Posts Tagged ‘financial losses’

Attention Facebook IPO Stock Fraud Victims: Private Arbitration May Be an Option

June 18th, 2012

In the Initial Public Offering (IPO) class action suits of the 1990s, individual shareholders claimed that underwriters pushed them to buy tech stocks, driving up prices for the benefit of institutional clients who then dumped their holdings when prices were high, netting huge profits which they shared with investment banks and leaving lone investors with deflated stocks and hefty financial losses.

It took until 2009 for the IPO class action suit to be settled for $586 million.

 

Have Individual Investors Been Screwed Over Once Again? Probably.

Facebook logo Español: Logotipo de Facebook Fr...

Facebook logo Español: Logotipo de Facebook Français : Logo de Facebook Tiếng Việt: Logo Facebook (Photo credit: Wikipedia)

What did Wall Street learn from the IPO debacle of the ‘90s? Not much, apparently.

Instead of maintaining an even playing field for all investors, class action suits recently filed allege that Defendants involved in the Facebook IPO favored certain institutional players and “preferred investors,” with underwriters privately providing them with information regarding the earnings stream for Facebook —information that differed from that published in Facebook’s prospectus and available to the general investor.

Unsurprisingly, a steadily increasing number of lawsuits are being filed against Facebook and the banks that underwrote its IPO, with claims likely to top $100 million.

 

Should Individual Investors Pursue Separate Suits? It Depends.

If you’re an investor who has suffered financial loss due to the alleged Facebook IPO stock fraud, you may want to join a class action, or you may be able to pursue an individual claim depending on the facts on your case.  If you bought the Facebook IPO from Morgan Stanley, J.P. Morgan, Goldman Sachs, Bank of America or one of the “preferred investors” allegedly tipped about Facebook lower revenue streams, a FINRA arbitration may be your best bet to recover your losses.

 

Contact Carlson Law to evaluate your claim.

Carlson Law is reviewing claims for investors and closely following the SEC, Financial Industry Regulatory Authority, Commonwealth of Massachusetts, and congressional panels reviewing what happened in the IPO.

If you lost money due to Facebook IPO alleged stock fraud, contact Carlson Law today at 619-544-9300 to review your claim and advise you about your best opportunities for recovery.

Tags: , , , , , , , , , , , , , , , , ,
Posted in Stock Fraud | Comments (0)

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)

FINRA CEO Says Brokers Must “Push and Pull” for Private Placement Information

June 6th, 2011

Often, investment advisors, stockbrokers and brokerages who unsuitably push Reg. D Private Placements on investors claim that any financial losses investors subsequently experience occur despite their due diligence. However, these private investments pay high fees that can induce some financial professionals to look the other way, focusing on the fifteen percent fee rather than the best interests of their clients in recommending these high-risk investments without the required due diligence having been performed. With the smell of large commissions and enormous fees in the air, it’s probably easy for brokers to rationalize away all of the drawbacks, risks, and any lack of appropriate due diligence for private placement investments.

Luckily for investors the Financial Industry Regulatory Authority (FINRA) has decided to come down hard on the sales of Reg. D Private Placements. At a yearly meeting of the agency, FINRA CEO and Chair Richard Ketchum explained that in the future brokers who promote and sell private placements must “push and pull” for the necessary due diligence information in order to avoid liability and assure that they’re making sound investment recommendations for their clients. That means doing a lot more than reading basic investment documents and attending “canned” meetings if questions needed to be asked.

At Carlson Law we pursue brokerage firms and financial professionals who recommend inappropriate, high-risk private placements to clients. For elderly investors, conservative investors, and those with a net worth of less than $1 million or a yearly income of less than $200,000, private placements may be per se inappropriate investments. If you’ve suffered financial loss due to stockbroker malpractice, contact Carlson Law in San Diego today at 619-544-9300.

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)