Posts Tagged ‘Goldman Sachs’

High Frequency Trading Securities Fraud Class Action Filed Against “Flash Boys” Exchanges and Major Brokerages

May 22nd, 2014
English: A view from the Member's Gallery insi...

English: A view from the Member’s Gallery inside the NYSE (Photo credit: Wikipedia)

Many large brokerages, high speed trading firms, and U.S. stock exchanges were named as defendants in a securities fraud class action lawsuit filed by Providence, Rhode Island on April 18, 2014.  The Defendants in the high frequency trading securities fraud class action are accused of various types of conduct, including insider trading and manipulating trading within the U.S. securities markets.  The manipulation is alleged to have been achieved via high frequency trading based upon access to market information not available to the general investing public and other illegal conduct.

A few of the defendants targeted in the lawsuit include NASDAQ Stock Market, LLC, New York Stock Exchange LLC, Chicago Board Options Exchange Inc., BATS Global Markets, Inc. stock exchanges, a number of large brokerage firms, including Citigroup, Inc., Goldman Sachs Group, Inc., Morgan Stanley & Co. LLC and a number of high speed trading firms or “Flash Trading” firms.

Investors who purchased stock in the United States are being represented in a securities fraud class action.  The transactions at issue in the class complaint occurred from April of 2009 forward.  The complaint alleges the Defendants’ actions resulted in billions of dollars in damages to the investor class.  The securities fraud misconduct alleged against the class defendants includes:  contemporaneous trading, front-running, spoofing, and rebate arbitrage.  The lawsuit further explains that using certain devices and manipulations, the defendants were able to pursue false schemes and fraudulent courses of business that were intended to defraud investors who were trading securities.

Securities regulators, including the S.E.C., Justice Department and Commodities Exchange Commission are reviewing the high frequency trading industry independently of the Providence Class action filing last month.

The Providence high frequency trading class action and the ongoing regulator investigations into the high frequency trading industries potential for fraud and market manipulation will hopefully further uncover and bring to light trading and market practices by large market players that at best involve questionable conduct.  Securities regulators should act quickly to investigate and protect the general investing public from any questionable or illegal conduct by the trading and investment industry.

With billions of dollars in losses alleged and allegations of billions of dollars in gains by the Defendants, can a Hollywood movie be far off?   Stay tuned.

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Posted in Securities Fraud | Comments (0)

Goldman Exec’s Op-Ed NY Times Article Airs Investment Banking Firms Self Interest at its Clients’ Expense

April 9th, 2012

In a recent New York Times editorial, Goldman Sachs exec Greg Smith voiced his opinion on the real impetus behind stockbroker malpractice: the avarice of brokerage firms.  According to Smith, the greed of investment banking firms is so great that it impels them to put extreme pressure on stockbrokers to sell with the best interest of the firm in mind — without regard for the financial wellbeing of clients.  As stated by Mr. Smith:”My clients have a total asset base of more than a trillion dollars. I have always taken a lot of pride in advising my clients to do what I believe is right for them, even if it means less money for the firm. This view is becoming increasingly

Logo of The Goldman Sachs Group, Inc. Category...

Logo of The Goldman Sachs Group, Inc. Category:Goldman Sachs (Photo credit: Wikipedia)

unpopular at Goldman Sachs. Another sign that it was time to leave.”

 

Smith is not alone in his opinion, which is seconded by others in the world of finance, including Rall Capital Management’s Bob Rall, a fee-only advisor, and Russell G. Thornton, a VP at Wealthcare Capital.  According to Rall, wirehouse firms do not focus on yield to the client (YTC). Instead, they focus on selling their proprietary investment products. And when a broker focuses on his or her own interests and the interests of brokerage firms rather than on client interests, the result is often a breach of fiduciary duty and stockbroker malpractice.     

 What Is a Wirehouse Broker?

A wirehouse broker works for a wirehouse brokerage firm (a national firm that has numerous branches). Ordinarily, wirehouse brokers are full-service stockbrokers who offer clients an array of services, from researching investment opportunities to buying and selling products.  They are supposed to function as fiduciaries, not as sales reps for their firms.

 

Because wirehouse brokers have access to the numerous resources of the major brokerage house for which they work, including the house’s own investment products, they have long been considered superior to independent brokers—that is, until the financial debacle of 2007-08, which was precipitated by stockbroker fraud and the unethical practices of firms in pushing their proprietary investment products above more suitable client options.

Does Your Broker Put Your Financial Wellbeing First?

Today more than ever, investors must carefully examine the performance of their financial advisors in order to avoid investment loss.

Is your broker behaving more like a sales rep for a brokerage house than a fiduciary who is committed to your financial wellbeing? Is your broker aggressively pushing a firm’s proprietary products? Or is he or she offering sound investment advice based upon research and your unique needs and financial situation?

If you believe you have suffered investment loss due to a breach of fiduciary duty on the part of your broker, contact a stockbroker fraud lawyer today at Carlson Law, (619) 544-9300.

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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 (0)

Ambac & Others Agree to Pay $33M to Settle Fraud Allegations Surrounding Bond/Insurance Litigation

June 20th, 2011

Ambac Financial Group Inc., as well as several of its banking underwriters and insurers, has agreed to pay a total of $33M in order to settle claims of investment fraud. According to investors who experienced significant financial loss, the parties involved hid risks from investors about the mortgage debt it guaranteed.

The primary claimants in the case are the Arkansas Teachers Retirement System, the Public Employees’ Retirement System of Mississippi and the Public School Teachers’ Pension and Retirement Fund of Chicago. These claimants allege securities fraud in regard to Ambac bonds and stocks purchased from October 25, 2006 to April 22, 2008.

According to the suit, Ambac gave out misleading information regarding the safety of the bonds it insured in order to inflate the value of the securities. Claimants further allege that Ambac, which insured instruments related to high-risk mortgages, hid its involvement in the subprime loan disaster, an involvement that became clear when the housing market collapsed in 2008. According to the suit, Ambac falsely claimed that it insured the “safest” transactions, when in reality it guaranteed billions of high-risk residential mortgage debt and collateralized debt obligations that were high risk in pursuit of big profit.

Once a federal court has approved the settlement proposal, Ambac will pay claimants 2.5M. Citigroup, Goldman Sachs, Merrill Lynch, HSBC Holding and Wachovia (now a part of Wells Fargo) will pay a combined total of $5.9 million. The four insurance companies involved will pay a total of $24.5M.

If you believe that you’ve been a victim of securities fraud, contact an investment recovery lawyer. Like the claimants in the Ambac case, you could recoup some or all of your financial loss through securities arbitration or litigation. Contact Carlson Law today at 619-544-9300 for a free consultation.

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Posted in Fiduciary Duty Breach, Investment Fraud, Negligent Misrepresentation, Securities Fraud, Securities Law, Securities Litigation | Comments (1)

Did Goldman Sachs Play an Unwholesome Role in the Recent Financial Crisis?

June 2nd, 2011
Goldman Sachs Headquarters, New York City

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According to an article published by Reuters on June 2, 2011, Goldman Sachs has been subpoenaed by the Manhattan District Attorney’s Office for information regarding its role in events which precipitated the recent worldwide financial crisis. Earlier this year, the Wall Street Journal reported that the U.S. Department of Justice also plans to subpoena Goldman Sachs.

Both federal and New York prosecutors want more information about documents discovered through a U.S. Senate subcommittee probe regarding the part Wall Street played in the collapse of the housing market. According to the subcommittee report, as the market began to drop in late 2006 and 2007, Goldman Sachs offloaded much of its subprime mortgage risk to innocent clients. The firm also purportedly took its time fulfilling customer requests to close out their failing accounts.

Last year, the Securities and Exchange Commission (SEC) filed a civil fraud suit against Goldman Sachs for its failure to disclose information linking it to complex mortgage securities. While the firm settled the charges, it refused to respond to the charges.

Are these current subpoenas a serious problem for Goldman Sachs? Financial experts disagree. Dick Bove, a Rochdale Securities analyst, says authorities are simply looking for someone to punish and Goldman Sachs seems like a likely candidate. Still, according to reporter Brad Hintz, any legal action against Goldman Sachs—whether successful or not—is bound to hurt the firm. Hintz advises that the company “make amends.” Other analysts maintain that the investigations will prove fruitless and have little impact on the company.

Meanwhile, Goldman Sachs has issued a public statement that it will “cooperate fully” with the Manhattan DA.

If you experienced financial loss during the recent financial crisis due to stockbroker malpractice, contact a stockbroker attorney at Carlson Law today at 619-544-9300 for a free consultation.

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Posted in Broker Fraud, Fiduciary Duty Breach, Investment Fraud, Negligent Misrepresentation, Securities Arbitration, Securities Fraud, Securities Law, Securities Litigation | Comments (0)

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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Posted in Broker Fraud, Fiduciary Duty Breach, Investment Fraud, Negligent Misrepresentation, Securities Arbitration, Securities Fraud, Securities Law, Securities Litigation, Stock Fraud, Stock Loss | Comments (1)