Investment Fraud Lawyer Blog

The amount of dollars at stake in FINRA securities arbitrations has grown in recent years. Of the 7,000 claims currently pending, approximately 200 involve claims of $10 million or more. “The claims coming in now are substantially larger than what we had a few years ago,” Linda Fienberg, president of FINRA Dispute Resolution, was quoted as saying. (“FINRA flooded with multimillion-dollar cases,” Nate Raymond, The American Lawyer).

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Unsophisticated state and local government officials have been sold billions of dollars of flawed financial products by Wall Street banks, leaving taxpayers on the hook for even more. The banks advised the governments to issue auction rate bonds to lower their financing costs and purchase interest rate swaps to protect the governments if the market moved in the wrong direction. The officials did not understand that the market was controlled by the banks and that the banks could impose penalties when the products unraveled, which they did.

Continue reading "Wall Street Professionals Fleece Government Amateurs - Main Street Suffers" »

Many investors, both individuals and corporations, were misled by their brokers and harmed during the credit crisis. For various reasons, however, many such investors have not yet taken action to recover their losses. Some have delayed taking action in order to see whether the misconduct warranted legal action while others just put it off until a later time. Investors need to appreciate that time is running out on their claims, and they should act now or forever hold their peace.

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Two subsidiaries of SunTrust Banks, SunTrust Robinson-Humphrey and SunTrust Investment Services have agreed to pay a combined total of $5 million to settle FINRA charges that they misled clients about the liquidity risks of auction rate securities, according to an article in the Atlanta Journal by J. Scott Trubey entitled “Regulator fines two units of SunTrust.”

Continue reading "SunTrust Settles Auction Rate Securities Case with Regulators" »

Raymond James Financial has agreed to buy back $300 million in auction-rate securities from clients and pay a fine of $1.7 million as part of a settlement the Securities and Exchange Commission and the states of Florida, Texas, Indiana, Missouri, New York, North Carolina, Pennsylvania and South Carolina, according to Bruce Kelly’s InvestmentNews article entitled “Raymond James to pony up $300M to buy back ARS.” The agreement reportedly calls on Raymond James to extend an offer to repurchase the securities within 30 days, and leave it open for 75 days.

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A U.S. district court judge granted Morgan Keegan’s motion for summary judgment, dismissing the Securities and Exchange Commission allegations that the brokerage firm misled investors in connection with its sales of $2.2 billion in auction-rate securities, according to an InvestmentNews article entitled “SEC claim that Morgan Keegan misled ARS investors is nixed,” and David Benoit’s and Suzanne Barlyn’s Wall Street Journal article entitled “Morgan Keegan Judge: No Fraud.”

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Best-selling “Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led To Economic Armegeddon,” by Gretchen Morgenson and Joshua Rosner, “calls out greedy guys behind mortgage mess,” according to a USA Today book review by Kathryn Caravan. See also “Home Truths,” by James Freeman of the Wall Street Journal. Both reviews provide examples of how the book peels back layer after layer of a bad onion to reveal how a nice-sounding idea (home ownership for all) turned into a house of cards that was doomed to collapse, after being propped up by private greed and public corruption.

Continue reading "The Subprime Mortgage Mess: How the American Dream Turned into a Nightmare" »

Defense-minded institutions that have long remained on the sidelines when defrauded have finally woken up and are jumping on the plaintiff-recovery bandwagon as they seek to protect themselves against a variety of wrongdoing, according to Vanessa O’Connell’s Wall Street Journal article entitled “Company Lawyers Sniff Out Revenue.” These actions include waves of claims against Wall Street financial institutions for fraud in the sale of mortgage backed securities, CDOs and related exotic investments.

Continue reading "Institutional Investors Are Filing Big Claims Against Financial Services Firms" »

A federal appellate court has denied Credit Suisse’s attempt to overturn a $431 million arbitration award in favor of STMicroelectronics NV in a case involving auction rate securities, according to Ian Thoms’ Law360 article entitled “2nd Circ. Downs Credit Suisse Appeal Of $431M Award.”

Continue reading "Huge Auction Rate Securities Award Against Credit Suisse Upheld" »

A Virginia bankruptcy court is considering a proposed $14.3 million settlement to be paid by SunTrust Banks Inc. over its sale of auction rate securities to LandAmerica 1031 Exchange Service Inc. (“LES”), according to Hilary Russ’s Law360 article entitled “$14.3M Deal Ends LandAmerica, SunTrust ARS Dispute.”

Continue reading "SunTrust Offers $14.3 Million to Settle an Auction Rate Securities Case" »

Raymond James Financial claims that it would face a loss of $25 million to $50 million if it is forced to immediately repurchase auction-rate securities that it sold to clients, according to an InvestmentNews article by Bruce Kelly entitled “ARS mess could cost Raymond James up to $50M.” That would cut into the firm’s total revenues of over $1 billion for 2010, as well as the average payout of $311,513 for each of the firm’s 3,237 registered representatives in 2010, according to InvestmentNews’ B-D Data Center.

Continue reading "Auction Rate Securities Update - Raymond James" »

Wells Fargo Securities LLC is the subject of an investor class action lawsuit alleging that it violated intended third-party beneficiaries of an auction rate securities settlement with the SEC by refusing to buy back auction rate securities from trusts that purchased and held those securities as trust property, according to a Law360 article by Richard Vanderford entitled “Wells Fargo Sued Over $7B Wachovia ARS Settlement.”

Continue reading "Wells Fargo's Auction Rate Securities Woes Continue" »

A federal judge has ruled that an institutional investor that lost over $200 million in auction rate securities sold by brokerage firm Deutsche Bank Securities can also bring a claim against that firm’s parent company, Deutsche Bank AG, according to a recent BNA article entitled “Deutsch Bank Loses Bid to Dismiss Control Person Claims by ARS Investor.”

Continue reading "Institutional Investor in Auction Rate Securities Allowed to Proceed with $200 Million Claim Against Deutsche Bank" »

If you are an investor who lost money in the financial crisis, your stockbroker or investment advisor may owe you money. There are a variety of legal claims that can be brought for investment malpractice, ranging from fraud and misrepresentation to making unsuitable investment recommendations. But there are also legal deadlines for bringing such claims, and time may be running out if you have not yet discussed your options with a lawyer who handles investor rights claims.

Continue reading "Victims of Investment Malpractice or Other Financial Misconduct During the Recent Financial Crisis May Be on the Verge of Losing Legal Rights" »

While many investors who lost money when the auction rate securities market collapsed in 2008 have now been made whole by regulatory settlements and redemptions, others have not been as fortunate and are still holding on to illiquid securities. Because regulatory settlements focused on the worst offenders in the industry, not all firms that sold auction rate securities were included in the settlements. Furthermore, most of the regulatory settlements have only benefited smaller investors leaving many corporate, institutional and other investors to fend for themselves. According to Craig T. Jones of Page Perry LLC in Atlanta whose firm has represented many large investors in auction rate securities cases, “we are continuing to file arbitration claims for investors nearly 3 years after the market failure. A lot of investors have patiently waited to be made whole, and now that the statutes of limitations are starting to run out, they are realizing that they must take action in order to protect themselves legally.”

Continue reading "Large Investors Who Have Sustained Losses on Auction Rate Securities Investments Need to Take Action" »

$130 billion of retail and institutional investor money is still being held in auction rate securities over two years after the $330 billion auction rate market failed and froze, according to Daisy Maxey in her Wall Street Journal article, “Still Frozen After All These Years.” But just as the Paul Simon song modulates from gloom into glee at the line, “But I would not be convicted by a jury of my peers…,” there may be a way out for ARS holders who are ineligible for the buy-backs some firms have agreed to as a result of their settlements with regulators.

Continue reading "Many Auction Rate Securities Investors Remain Left Out in the Cold" »

Just last month (August 2010), a panel of arbitrators acting under the sponsorship of the Financial Industry Regulatory Authority (FINRA) ordered UBS Financial Services to pay $80.8 million as consequential damages to a corporate investor in Student Loan Auction Rate Securities – an amount equal to more than ten times the amount of the investment, according to a recent Wall Street Journal article by Randall Smith.

The investor, Kajeet, Inc., a marketer of cellphones for kids, had requested an award of $110 million for damage to its business when its cash was frozen in auction-rate securities in early 2008.

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A Financial Industry Regulatory Authority (FINRA) arbitration panel has ordered Raymond James & Associates, Inc. and one of its registered representatives to pay $925,000 to a Texas couple who purchased $1.4 million of municipal auction rate securities issued by Jefferson County, Alabama, according to August 26th articles in InvestmentNews by Bruce Kelly (“Raymond James pays more auction rate claims”) and in the Wall Street Journal by Suzanne Barlyn (“Raymond James Forced to Buy Back Securities”).

Continue reading "Raymond James' Auction Rate Securities Problems Mount" »

On July 30, 2010, Judge Michael D. Johnson of the Superior Court of Fulton County, Georgia, confirmed and upheld a December 2009 award issued by an Atlanta-based Financial Industry Regulatory Authority (FINRA) arbitration panel ordering SunTrust Robinson Humphrey, Inc. (SunTrust) to pay over $4.1 million in damages (including punitive damages, attorneys’ fees and costs) to a former registered representative based on a claim of wrongful termination and malicious defamation in annotating the claimant’s Form U-5 (a regulatory filing) to indicate that he had been “permitted to resign” for “failure to follow firm sales practice policy.”

After the award was issued, SunTrust filed a motion to vacate (i.e., throw out) the award, which Judge Johnson denied at the same time that he confirmed the award.

Continue reading "Georgia Court Upholds $4.1 Million Damage Award Against SunTrust Robinson Humphrey for Terminating and Defaming a Broker who Sold Auction Rate Securities" »

A Financial Industry Regulatory Authority (FINRA) arbitration panel has ordered UBS AG to pay $80.8 million to a Maryland cellphone marketer for lost profits when its cash was frozen in auction-rate securities in early 2008, according to an August 4, 2010 Wall Street Journal article by Randall Smith, “UBS to Pay $80 Million in Auction-Rate Case.”

Continue reading "Arbitration Panel Renders an $80 Million Award Against UBS for Improper Sales of Auction Rate Securities" »