commercial Mortgage-Backed Securities Recent reports indicate that serious problems lie ahead for investors in approximately $700 billion in commercial mortgage-backed securities. The securities are complex structured finance instruments that are constructed with bundles loans secured by apartments, shopping centers, office complexes or hotels, among other commercial real estate projects. Unfortunately, many of the mortgages were underwritten using loose underwriting standards with liberal financing structures in much the same way that subprime mortgage loans were underwritten. For example, many of these commercial loans made between 2005 and 2007 were either interest-only loans or partial interest-only loans and are facing payment resets that the borrowers can’t afford.

]]> http://www.investmentfraudlawyerblog.com/2009/06/danger_ahead_for_investors_in.html http://www.investmentfraudlawyerblog.com/2009/06/danger_ahead_for_investors_in.html Thu, 25 Jun 2009 09:00:49 -0500 It's Time to Make Securities Arbitration Completely Neutral An organization of attorneys who represent investors in securities arbitrations has filed a petition with the Securities and Exchange Commission to eliminate FINRA’s requirement that, in cases over $100,000, one of the three arbitrators must be a person affiliated with the securities industry. The organization is known as PIABA, which stands for Public Investors Arbitration Bar Association. In the interest of disclosure, J. Boyd Page, a Senior Partner of Page Perry, LLC, was a founder and past president of PIABA.

]]> http://www.investmentfraudlawyerblog.com/2009/06/its_time_to_make_securities_ar.html http://www.investmentfraudlawyerblog.com/2009/06/its_time_to_make_securities_ar.html Tue, 23 Jun 2009 17:07:13 -0500 Toxic Securities Alert: Reverse Convertibles Every time there is a significant downturn in the market, Wall Street’s “rocket scientists” conjure up complex new products that purport to be conservative and pay hefty returns but end up slamming investors. Add reverse convertibles to the list of failed products that meets this description.

]]> http://www.investmentfraudlawyerblog.com/2009/06/toxic_securities_alert_reverse.html http://www.investmentfraudlawyerblog.com/2009/06/toxic_securities_alert_reverse.html Mon, 22 Jun 2009 14:05:14 -0500 Investors Left Out of the Auction Rate Securities Regulatory Settlements Are Suing to Recover Losses 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.

]]> http://www.investmentfraudlawyerblog.com/2009/06/investors_left_out_of_the_auct.html http://www.investmentfraudlawyerblog.com/2009/06/investors_left_out_of_the_auct.html Mon, 22 Jun 2009 11:46:00 -0500 Page Perry's Market Monitor - June 19, 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 8799 and, on Monday, plunged 187 points.

• On Tuesday, the Dow Jones Industrial Average dropped 107 points.

• On Wednesday, the Dow Jones Industrial Average fell 7 points.

• On Thursday, the Dow Jones Industrial Average jumped 58 points.

• On Friday, the Dow Jones Industrial Average fell another 16 points and closed the week at 8540.

]]> http://www.investmentfraudlawyerblog.com/2009/06/page_perrys_market_monitor_jun_2.html http://www.investmentfraudlawyerblog.com/2009/06/page_perrys_market_monitor_jun_2.html Sun, 21 Jun 2009 08:51:36 -0500 Wall Street's "Fiduciary Duties" Should Be Formalized It’s time to hold Wall Street accountable for meeting the standards of conduct that it promises to its customers. President Obama’s proposed regulatory overhaul contains a significant provision that should end any confusion about whether a broker has to act in your best interest or can just pitch a product, according to recent articles by Alexis Leondis and Elizabeth Hester in Bloomberg.com, and Jane J. Kim and Aaron Lucchetti in the Wall Street Journal. That provision would leave no doubt that brokers are required to meet a higher fiduciary standard that compels them to place their customer’s interests ahead of their own. Fiduciaries are not allowed to engage in self-dealing. This is reportedly “a change that could upend Wall Street."

]]> http://www.investmentfraudlawyerblog.com/2009/06/wall_streets_fiduciary_duties.html http://www.investmentfraudlawyerblog.com/2009/06/wall_streets_fiduciary_duties.html Sat, 20 Jun 2009 11:38:07 -0500 Obama Proposal Urges Review of Mandatory Securities Arbitration The Department of Treasury released its financial regulatory reform proposal on June 17. The report, a product of consultations with a wide range of people from members of the President’s working group on financial markets to industry and market participants, recommends that the SEC study the use of mandatory arbitration clauses in retail investor contracts. Specifically, the proposal recommends legislation that would give the SEC specific authority to study mandatory arbitration and to prohibit mandatory arbitration clauses in broker-dealer and investment advisory accounts with retail customers if deemed appropriate.

]]> http://www.investmentfraudlawyerblog.com/2009/06/obama_proposal_urges_review_of.html http://www.investmentfraudlawyerblog.com/2009/06/obama_proposal_urges_review_of.html Fri, 19 Jun 2009 16:35:39 -0500 Schwab Sued for Deceptive Sales of Lehman Principal Protected Notes Once regarded as the retail investors’ friend, and somehow different from other fee-driven brokerage firms, Charles Schwab has been battling retail investors who were sold the Schwab YieldPlus Fund as a cash-equivalent investment, similar to a money market fund. The Schwab YieldPlus Fund has lost approximately half its value as a result of undisclosed, high-risk non-conventional investments. Schwab now has another black mark on its investor friendly image – deceptive sales of Lehman Brothers “100% Principal Protected” Notes.

]]> http://www.investmentfraudlawyerblog.com/2009/06/schwab_sued_for_deceptive_sale.html http://www.investmentfraudlawyerblog.com/2009/06/schwab_sued_for_deceptive_sale.html Thu, 18 Jun 2009 16:15:11 -0500