Investment Fraud Lawyer Blog

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" »

Posted by Page Perry, LLC | Permalink | Email This Post

Posted In: Auction Rate Securities , Brokerage Firms , Deutsche Bank , Employment Issues , Goldman Sachs , J. P. Morgan Chase , Market Developments , Morgan Stanley , Municipal Bonds , Smart Investing Tools , SunTrust , Wells Fargo

Bookmark:

Wachovia Bank, JPMorgan and other major financial institutions have filed their second motion to dismiss a complaint brought against them by more than a dozen state and local governments alleging price-fixing and bid-rigging of municipal derivatives markets. This according to a recent article by Erin Fuchs in Law360 entitled “Banks Shoot To Kill Municipal Bond Antitrust MDL.” The MDL action, captioned In re: Municipal Derivatives Antitrust Litigation, case number 1:08-md-01950, is pending in the U. S. District Court for the Southern District of New York.

Continue reading "Wall Street Firms Want a "Free Pass" for Ripping Off State and Municipal Governments" »

Posted by Page Perry, LLC | Permalink | Email This Post

Posted In: Bank of America , Bear Stearns , Brokerage Firms , Derivatives , Investment Advisers , J. P. Morgan Chase , Merrill Lynch , Municipal Bonds , Securities Class Actions , Securities Litigation , UBS

Bookmark:

The Financial Industry Regulatory Authority (“FINRA”) is requesting information from brokerage firms involved in several recent municipal bond problems, according to a July 1 article by Leslie Wayne in the New York Times. FINRA says that it is conducting these information “sweeps” with an eye toward possible investigations and disciplinary actions.

Continue reading "Regulators Investigate Fraud in the Municipal Bond Market" »

Posted by Page Perry, LLC | Permalink | Email This Post

Posted In: Bank of America , Brokerage Firms , Common Securities Broker Abuses , J. P. Morgan Chase , Lehman Brothers , Municipal Bonds , Regulatory Developments

Bookmark:

Even though 2009 has been a bad year for Georgia banks to date--with six bank failures since the start of the year--the rest of 2009 could be even worse. According to a research analyst at FIG Partners, an Atlanta based consulting firm, there are at least 49 Georgia banks that are at risk of failing. FIG generated a list of distressed banks using a index known as the "Texas Ratio," which measures a banks total problem loans and foreclosed properties (so-called "non-performing assets") compared to its cash or other liquid capital available to absorb potential losses. When the Texas Ratio equals 100% or more that means its non-performing loans or the value of its non-performing loans exceeds its cash equivalence. According to the Atlanta Journal & Constitution, there were 42 Georgia banks with a Texas Ratio of 100 or more at the end of 2008.

Continue reading "2009: A Very Bad Year for Georgia Banks" »

Posted by Page Perry, LLC | Permalink | Email This Post

Posted In: Market Developments , Municipal Bonds , Regulatory Developments , Subprime Mortgage & Collateralized Debt Obligation Problems

Bookmark:

The securities credit ratings process needs an overhaul. Fortunately, there is renewed interest in replacing the credit rating agencies that gave high ratings to the trillion of dollars of toxic structured products that catalyzed the market meltdown, according to an April 29, 2009 Bloomberg article by David Evans and Caroline Salas entitled “Flawed Credits Ratings Reap Profits as Regulators Fail.” Three agencies control 98% of the ratings market: Standard & Poors, Moody’s and Fitch. Ever since the Enron scandal, investors and regulators have questioned the efficacy and wisdom of our rating-based market and regulatory system.

Continue reading "Securities Credit Ratings Agencies Under Attack" »

Posted by Page Perry, LLC | Permalink | Email This Post

Posted In: Bonds , Brokerage Firms , Derivatives , Market Developments , Municipal Bonds , Regulatory Developments , Smart Investing Tools , Subprime Mortgage & Collateralized Debt Obligation Problems

Bookmark:

Citigroup has been hit with a $30 million auction-rate securities lawsuit filed by Braintree Laboratories, Inc., a specialty pharmaceutical company, reported Christine Caufield in an April 17, 2009 article posted on Law360.com. The suit comes less than two weeks after Texas Instruments Inc. filed a similar suit in Texas state court (Dallas County) against Citigroup Global Markets and others alleging misrepresentations relating to the sale of auction-rate securities. Braintree’s suit also follows an auction-rate securities lawsuit by two financial firms - Ocwen Financial Corp. and Bankruptcy Management Solutions Inc. – against Citigroup filed in the U. S. District Court for the Southern District of Florida, according to the article.

Continue reading "More Corporate Clients Sue Citigroup Over Auction-Rate Securities" »

Posted by Page Perry, LLC | Permalink | Email This Post

Posted In: Auction Rate Securities , Bonds , Brokerage Firms , Citigroup/Smith Barney , Municipal Bonds , Securities Arbitration , Securities Litigation

Bookmark:

Many investors suffered losses in 2008 because they owned Tobacco Settlement Bonds. These bonds, which are tax exempt, were sometimes marketed by brokers as “municipal bonds”. They lost up to 50% of their value as a result of Wall Street’s self-induced credit crisis.

Other than their "tax-exempt" status, Tobacco Settlement Bonds have absolutely nothing in common with traditional municipal bonds.

Continue reading "Tobacco Settlement Bonds Give Rise to Legal Claims" »

Posted by Page Perry, LLC | Permalink | Email This Post

Posted In: Bear Stearns , Bonds , Brokerage Firms , Derivatives , Municipal Bonds , Mutual Funds , Securities Arbitration , Securities Litigation , Subprime Mortgage & Collateralized Debt Obligation Problems

Bookmark:

Investors who still hold auction-rate securities are facing many increasing problems, according to an article in today’s Bloomberg.com by Michael McDonald. Last February, the $330 billion market for auction-rate securities essentially froze when major Wall Street firms discontinued supporting auction-rate securities. A year later, investors are still stuck with as much as $176 billion of auction-rate securities that pay an average of 1.36%. Thus, it is apparent that many investors have been left out in the cold even after regulators forced some firms to buy back more than $50 million of auction-rate securities. Investors are stuck is because the market remains frozen and issuers either have no incentive to refinance or are unable to refinance. Many investors rightly complain that a large portion their liquid wealth is frozen and paying next to nothing in interest, and, while they may be able to liquidate their holdings in the secondary market, they can do so only if they accept less than what they paid for the auction rate securities.

Continue reading "Things Continue to Get Worse for Auction-Rate Securities Investors" »

Posted by Page Perry, LLC | Permalink | Email This Post

Posted In: Auction Rate Securities , Bank of America , Bonds , Brokerage Firms , Citigroup/Smith Barney , Credit Suisse , Deutsche Bank , Goldman Sachs , J. P. Morgan Chase , Market Developments , Merrill Lynch , Morgan Keegan , Morgan Stanley , Municipal Bonds , Oppenheimer , Raymond James , SunTrust , UBS , Wachovia , Wells Fargo

Bookmark:

Compelling pieces of evidence, including sworn statements from Bank of America, have been uncovered indicating that, during recent years, Wall Street brokerage firms conspired to cheat state and local governments and American taxpayers in the municipals markets. Municipal bonds are issued by state and local governments to raise funds for various public projects. Since the proceeds received by the governments are usually not spent all at once, they are invested in various contracts (collectively referred to as Municipal Derivatives) that provide a fixed rate of return or shift the risk of changes in interest rates. The market for Municipal Derivatives is large ($400 billion annually), concentrated among 20 major institutional sellers, and largely unregulated. Before engaging in Municipal Derivatives transactions, governments routinely engage brokers to find the best deals.

Continue reading "More Dishonesty from Wall Street - This Time Cheating State and Local Governments as well as Taxpayers" »

Posted by Page Perry, LLC | Permalink | Email This Post

Posted In: Bank of America , Bear Stearns , Bonds , Brokerage Firms , Derivatives , ERISA Fiduciaries and Claims , J. P. Morgan Chase , Merrill Lynch , Morgan Stanley , Municipal Bonds , Securities Arbitration , Securities Class Actions , UBS

Bookmark:

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:

• On Monday, the Dow Jones Industrial Average fell 32 points.

• On Tuesday, the Dow Jones Industrial Average advanced 184 points.

• On Wednesday, the Dow Jones Industrial Average rose 108 points and closed the year at 8776.39.

• On Thursday, the market was closed.

• On Friday, the Dow Jones Industrial Average rose 258 points and closed the week at 9035.

Continue reading "Page Perry's Market Monitor - January 2, 2009" »

Posted by Page Perry, LLC | Permalink | Email This Post

Posted In: Bank of America , Brokerage Firms , Citigroup/Smith Barney , Employment Issues , Goldman Sachs , J. P. Morgan Chase , Market Developments , Merrill Lynch , Morgan Stanley , Municipal Bonds , Regulatory Developments , Smart Investing Tools , SunTrust , Wachovia , Wells Fargo

Bookmark:

Congressional inquiries into the credit ratings issued by Standard & Poor's, Moody's and Fitch, Inc., the leading credit rating agencies, revealed the same kind of corruption that brought stock market analysts under the microscope just seven short years ago, suggesting that Wall Street firms do not learn any lessons and are, in effect, ungovernable. In an internal email that came to light during hearings on the Hill, one S&P analyst admitted that their credit ratings were inflated and unsupported, saying, "it could be structured by cows and we would rate it." In other words, the credit ratings were a bunch of bull.

In another internal exchange, a different analyst told a co-worker, "let's hope we are all wealthy and retired by the time this house of cards falters."

Continue reading "Are Credit Ratings Agencies Just a Bunch of Bull?" »

Posted by Page Perry, LLC | Permalink | Email This Post

Posted In: Bonds , Brokerage Firms , Market Developments , Municipal Bonds , Smart Investing Tools

Bookmark:

It’s time for the American people to demand accountability from Wall Street firms that abused the trust of both their clients and the capital markets and from those regulators responsible for overseeing their conduct. The unprecedented bailouts of U.S. financial institutions and their reckless conduct will have a sweeping impact on the U.S. economy and on American taxpayers for years to come. These bailouts that have involved literally trillions of dollars worth of exposure and risk assumption by U.S. taxpayers have to be paid for at some point in time. Unfortunately, the only source of repayment will ultimately lie with the U.S. taxpayer. It is indeed sad that hardworking Americans will be called upon to pay for Wall Street’s excesses and abuses while many of the culprits remain in ivory towers living off their ill-gotten gains.

Continue reading "Government Bailouts Place Significant Risks on U.S. Economy and Taxpayers" »

Posted by Page Perry, LLC | Permalink | Email This Post

Posted In: Bonds , Market Developments , Money Market Funds , Municipal Bonds , Regulatory Developments , Subprime Mortgage & Collateralized Debt Obligation Problems

Bookmark:

Late last Friday, Jefferson County announced that it had entered into a standstill agreement with its lenders thus avoiding a threatened bankruptcy filing. The standstill agreement delays any immediate default on Jefferson County’s debt obligations until at least September 30, 2008 and permits negotiations with its lenders to continue.

Last week, Jefferson County presented a proposal to restructure its existing bond debt at lower fixed interest rates over a longer period. Jefferson County’s lenders apparently agreed to the standstill agreement in order to give themselves adequate time to consider the county’s proposal. Two of Jefferson County’s largest lenders, Bank of America and JP Morgan, declined to comment on the status of discussions.

Continue reading "Jefferson County, Alabama Staves Off Bankruptcy" »

Posted by Page Perry, LLC | Permalink | Email This Post

Posted In: Auction Rate Securities , Bank of America , J. P. Morgan Chase , Market Developments , Municipal Bonds

Bookmark:

Emma Moody of Bloomberg.com reported on April 4, 2008 that Fitch Ratings cut MBIA’s insurance rating from AAA to AA on the grounds that the bond insurer no longer had sufficient capital to retain the top rating. According to Fitch, MBIA, the world’s largest bond insurer, would need as much as $3.8 billion in additional capital to deserve an AAA rating. Fitch also cut MBIA’s long-term rating from AA to A.

MBIA had already raised $2.6 billion in capital through a bond offering and the sale of a stake to Warburg Pincus, LLC, eliminated its dividend and stopped guaranteeing asset-backed securities for six months. These steps were enough to satisfy the other two credit rating organizations. Both Moody’s Investor Service and Standard & Poor’s affirmed the top rating for MBIA. Fitch, however, continued its review.

Continue reading "MBIA Loses AAA Rating From Fitch" »

Posted by Page Perry, LLC | Permalink | Email This Post

Posted In: Market Developments , Municipal Bonds , Subprime Mortgage & Collateralized Debt Obligation Problems

Bookmark:

Many investors are being provided with grossly inflated valuations of their subprime securities holdings because Standard & Poor’s and Moody’s have failed to cut the ratings of many AAA-rated securities even though those securities do not meet the criteria to be classified AAA. The bulk of these securities are believed to be held by banks and insurance companies.

A recent study by Bloomberg concluded that 80 of the AAA securities in the ABX indexes fail to meet S&P’s criteria for AAA-rated securities. The study concluded that, if the ratings standards were accurately applied, at least $120 million in AAA bonds would be downgraded. According to Credit Suisse Group, record home foreclosures have caused AAA debt to fall to 61 cents on the dollar, but those same bonds would be worth only 26 cents if downgraded to AA. If Credit Suisse is correct, investors in just these securities currently rated AAA have an undisclosed loss of at least $42 billion.

Kyle Bass, chief executive officer of Hayman Capital Partners, was blunt about the situation when he said, “The fact that they’ve kept those ratings where they are is laughable. Downgrades of AAA and AA bonds are imminent, and they’re going to be significant.”

Continue reading "Investors Are Being Misled About The Real Values Of Their Subprime Securities Holdings" »

Posted by Page Perry, LLC | Permalink | Email This Post

Posted In: Bonds , Brokerage Firms , Derivatives , Market Developments , Municipal Bonds , Smart Investing Tools , Subprime Mortgage & Collateralized Debt Obligation Problems

Bookmark:

Moody’s Investors Service downgraded the insurance units of FGIC Corp., the fourth-largest bond insurer, six levels from Aaa to A3 and announced that further downgrades were possible. This downgrade occurred as a result of FGIC’s expansion into guaranteeing CDOs backed, in part, by subprime mortgages. FGIC, which is owned by Cypress Group, PMI Group, Inc. and Blackstone Group LP, had its rating cut eight levels to below investment grade.

As a result of Moody’s downgrade, the New York Insurance Department has reported that FGIC is seeking to be split in two to protect the municipal bonds it insures from the problems attributable to its guarantees of subprime-related securities. Essentially, FGIC is seeking to separate its “good” business (insuring municipal bonds) from its “bad” business (insuring subprime structured finance products.) FGIC reportedly insures $220 billion of municipal bonds and another $94 billion of other debt.

Continue reading "Bond Insurer FGIC Downgraded Again, Seeks To Split--Litigation Likely To Follow" »

Posted by Page Perry, LLC | Permalink | Email This Post

Posted In: Market Developments , Municipal Bonds , Subprime Mortgage & Collateralized Debt Obligation Problems

Bookmark:

Bond insurers MBIA and Ambac may lose $11.6 billion (each) on guarantees of mortgage-backed debt and other related securities, as predicted recently by Managing Partner of Pershing Square Capital Management LP, William Ackman, and as reported by Bloomberg.com's Christine Richard and Mark Pittman (1/30). Such losses could have far reaching effects by increasing investor losses in municipal securities and raising future borrowing costs for states and municipalities.

Using a model supplied by an unnamed bank, Ackman recently posted a list of asset-backed collateralized debt obligations and other securities guaranteed by MBIA and Ambac that allow readers to create their own loss predictions.

Ackman sent his findings to the Securities and Exchange Commission as well as the Superintendent of New York Insurance, Eric Dinallo, who is currently in talks with unnamed banks regarding raising new capital for bond insurers, stabilizing the bond insurers, and bolstering financial markets.

Continue reading "Bond Insurers MBIA And Ambac To Incur Predicted Subprime-Related Losses Of $11.6 Billion Each" »

Posted by Page Perry, LLC | Permalink | Email This Post

Posted In: Bonds , Market Developments , Municipal Bonds , Subprime Mortgage & Collateralized Debt Obligation Problems

Bookmark:

An old Wall Street adage says that you should never plan to bring a new offering to market right after a three-day weekend because you never know what could happen from Friday night to Tuesday morning. US markets were closed today for the Martin Luther King, Jr. holiday but it was an event-filled weekend that will cause further market turmoil on Tuesday when the markets re-open.

On December 18, 2007, The Wall Street Journal wrote “Credit Crunch Could Worsen if . . . Bond Insurers Sink, ‘Buck Breaks’.” According to Dennis K. Berman of the Journal, the two events that are of most concern to Wall Street bankers, traders, and regulators are ratings downgrades of bond insurers and money market funds losing value below $1. Unfortunately, recent events suggest that this very scenario may be playing out.

First, on Saturday, January 19, 2008, Christine Richard of Bloomberg.com reported that Fitch Ratings announced that it had downgraded the credit rating of Ambac Assurance Corporation from AAA (the highest rating available) to AA after Ambac abandoned plans to raise new equity. This in turn caused a downgrading by Fitch of approximately 140,000 municipal and non-municipal bonds insured by Ambac.

Continue reading "Is The Market's Doomsday Scenario Here?" »

Posted by Page Perry, LLC | Permalink | Email This Post

Posted In: Bonds , Market Developments , Money Market Funds , Municipal Bonds , Subprime Mortgage & Collateralized Debt Obligation Problems

Bookmark: