Bloomberg is reporting that the SEC’s recent fraud action against the State of New Jersey may be the first of many such suits targeting public officials who raised money in the $2.8 trillion municipal bond market. New Jersey agreed to settle the fraud charges on August 18, 2010, the same day they were filed by the SEC.
Continue reading "More Municipal Fraud Charges Ahead?" »
The State of New Jersey has the dubious honor of being the first U.S. state ever to be charged with violating federal securities laws, according to an article in CNNMoney by Ben Rooney, “SEC sues New Jersey for fraud.” The state agreed to settle the fraud charges on August 18, 2010, the same day they were filed by the SEC.
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Investors who purchased MAT/ASTA municipal arbitrage funds between 2002 through 2005 may mistakenly believe that they have waited too long and it is too late to pursue a claim for damages against Citigroup. Fortunately, this is not the case.
The law firms of Page Perry, LLC and Robert Wayne Pearce, P.A. are proud to announce their agreement to join together in investigating and pursuing MAT/ASTA municipal arbitrage cases against Citigroup and its affiliates. Both firms have extensive experience in prosecuting MAT/ASTA cases and already have been involved in representing almost fifty (50) MAT/ASTA clients between them.
In a recent Financial Industry Regulatory Authority (FINRA) arbitration, a South Florida panel specifically found that Respondents Citigroup Global Markets, Inc. f/k/a Citigroup Investment Services, and Citigroup Alternative Investments, LLC were guilty of negligent mismanagement of MAT/ASTA funds, as well as negligent supervision of their registered representatives. This award should open the door for many investors to recover the damages they sustained, particularly in early MAT/ASTA deals.
Investors in the MAT Municipal Arbitrage Funds sold by Citigroup/Smith Barney recently won a total of $2.1 million in separate arbitration proceedings and these awards may just be the tip of the iceberg. In fact, Wall Street brokerage firms are being ordered to pay millions to investors who incurred significant losses on what they thought were low-risk investments, but were, in fact, leveraged municipal arbitrage hedge funds, according to a Wall Street Journal article by Randall Smith (“Crisis-Era Munis Haunt Wall Street,” July 27, 2010).
Continue reading "Investors Are Winning MAT/ASTA Claims Against Citigroup/Smith Barney" »
Wall Street brokerage firms are being ordered to pay millions to investors who incurred significant losses on what they thought were low-risk investments, but were, in fact, leveraged municipal arbitrage hedge funds, according to a Wall Street Journal article by Randall Smith (“Crisis-Era Munis Haunt Wall Street,” July 27, 2010).
Continue reading "First Republic Municipal Arbitrage Investors Recover Substantial Damages" »
Historically, municipal bonds have been at the low end of the risk spectrum, but economic realities are changing that assumption. According to a May 28 article in CNNMoney by Sara Behunet titled “Three American cities on the brink of broke,” in 2009, 183 municipal issuers defaulted on $6.4 billion of bond payments – up from 31 defaults on $348 million in 2008. That’s an 1800% increase in dollars and a 590% increase in municipalities in default. This alarming trend is expected to continue, according to the article.
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Default by a municipal bond issuer has been an exceedingly rare occurrence, but a number of signs suggest that the municipal bond market may be on shakier ground than anyone dreamed possible, according to a recent SmartMoney article by Russell Pearlman, “Municipal Bonds: Derailed.”
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In “Paying a price for risky schemes,” Atlanta Journal Constitution reporter Russell Grantham presents an excellent overview of how at least a dozen metro governments and nonprofits that issued debt were whipsawed by the “shadow banking system” – the freezing of the auction rate securities markets and complex derivative contracts called swaps. As a result, they have been forced to pay or owe as much as $394 million that they did not expect to, according to the article, which identifies the borrowers as:
“Atlanta airport, Atlanta water/sewer, Underground Atlanta, Children’s Healthcare of Atlanta, Piedmont Healthcare, Woodruff Arts Center, Georgia Tech, Georgia State University, DeKalb Medical Center, Emory University, Gwinnett Medical Center, Marietta, MARTA, Power South Energy Cooperative, and Cobb County Kennestone Hospital Authority. “
The $2.8 trillion municipal bond market, long considered one of the safest havens for investors, is actually fraught with risk, according to a recent CNBC article titled “More Cities on Brink of Bankruptcy.”
Continue reading "Have Municipal Bonds Become High Risk Securities?" »
Hundreds of state and local governments are losing big money as a result of interest-rate swaps they made with Wall Street Banks, according to a recent Wall Street Journal article by Aaron Lucchetti.
A Financial Industry Regulatory Authority (FINRA) arbitration panel has awarded damages to the Gale family as a result of losses sustained in Lehman-backed Main Street Natural Gas Bonds sold to them by their broker. The panel granted rescission, which is to say it ordered the brokerage firm to take back the bonds and reimburse the Gales the purchase price they paid for the bonds. On top of that, the panel awarded $11,000 as “compensatory damages” (which probably represented interest on the purchase price) and $300 for reimbursement of the non-refundable portion of the FINRA filing fee.
Continue reading "Investors Recover Losses on Main Street Natural Gas Bonds" »
Recently released figures show that colleges across the nation suffered a 19 percent decline in their endowments in 2009. Some school endowments have reported even steeper declines, including Georgia Tech (26%), the University of Georgia Foundation (23%), and Emory University (21%). While the financial markets as a whole experienced a significant downturn in 2008, the stock market began rebounding in early 2009 and many investment portfolios have since regained much of their value—but not all. According to an article in the Atlanta Journal Constitution, Emory has had to cut its expenses by $50 million a year and eliminated 500 administrative positions, despite having one of the richest endowments in the country. Smaller schools with more modest endowments are in a more precarious position, because a single bad investment may threaten the very survival of the institution.
Continue reading "Have College Endowment Funds Been Victimized by Unscrupulous Brokers?" »
According to Don Schreibner Jr., they have. See his Jan. 3, 2010 InvestmentNews article, “It’s time to sell municipal bonds.” Mr. Schreibner is president and chief executive of WBI Investments, a money management firm.
Continue reading "Have Municipal Bonds Become High Risk Investments?" »
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" »
Investors and their accountants should scrutinize investment portfolios to see whether they contain Main Street Natural Gas Bonds that were guaranteed by Lehman Brothers Holdings, Inc. These bonds were not only guaranteed by Lehman Brothers, they were issued to finance the cost of acquiring a thirty-year supply of natural gas from Lehman Brothers Commodities Services Inc., a wholly-owned subsidiary of Lehman Brothers, as the designated Gas Supplier. Thus, the viability of these Lehman-backed bonds was directly dependent upon the viability of Lehman Brothers. In September 2008, Lehman Brothers filed for bankruptcy, and Lehman-guaranteed Main Street Natural Gas Bonds plummeted in value, but there were numerous red flags and storm warnings well before then.
Continue reading "Investors Sue to Recover Losses on Main Street Natural Gas Bonds" »
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" »
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.
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" »
