Investment Fraud Lawyer Blog

One good thing that might come out of the Dodd-Frank financial reform act is better self-policing by Wall Street. Not that Wall Street has changed its unscrupulous ways. But the Securities and Exchange Commission is expecting a big increase in tips from senior employees and third parties because of whistleblowing incentives in the new law that can reach seven-figures, as reported by CNBC in an August 9, 2010 article entitled “Wall Street Rewards to Trigger a Surge in Informants.”

Continue reading "Regulators Expect a Huge Volume of New Securities Fraud Cases Because of Whistlerblower Incentives" »

In response to recent concerns over high-risk private offerings such as Medical Capital and Provident Royalties, the Financial Industry Regulatory Authority (FINRA) has issued a Notice to Members (NTM-10-22) that reminds brokerage firms of their obligations to investigate private placements before allowing their representatives to sell those investment products. However, FINRA only regulates registered broker-dealers, and many such offerings are recommended or sold by financial advisory firms that are not FINRA-registered.

Continue reading "Problems Involving Private Offerings Escalate" »

HighTower Advisors LLC, a high-profile, high-pedigree investment advisory firm, has been dogged by a series of investor and business lawsuits that could threaten its distinguished reputation, according to a recent article by Bruce Kelly in InvestmentNews.

Continue reading "Is HighTower Advisors All That It Claims To Be?" »

In today’s low-interest-rate environment and with investors rightly suspicious of stock and bond investments, investment scams are flourishing. Investors should pay attention to the warnings of state securities regulators, whose list of Top 10 Investor Traps is featured on CNBC.com’s American Greed.

Continue reading "Beware of These Investment Scams" »

A recent report by Securities and Exchange Commission’s inspector general H. David Kotz shows that the SEC’s investigation of Bernard Madoff was not the only one it botched. The Kotz report also reveals that the SEC’s enforcement division was unduly influenced by former colleagues-turned defense lawyers to drop enforcement matters, according to a New York Times DealBook article by Peter J. Henning called “How Not to Run an S.E.C. Investigation.”

Continue reading "The Revolving Door at the SEC Compromises Investigations" »

Life settlements - buying rights to senior citizens' life insurance policies - is a risky gamble that should be avoided by most investors, according to Leslie Scism and Larry Light in their Feb. 6 Wall Street Journal article, "Grim Risks of Reaping Death’s Rewards.“

Continue reading "Life Settlement Investments Carry Big Risks" »

Public confidence in the Securities and Exchange Commission and Wall Street was broken in the wake of the 2008 financial crisis, according to a recent InvestmentNews article, “SEC needs to remember that investors come first.” The article pointed to the SEC's failure to detect the Madoff Ponzi scheme, its apparent unwillingness to investigate the warnings of Madoff whistleblower Harry Markopolos, its lack of oversight of credit-rating agencies, and its failures to address the practices that led to the collapse of Bear Stearns, Lehman Brothers and the capital markets.

Continue reading "Is the SEC Finally Going to Act Like Investors Come First?" »

As reported in recent articles in Investment News, after the SEC filed fraud charges against Medical Capital Holdings Inc, the Financial Regulatory Authority indicated that it has “a number of investigations under way involving the allegations of wrongdoing arising from the sale of these ‘Reg D’ private placements.” Regulation D refers to the securities regulation that governs the sale of private-placement investments that don’t have to be registered with regulators.

Continue reading "Medical Capital Debacle Puts Private (Reg D) Offerings under the Microscope" »

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 10,520 and, on Monday, the market rose 27 points.

• On Tuesday, the Dow Jones Industrial Average dropped 2 points.

• On Wednesday, the Dow Jones Industrial Average gained 3 points.

• On Thursday, the Dow Jones Industrial Average fell 120 points and closed the year at 10,428.

• On Friday, the markets were closed for New Years Day.

Continue reading "Page Perry's Market Monitor - January 1, 2010" »

It’s not just the SEC that is feeling the sting of public criticism for lax enforcement. The U.S. Department of Justice, responsible for prosecuting federal crimes (including financial crimes), filed markedly fewer cases during the years leading up to one of the worst economic meltdowns in U.S. history, according to a recent USA Today article by Brad Heath (“Crisis loomed as fraud cases fell,” Dec. 16, 2009). An examination of Justice Department records by USA Today revealed that the drop in enforcement actions involved everything from stock-trading schemes and corporate wrongdoing to fraud aimed at individual consumers.

Continue reading "The Lack of Government Enforcement Actions Facilitated the Recent Epidemic of Investment Fraud" »

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 10,471 and, on Monday, the market rose 30 points.

• On Tuesday, the Dow Jones Industrial Average fell 49 points.

• On Wednesday, the Dow Jones Industrial Average sunk 11 points.

• On Thursday, the Dow Jones Industrial Average dropped 133 points.

• On Friday, the Dow Jones Industrial Average rose 21 points and closed the week at 10,329.

Continue reading "Page Perry's Market Monitor - December 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 10,389 and, on Monday, the market rose 1 point.

• On Tuesday, the Dow Jones Industrial Average fell 104 points.

• On Wednesday, the Dow Jones Industrial Average rebounded up 51 points.

• On Thursday, the Dow Jones Industrial Average jumped 69 points.

• On Friday, the Dow Jones Industrial Average rose 66 points and closed the week at 10,472.

Continue reading "Page Perry's Market Monitor - December 11, 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 10,310 and, on Monday, the market jumped 35 points.

• On Tuesday, the Dow Jones Industrial Average surged 127 points.

• On Wednesday, the Dow Jones Industrial Average dropped 19 points.

• On Thursday, the Dow Jones Industrial Average tumbled 87 points.

• On Friday, the Dow Jones Industrial Average rose 23 points and closed the week at 10,389.

Continue reading "Page Perry's Market Monitor - December 3, 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 10,023 and, on Monday, the market soared 204 points.

• On Tuesday, the Dow Jones Industrial Average rose 20 points.

• On Wednesday, the Dow Jones Industrial Average climbed 44 more points.

• On Thursday, the Dow Jones Industrial Average fell 94 points.

• On Friday, the Dow Jones Industrial Average rebounded 73 points and closed the week at 10,270.

Continue reading "Page Perry's Market Monitor - November 13, 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 9972 and, on Monday, the market fell 104 points.

• On Tuesday, the Dow Jones Industrial Average rebounded 14 points.

• On Wednesday, the Dow Jones Industrial Average dropped 119 points.

• On Thursday, the Dow Jones Industrial Average surged 200 points.

• On Friday, the Dow Jones Industrial Average tumbled 250 points and closed the week at 9713.

Continue reading "Page Perry's Market Monitor - October 30, 2009" »

A Special Review Committee (the “Special Committee”) appointed by the Board of Governors of the Financial Industry Regulatory Authority (“FINRA”) issued a report finding that FINRA missed opportunities to detect the Ponzi Schemes perpetrated by Bernard Madoff and Allen Stanford, according to an October 2 article in InvesmentNews by Sue Asci. The fraudulent schemes perpetrated by Stanford and Madoff are striking due to their size and duration. The Madoff scheme spanned decades, defrauded thousands of investors, and caused an estimated $64 billion in investor losses. According to the SEC, Stanford sold numerous investors approximately $7.2 billion of fraudulent products, purported to be certificates of deposit (“CDs”), over at least a decade. Despite conducting examinations of the Madoff and Stanford firms, FINRA did not uncover these frauds.

Continue reading "FINRA "Missed Opportunities" to Stop Madoff and Stanford Ponzi Schemes" »

Two victims of Bernard Madoff’s Ponzi scheme have sued the Securities and Exchange Commission, alleging that the agency was negligent in performing its duties to protect investors. The plaintiffs argue that the SEC should have “done its job” and uncovered the scheme. They claim that the SEC’s failure to detect the fraud led directly to losses by the plaintiffs, Phyllis Molchtasky and Stephen Schneider. Ms. Molchtasky had previously filed an administrative claim against the SEC in December of 2008. The Commission refused to negotiate a settlement, which resulted in the present suit. Ms. Molchtasky and Dr. Schneider lost a combined $2.45 million in the scheme.

Continue reading "Investors Sue the SEC" »

When SEC officials appeared before Congress last January and February to answer questions about their handling of the Madoff Ponzi scheme, they rebuffed many questions posed by lawmakers on the ground that there was a pending investigation of the SEC by its inspector general. Now that Inspector General David Kotz has completed his investigation and issued a report on the matter, the SEC is full of regret, reports Paul Wiseman of USA Today in his September 3 article entitled “Inspector general’s report blasts SEC over Madoff.”

Continue reading "Inspector General Continues to Blast SEC" »

The North American Securities Administrators Association (NASAA), the organization of state securities regulators, has published its annual list of top 10 investor traps to avoid. NASAA identified Leveraged Exchange-Traded Funds (ETFs), real estate investment schemes, private placement offerings, natural resources investments, and Ponzi schemes as the greatest potential threats to investor safety. Regarding leveraged ETFs, NASAA warns: “Given their volatility, these funds typically are not suitable for most retail investors.” NASAA also warns investors to be wary of pitches for investments in gold bullion and currency scams, life settlements, entertainment investments, short-term commercial promissory notes, and speculative inventions and new products.

Continue reading "Regulators Issue Warnings about Leveraged Exchange-Traded Funds (ETFs) and Other Toxic Investments" »

The Securities and Exchange Commission is outmanned and outgunned by the folks it is trying to police, according to an August 20 article in the Wall Street Journal by Tom McGinty and Kara Scannell. The SEC turned over daily surveillance of the markets to the markets’ own self-regulatory organizations (“SROs”) long ago. Now, under pressure from Congress and investors to prove it is up to the job, after its glaring failures in the Madoff Ponzi scheme and other scandals, Chairman Mary Shapiro’s SEC is trying desperately to catch up. But surveillance of complex modern markets requires “the quantitative, analytical capacity that the agency has never had,” observes Jonathan Katz, who left the SEC in 2006 after 20 years as secretary.

Continue reading "The SEC Simply Does Not Have Sufficient Resources To Do Its Job" »