Posts Tagged ‘Business’

Variable Annuity Contract Thief Gets 10-Year Sentence – Hartford and Nationwide Life Insurance Companies

January 25th, 2012

In October 2011, a former Agent for Hartford and Nationwide Life Insurance companies pled guilty to charges of theft and received a 10-year prison sentence. By Matthew J. Ryan’s own admission, he exploited weaknesses in the insurance companies’ practices and procedures in order to steal from the variable annuity contracts Hartford and Nationwide issued to his clients.

Ryan created fake companies and bogus “transfer forms” which he had his clients sign. The bogus forms gave Ryan the ability to divert funds from his customers’ variable annuities and, ultimately, into his own accounts. Hartford and Nationwide honored thousands of Ryan’s transfer requests, despite the fact that the fraudulent documents were obviously illegitimate. The fraudulent documentation was not detected until 2010. By that time, however,  the former
agent had diverted an excess of $3M over a period of five years.

Two additional insurance companies have settled claims made by Ryan’s fixed variable annuity customers. Currently, combined suits of more than $3M against Nationwide and Hartford are pending.

Are you a former client of Mathew J. Ryan? Do you believe that your variable annuity contract assets have been or are being illegally diverted or invested unsuitably? If the answer to any of
these questions is yes, contact investment fraud lawyer Daniel Carlson at Carlson Law in San Diego for a free consultation. As an experienced investment recovery attorney, Mr. Carlson may be able to help you recoup all or part of financial loss.

Enhanced by Zemanta

Tags: , , , , , , , , , , , , , ,
Posted in Broker Fraud, Fiduciary Duty Breach, Investment Fraud, Securities Arbitration, Securities Fraud, Securities Litigation, Stock Loss | Comments (1)

Principal Protected Notes, Lehman Brothers and UBS Financial Services Arbitrations

June 14th, 2011
Head office of Lehman Brothers in Frankfurt, G...

Image via Wikipedia

A recent class action suit against Lehman Brothers as well as an enforcement proceeding against UBS Financial Services by New Hampshire has encouraged investors to hire investment recovery litigators and pursue claims against firms selling Lehman Brothers principal protected notes in an attempt to recoup their financial losses. According to New Hampshire’s claim, UBS engaged in broker malpractice by failing to disclose the risky nature of principal protected notes (PPNs). As a result, New Hampshire investors lost 2.5 million.
Principal Protected Notes
Principal protected notes (PPNs) are structured investments that have been around for years. Like all structured investments, PPNs connect CDs and fixed income notes to the performance of currencies, commodities, equities and/or other assets. Structures investment products are legitimate investments, and principal protected notes are a legitimate form of them.
Structured investments may have partial or full principal protection. Some pay a variable sum at their maturity. Others pay by coupons that are connected to a particular index or security. Given their risk and return reports, structured investments in general are appropriate for the portfolios of many investors.
In short, they are unsecured promissory notes connect to referenced securities, and as such they are not without risks. Unfortunately, according to claimants, investment firms committed broker malpractice by marketing these products to customers as safe investment alternatives.
Marketing of PPNs to Retail Investors
Beginning in 2005, PPNs became a particularly popular type of structured investment for retail customers. Noting their increased sales to non-institutional customers, the Financial Industry Regulatory Authority (FINRA) expressed concern that brokers were committing a breach of fiduciary duty by marketing principal protected notes to retail customers as “conservative” investments with “predictable current income.” In fact, the agency issued a notice to brokerage firms in September of 2005 that clear guidance regarding the risks involved in these financial products should be given to retail customers.
PPNs, Lehman Brothers & Bankruptcy
When PPNs mature, investors typically receive a return on the principal from the borrower. In this case, the borrower was Lehman Brothers. Unfortunately for investors, when Lehman Brothers filed for bankruptcy, even the principal on these notes became unprotected. Lehman’s PPN obligations on the notes were unsecured–and behind secured notes in the creditor bankruptcy line up.
The Case Against Lehman Brothers
Unsurprisingly, investors are now seeking to recover their financial losses. Although the specific allegations of claimants vary, all assert that Lehman Brothers, selling brokerages like UBS Financial Services and others, committed broker malpractice by falsely marketing PPNs as conservative investment product alternatives.
Specifically, claimants allege, these PPN products were depicted as 100 percent principal protected if investors held them to maturity.
Brokers also presented the PPNs as principal protected if the indices underlying them held their value. Furthermore, firms and brokers did not warn customers of the risks involved in investing in PPNs, nor did they warn them about what would happen if the underlying backer of the notes, Lehman Brothers, defaulted. Customers were also not made aware of the Lehman Brothers’ decline and that its fall could affect their investment’s value, making it in effect worthless.
It’s also been alleged that firms continued to push PPNs after Bear Stearns collapse, a failure which should have been a clear indicator or “red flag” of the risks involved in investing in banks that hold large numbers of subprime mortgages. It’s also been alleged that firms pushed PPNs on retail customers at a time when they themselves were reducing their PPN holdings. The accuracy or falsity of these claims has yet to be determined. But if firms did indeed recommend PPNs while reducing their own holdings, litigators are likely to claim broker fraud rather than simply failure to disclose.
Did your financial advisor mislead you into investing in PPNs, causing you to suffer financial loss as a result? If so, you need the advice of an investment recovery counsel. Contact Carlson Law in San Diego at 619-544-9300 today for a free consultation.

Tags: , , , , , , , , , , , , , , , , , , , , , ,
Posted in Broker Fraud, Fiduciary Duty Breach, Investment Fraud, Negligent Misrepresentation, Securities Arbitration, Securities Fraud, Securities Law, Securities Litigation, Stock Fraud, Stock Loss | Comments (2)

Justice for Morgan Keegan Investors an Ongoing Struggle

May 23rd, 2011
Seal of the U.S. Securities and Exchange Commi...

Image via Wikipedia

Morgan Keegan & Company, Inc., a financial services division of Regions Financial Corporation, has been the subject of numerous regulatory investigations in the last few years.

Originally founded by Allen B. Morgan, Jr., James Keegan and two other businessmen in 1969, Morgan Keegan didn’t grow on a large scale until the 1980s when it began acquiring other brokerage houses, beginning with the Mississippi-based Geary & Patterson. By 1990, it had purchased a total of four investment houses, and it was hungry for more. From 1992 to 1997, it bought seven additional firms as well as a sports agency, Athletic Resource Management.

Morgan Keegan itself was purchased in 2001 by Regions Financial. Regions incorporated its brokerage unit into the firm, creating a division specializing in asset management, investment banking and securities brokerage.

In April 2011, the Financial Industry Regulatory Authority (FINRA) as well as various state regulatory agencies and the Securities and Exchange Commission (SEC) filed civil suits against Morgan Keegan.
According to many investor complaints filed with FINRA, State and SEC suits and investigations, from 2004 to 2007, the company marketed Select Intermediate Bond Funds and Select High Income Funds as low-risk securities to investors who had requested safe, short-term corporate commercial paper investments. Furthermore, Morgan Keegan did not inform clients that most of their assets (over 50 percent) were invested in sub-prime, illiquid, untested investment structures, such as mortgage-backed securities and collateralized debt obligations (CDOs).

When the mortgage market collapsed in 2007, investors lost big. According to the SEC, the company and two of its top execs, Thomas Weller and James Kelsoe, purposely hid the plummeting value of their risky investments through 262 so-called “price adjustments.”

The result of Morgan Keegan’s blatantly behavior was predictably catastrophic for their clients. Thousands of investors, hoping to recoup their financial loss, have filed or will file arbitration claims against Morgan Keegan with FINRA.

Unfortunately, although regulators unanimously agree that Morgan Keegan committed acts of egregious fraud that financially harmed clients, investor claimants in FINRA proceedings, generally individual or family trust investors, have thus far experienced very mixed success in recovering their losses. Why? They’ve consistently been denied access to documents necessary to their cases by FINRA arbitration panels.

Despite the fact that Morgan Keegan has publically admitted it’s been the subject of multiple regulatory investigations, the thousands and thousands of documents relating to these investigations have been denied to claimants and their counsel because many arbitrators have refused to order that Morgan Keegan produce this potentially damning paperwork. Consequently, time and time again, arbitration panels have rendered decisions on claims without having all the relevant facts.

Clearly, this must change if investors are to receive just compensation for their financial loss. And with persistent, long-term petitioning by defrauded investors and their lawyers, no doubt it will change.

If you feel you have been a victim of investment fraud or negligence, contact Carlson Law in San Diego. Carlson Law specializes in investment recovery litigation and arbitration. Call 619-544-9300 now for a free consultation.

Tags: , , , , , , , , , , , , , , , , , , ,
Posted in Broker Fraud, Fiduciary Duty Breach, Investment Fraud, Negligent Misrepresentation, Securities Arbitration, Securities Fraud, Securities Law, Securities Litigation, Stock Fraud, Stock Loss | Comments (2)