Sales of poorly understood, non-conventional investments tend to increase in low-yield environments like the present. Reverse convertible notes are an example of this dangerous trend, says Jeff Benjamin in his recent InvestmentNews article, “Reverse convertible notes warrant sales scrutiny.”
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?" »
The Commonwealth of Massachusetts Securities Division recently filed a Complaint (“Complaint”) that makes some startling allegations about Securities America’s actions in selling Medical Capital Notes. The collapse of the Medical Capital investments has left investors nationwide in the hole to the tune of about $1 billion.
Continue reading "Securities America Faces a New Wave of Medical Capital Problems" »
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 10,173 and, on Monday rose 24 points.
• On Tuesday, the Dow Jones Industrial Average fell 3 points.
• On Wednesday, the Dow Jones Industrial Average jumped 42 points.
• On Thursday, the Dow Jones Industrial Average plunged 116 points.
• On Friday, the Dow Jones Industrial Average fell 53 points and closed the week at 10,067.
Continue reading "Page Perry's Market Monitor - January 29, 2010" »
The Massachusetts Securities Division recently filed a complaint against Securities America related to its private offerings of Medical Capital Notes. The collapse of the Medical Capital investments has left investors nationwide in the hole to the tune of about $1 billion.
Continue reading "Evidence Against Securities America Mounts in Medical Capital Cases" »
Former Credit Suisse broker Eric Butler, who was convicted of fraud by a New York federal court jury in August, was sentenced last week to five years in federal prison. Along with former Credit Suisse colleague Julian Tzolov, Butler was accused of making misrepresentations in the sale of auction rate securities, claiming that they were backed by federally-insured student loans when in fact they were backed by high-risk collateralized debt obligations, or CDOs. Prosecutors alleged that Butler and Tzolov had switched their clients to the CDO-backed securities because they paid higher commissions.
Continue reading "Broker Sentenced for Fraud in Selling Auction Rate Securities Issued by CDO's" »
The first public hearings by the Financial Crisis Inquiry Commission were notable for what did not happen. The well-prepared Wall Street bankers faced the cameras with apparent humility, parried Commission clunkers with their own platitudes, and left pretty much unperturbed. Those who expected the reprise of the 1930s Pecora hearings must have been disappointed. “Pecora’s revelations enraged the public and stampeded Congress into creating the SEC and separating commercial banks from investment banks,” according to Paul Wiseman in his USA Today column, “Depression-era star muckraker shapes Wall Street inquiry.” He added: “In public hearings, Pecora squared off against the elite financiers of the age, pointing at them with his cigar and coaxing them into what [Senate historian Donald] Ritchie calls ‘startling admissions of wrongdoing.”
Wall Street banks like Goldman Sachs, Deutsche Bank, Morgan Stanley, as well as smaller firms like Tricadia Inc., and certain of favored hedge fund clients that were tipped off by the banks, reaped huge profits by shorting (betting against) “synthetic” collateralized debt obligations (CDOs) linked to residential mortgages, which the banks created and sold to other clients, according to Gretchen Morgenson and Louise Story in their recent New Times article, “Banks Bundled Bad Debt, Bet Against It and Won.”
So many investors have lost money in investments mis-marketed under assurances the investment was “principal-protected,” or “capital guaranteed,” that the Financial Industry Regulatory Authority (FINRA) has found it necessary to issue a notice (Notice to Member 09-73) reminding brokerage firms of their sales practice duties when recommending investments such as so-called Principal Protected Notes. These securities are structured products that are typically comprised of a zero-coupon linked to the performance of some other asset. That asset might be, for example, a derivative product based on a stock index or a basket of securities as obscure as the Brazilian Real-U.S. Dollar exchange rate and the price of copper.
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 10,329 and, on Monday, the market rose 85 points.
• On Tuesday, the Dow Jones Industrial Average jumped 51 points.
• On Wednesday, the Dow Jones Industrial Average drifted up 2 points.
• On Thursday, the Dow Jones Industrial Average increased 54 points and closed the week at 10,520.
• On Friday, the markets were closed for Christmas.
Continue reading "Page Perry's Market Monitor - December 25, 2009" »
If you were sold Main Street Natural Gas Bonds that were guaranteed by Lehman Brothers, you are likely to have a compelling claim to recover any losses that you sustained when Lehman Brothers went bankrupt. These bonds were sold to income oriented investors as relatively safe investments. However, the brokerage firms that sold them, in many cases, did not do their homework. If they had, they would have realized that these bonds were totally inappropriate for almost any investor.
Continue reading "Investor Alert: Main Street Natural Gas Bonds Backed by Lehman Brothers" »
A Columbia, South Carolina-based Financial Industry Regulatory Authority (FINRA) arbitration panel awarded damages to a South Carolina resident as a result of losses sustained in Lehman Brothers Holdings Inc. principal-protected notes sold to her by UBS. The panel awarded Patricia Flanagan $150,000 in compensatory damages, plus an additional $35,000 designated as costs, plus interest. Ms. Flanagan had requested compensatory damages in the amount of $300,000.00, plus interest, costs, expenses, attorney’s fees, expert witness fees, FINRA fees, and punitive damages. The Panel assessed $6,075.00 of the hearing session fees to Claimant and the same amount to be paid by UBS. No attorney’s fees, expert witness fees or punitive damages were awarded.
The Receiver for Medical Capital Holdings Inc. issued his Third Report on October 9, 2009. The most recent report did contain some additional information but was, in most part, a recap of what was included in the Second Report. The reports can be found at http://www.medicalcapitalreceivership.com. Nothing in the Third Report indicates any greater likelihood of recovery for investors directly from Medical Capital. As indicated in the reports, out of the 104 medical accounts receivable clients listed, 53 of the accounts, totaling some $542,894,528, appear to no longer exist.
Continue reading "Medical Capital Holdings Alert - Investors Face Tremendous Losses" »
The Receiver for Medical Capital Holdings Inc. issued his Second Report on September 7, 2009. According to the Report the estimate for the amount of money raised through the six offerings is $1.778 billion with $268 million in administrative fees taken and a staggering $1.079 billion still due investors. On July 16, the SEC charged Medical Capital Holdings Inc. with fraud related to the sale of $77 million of private securities in the form of notes.
According to a recent article in InvestmentNews, a former executive of Securities America feared a “panicked run on the bank” for clients who held securities issued by Medical Capital Holdings Inc. On July 16, the SEC charged Medical Capital Holdings Inc. with fraud related to the sale of $77 million of private securities.
