Posts Tagged ‘fraud’

Signs of Investment Fraud

May 30th, 2012

Investment fraud can happen to anyone. To protect against financial loss, it’s imperative that investors become active participants in their financial wellbeing, learning as much as they can about their investments, monitoring their portfolios diligently, and being alert for signs of investment fraud.  A few signs to watch for:

Sure Things
Financial advisors who guarantee that an investment will perform in a certain way, i.e. often provide high returns in a short time, should immediately be suspect. No investment is a sure thing; all of them carry risks. Any broker who tells an investor otherwise is being less than honest.

Undue Sales Pressure
Trustworthy brokers do not pressure clients into investments. Even if no fraud is involved, such behavior is inappropriate. Investors should avoid stockbrokers who urge them to make snap decisions, tell them that they must “act now,” or apply other heavy-handed sales techniques.

Inexplicable Complexity
Investors should not sink their money into investments they cannot comprehend. All aspects of any investment, including how it works and what its risks are, should be understandable. Investments that a broker claims are successful because of their intricacy—a complexity the financial analyst cannot explain—should be considered suspect investments.

Consistent Pay Outs
All investments, even those that are low risk, go up and down in value. That’s their nature. When returns remain unnaturally consistent or increase in value despite negative economic conditions, that’s a red flag that an investor may have

The unsustainable geometric progression of a c...

The unsustainable geometric progression of a classic pyramid scheme, from Securities and Exchange commission report on pyramid schemes. (Photo credit: Wikipedia)

invested in a pyramid scheme, a ponzi scheme or some other investment fraud scheme.

Account Discrepancies
Unauthorized activity, missing money and other problems with a client’s account statement may simply be mistakes. However, they could also be signs that the broker is churning the account or engaging in some other type of investment fraud. To lessen this possibility, investors should monitor their account statements.

Unlicensed Brokers
Investors who do business with unlicensed brokers run a high risk of fraud. Investment scams are often perpetrated by unlicensed brokers who sell financial products that have not been registered with the Securities and Exchange Commission (SEC) or issued by a legitimate agency. Unregistered products may include stocks, bonds, notes and hedge funds, among others.

Missing Documentation
Just as investors should avoid doing business with unlicensed brokers, they should also avoid making investments that have little or no documentation. Lack of documentation is a sign that an investment may be unregistered. For instance, if a mutual fund or a stock has no prospectus, or a bond has no offering circular, it might be an unregistered security. Likewise, stocks that do not have stock symbols may be unregistered.

Investor should also keep in mind, however, that not all legitimate investment products are registered with the SEC. Regulation D products, for example, are exempt from registration, as are those issued by the federal government or a state or municipal government.

If you think that you have been the victim of investment fraud, contact Carlson Law today for a free consultation at 619-544-9300. A securities fraud attorney may be able to help you recover some or all of your financial losses.

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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.

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Is It Really Too Late? Fraud, Statutes of Limitations & Recovering Investment Losses

May 26th, 2011
Wall Street, Manhattan, New York, USA

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Although it’s been three years since financial misconduct on Wall Street rocked the nation, investors still have opportunity to recoup some or all of their financial loss.

If you suffered financial loss during the recent crisis, your broker, brokerage or financial advisor may be legally responsible for that loss. A variety of legal actions can be brought against financial professioals for malpractice, such as negligent investment misrepresentation for making inappropriate investment product recommendations, intentinal securities fraud and inapropriate account turnover/excessive trading or “churning” to name only a few examples.

“Each state has different statutes of limitations for different kinds of claims,” explains Daniel Carlson of Carlson Law, a securities litigation firm in San Diego. “Your ability to file for damages depends on where you live and the kind of claims you have. While one state may have a three-year statute of limitations for all claims, others may have deadlines as long as 10 years for claims like breach of fiduciary duty. And in some states, the ‘discovery rule’ applies to fraud. That means the statute of limitations’ clock doesn’t start ticking until an investor ‘discovers’ he or she has been defrauded.”

Defrauded investors may also be able to file claims in more than one state. “It depends upon where you live, where you transacted business with your broker and whether the account agreement has a ‘choice of law’ provision indicating the state law that applies in the event of any claims,” Carlson says.

“And of course there’s more than one way to file a claim,” he adds. “If there are several options available, a good litigator will choose the state and the claims that give their clients the best chance of success.”

Did you experience financial loss due to your financial advisor’s misconduct? Did your broker lie to you about an investment? Did he or she give you advice inappropriate to your financial goals? Don’t wait any longer to fight for the compensation you deserve. Remember, legal deadlines do exist, and your time could be running out.

To discuss your options, contact Carlson Law at 619-544-9300 for a free consultation with an experienced investment recovery lawyer.

“Even if claims seem to have exceeded the applicable statute of limitations, defrauded investors should still contact an attorney,” Carlson advises. “By using all the legal means at their disposal, securities fraud attorneys can sometimes still recover client losses through arbitration even after a statute of limitations has expired.”

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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)

Did Wall Street Bankers Commit CDO Fraud?

May 25th, 2011
Goldman Sachs New World Headquarters

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In 2009, the Securities and Exchange Commission (SEC) began a civil fraud investigation of over a dozen banking firms that traded and sold mortgage-backed collateralized debt obligations (CDOs). This investigation has engendered subsequent probes into the behavior of Wall Street firms.

Did Wall Street bankers defraud investors by selling them CDOs in order to make a profit for themselves—and a few special clients—when the mortgage market collapsed? Federal prosecutors believe so. In fact, in the spring of 2010, they launched a criminal investigation into the matter, and it’s still ongoing.

Investigators allege that a number of major Wall Street banks (including Citigroup, Deutsche Bank, Goldman Sachs, J.P. Morgan Chase, Morgan Stanley and UBS) created CDOs in order to sell and then bet against (short) them in the event of a crash. These CDOs include Baldwin 2006-I and AB Spoke, which Morgan Stanley sold investors, and Carina, Cetus and Virgo, which Citigroup, Deutsche and UBS may have sold for fraudulent purposes.

New York’s Attorney General Andrew Cuomo has also begun an investigation into the behavior of Wall Street banks regarding CDOs. Investigators allege that Citigroup, Credit Agricole, Credit Suisse, Deutsche Bank, Goldman Sachs, Merrill Lynch, Morgan Stanley and UBS gave credit rating agencies misleading data in order to inflate CDO ratings. These agencies in turn have been harshly criticized and even sued for assigning high scores to numerous toxic CDOs.

Furthermore, the U.S. Attorney’s Office of Manhattan and the SEC are collaborating to determine if Wall Street banks misrepresented CDOs to their clients, failing to disclose pertinent facts when trading, marketing and selling them to clients.

Since hearings in Congress revealed that fraudulent conduct on Wall Street precipitated the nation into financial crisis, prosecutors have taken legal action against two traders for Bear Stearns without success. However, legislators are calling for more prosecutions, and criminal probes into Wall Street’s activities widening.

The SEC has subpoenaed Citigroup, Deutsche Bank, J.P. Morgan Chase and UBS, asking that they turn over a wide range of paperwork, including prospectuses and offering documents (final copies as well as drafts) and lists of investors associated with mortgage-related transactions. The SEC has also filed an action in federal court against Goldman Sachs, claiming that a trader on behalf of the company created an investment product designed to fail so that one of the company’s pet hedge-fund clients could bet against it and profit at the expense of less favored Goldman investors. Goldman is purportedly seeking to settle the case out of court.

From 2005 to 2007, diverse Wall Street banks issued CDOs totaling $1.08 trillion. The research firm Thomson Reuters reports that Citigroup, Deutsche Banks and Merrill Lynch issued the greatest dollar amount. J.P. Morgan, Morgan Stanley, UBS and Goldman were numbers five, seven, ten and 14 on the list, respectively.

If you believe that you’ve suffered financial loss due to CDO fraud, contact Carlson Law at 619-544-9300 for a free consultation today. The investment recovery litigators at Carlson Law are dedicated to getting justice for securities fraud victims.

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