Posts Tagged ‘investment loss’
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: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.
Tags: breach of fiduciary duty, Broker, Brokerage firm, Fiduciary, Finance, Goldman Sachs, Investment, investment loss, investment recovery, New York Times, Sales, Securities Fraud Attorney San Diego, stockbroker fraud, stockbroker fraud lawyer, stockbroker malpractice, Wall Street
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)
The Financial Industry Regulatory Authority (FINRA) recently received a withdrawal request from Boogie Investment Group, a small brokerage house that sold failed Provident Royalties private placements to its investors. Of the 52 brokerage houses that sold Provident private placements, Boogie Investment is the eleventh to call it quits this year.
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Private placements amounting to roughly $410K were sold by Boogie, whose revenues dropped from 1.2M three years ago to $422K this last fiscal year. But reduced earnings aren’t the only reason Boogie is exiting the brokerage business. The company has been hard hit by securities litigation. The firm is not only fighting a class action suit comprised of investors to whom they sold Provident private placements, but it’s also contending with a suit filed by those who bought Provident Shale Royalties products. Moreover, Boogie is combating other lawsuits that are unrelated to its sale of Provident Royalties private placements.
FINRA has forcefully dealt with brokerage firms as well individual brokers who sold private placements, alleging that they failed in their due diligence, both in investigating the placements and in assessing their suitability for their clients.
Other defunct brokers who sold Provident Royalties private placements include Workman Securities, Investlinc Securities/Meadowbrook, WFP Securities, Okoboji Financial, Matheson Securities, United Equity, CapWest, Private Asset Group Inc., Community Banker Securities LLC, E-Planning Securities Inc., Empire Financial, GunnAllen Financial and Barron Moore.
Have you incurred investment loss due to broker misconduct? Contact a stockbroker fraud lawyer in San Diego. It may be possible for you to recoup some or all of your losses. For a free consultation, contact Daniel Carlson, Esq. at Carlson Law 619-544-9300.
Tags: Boogie Investment Group, broker misconduct, brokerage house, CapWest, Community Banker Securities LLC, E-Planning Securities Inc., Empire Financial, FINRA, GunnAllen Financial and Barron Moore, Investlinc Securities/Meadowbrook, investment loss, investors, Matheson Securities, Medical Capital, Okoboji Financial, Private Asset Group Inc., private placements, Provident, Provident Royalties, Securities Fraud Attorney San Diego, Securities Lawyer, Securities Litigation, stockbroker fraud lawyer, United Equity, WFP Securities, Workman Securities
Posted in Fiduciary Duty Breach, Investment Fraud, Negligent Misrepresentation, Securities Arbitration, Securities Fraud, Securities Law | Comments (0)
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In its roles as conservator for Freddie Mac and Fannie Mae, the
Federal Housing Finance Agency (FHFA) filed securities lawsuits against 17
financial entities in federal court as well as in the state courts of
Connecticut and New York in early September 2011. In the lawsuits the FHFA
alleges that the financial institutions, which range from Bank of America and
Citigroup to Deutsche Bank and Credit
Suisse, violated numerous federal securities and common laws in their sales of
mortgage-backed securities. Citing the Securities Act of 1933, the FHFA seeks
both civil penalties and damages.
According to an FHFA press release, Bank of America and its
fellow financial institutions committed a breach of fiduciary duty when they provided
Fanny May and Freddie Mac with misleading loan descriptions. These
descriptions, which were part of sales and marketing materials, failed to
reveal the true character of the loans, particularly their risk factors. In
other words, they constituted banking fraud.
The current FHFA lawsuit is part of a continuing effort on
the part of Congress and regulators to deal with institutions that engaged in
practices that precipitated the financial crisis of 2008, a crisis in which
risky mortgage-backed securities played an important role. The Washington Post estimates that almost
$200 billion in risky securities were sold to Freddie Mac and Fannie Mae.
Regardless of possible negative effects on the financial
sector and on the recovery process of the housing market, the government appears
to be stepping up its efforts to recover the financial losses investors
incurred during the 2008 crisis. These recent FHFA lawsuits are comparable to
an earlier lawsuit in 2011 which the FHFA filed against UBS Americas, Inc.
If you believe that you have
experienced investment loss due to the misleading marketing practices of a
banking institution, contact an investment recovery lawyer in San Diego today
at Carlson Law.
Tags: Bank of America, banking fraud, breach of fiduciary duty, Fannie Mae, Federal Housing Finance Agency, FHFA, Freddie Mac, investment loss, investment recovery lawyer, Securities Act of 1933, Securities Fraud Attorney San Diego, securities lawsuits, UBS, Washington Post
Posted in Investment Fraud, Negligent Misrepresentation | Comments (0)
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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.
Tags: financial loss, Goldman Sachs, investment loss, investment recovery, mortgage securities, New York County District Attorney, Stock Fraud Attorney, stockbroker attorney, stockbroker malpractice, subprime mortgage, U.S. Securities and Exchange Commission, Wall Street
Posted in Broker Fraud, Fiduciary Duty Breach, Investment Fraud, Negligent Misrepresentation, Securities Arbitration, Securities Fraud, Securities Law, Securities Litigation | Comments (0)
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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.
Tags: CDOs, Collateralized debt obligation, Deutsche Bank, financial loss, fraud, Goldman Sachs, investment loss, investment recovery litigators, JPMorgan Chase, Merrill Lynch, Morgan Stanley, Securities Fraud, Stock Fraud Attorney, UBS, Wall Street, Wall Street banks, Wall Street firms
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)
In April 2011, Citigroup Global Markets, Inc. was ordered by a Financial Industry Regulatory Authority (FINRA) panel to pay damages of more than $54M for its misconduct in managing and promoting a wide range of investment products, including MAT/ASTA municipal bond hedge funds.
The three claimants will receive 100 percent of the compensatory damages they sought, which total $34,058,948, as well as 8 percent interest and $17,000,000 in punitive damages. Furthermore, Citigroup must pay claimants’ attorney fees, expert witness fees, hearing session fees and the nonrefundable portion of the claimants’ filing fee.
The settlement process focused on the company’s poor handling of MAT/ASTA municipal arbitrage funds, including MAT Two, MAT Three and MAT Five; MAT Finance; ASTA Three and ASTA Five; and ASTA Finance. Without regard to their high-risk nature, the funds were promoted as alternatives to municipal bond portfolios. Furthermore, Citibank falsely characterized them as having strong risk-control features. FINRA found that Citibank not only falsely marketed MAT/ASTA funds, but that it also seriously mismanaged them.
If you believe that Citigroup Global Markets mishandled your investments but have yet to file a claim, don’t delay. Contact an experienced investment recovery lawyer in San Diego at Carlson Law today. It may not be too late to recoup your financial loss and stand up for your rights as an investor.
Tags: ASTA Finance, ASTA Five, ASTA Three, Broker Fraud, Citigroup, Citigroup Global Markets, Fiduciary Duty Breach, Financial Industry Regulatory Authority, FINRA, Fraud Attorney, Investment Fraud, investment loss, MAT Finance, MAT Five, MAT Three, MAT Two, MAT/ASTA municipal bond hedge fu, municipal arbitrage funds, Negligent Misrepresentation, San Diego, Securities Attorney, Securities Fraud Attorney San Diego, Stock Loss
Posted in Broker Fraud, Fiduciary Duty Breach, Investment Fraud, Negligent Misrepresentation, Securities Arbitration, Securities Fraud, Securities Law, Securities Litigation, Stock Fraud, Stock Loss | Comments (3)
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Ordinarily, mutual funds are long-term investments. And ordinarily, brokers who switch shares among funds with comparable investment goals have committed a violation if the switch serves little or no legitimate financial purpose other than earning him or her a fee. Such switching not only increases the fees investors pay, but it also puts them at risk of increased tax liability.
Often, investors are unaware that their broker has increased their investment costs and risks by “switching” their mutual funds. Mutual funds are intended to be held for a substantial length of time, not traded like individual stocks. To do so results in considerable charges that don’t apply to common stocks. Furthermore, the majority of mutual funds, by their very nature, may already be diversified and do not need to be traded unless there’s been a major change in the allocation of their assets or the fund manager’s market focus is narrow to the extent that it increases investor risk.
Mutual fund switch transactions are a violation of FINRA acceptable sales practices. If you believe you may have experienced financial loss due broker switching, contact an investment recovery lawyer at Carlson Law. Your broker’s misconduct may constitute a viable claim on your part for damages.
Tags: Broker Fraud, broker misconduct, churning, Fiduciary Duty Breach, Financial Industry Regulatory Authority, financial loss, Fraud Attorney, Investment Fraud, investment loss, investment recovery lawyer, mutual fund, mutual fund switch transactions, mutual funds, Negligent Misrepresentation, Securities Attorney, Securities Fraud Attorney San Diego
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)
How do you buy mutual funds?
To purchases shares (portions) in a mutual fund, investors may go through stockbrokers, banks, insurance agents and other investment professionals. They can even buy portions from the fund directly.
When you buy shares, you pay the current net asset value (NAV) for each share. You also pay any sales charge (sales load).
Are mutual funds easy to sell?
Yes, any mutual fund will buy back your shares during regular business hours. Within seven days, you’ll receive the NAV for each share sold minus any sales load.
Are mutual funds a risk-free investment?
No. Just as individual stocks fluctuate in value, so does the portion price of mutual funds. Therefore, the value of your investment will sometimes be more, sometimes less than its original price.
How do you choose the mutual fund that’s right for you?
To determine if you should invest in a mutual fund, acquaint yourself with the major types that are available.
Mutual funds may be categorized by their asset types. Most are either bond funds, stock (equity) funds or money market funds. However, numerous variations exist within these three categories. In fact, some mutual funds combine several types of investments. An asset allocation fund, for instance, is a type of mutual fund that combines all three asset classes—funds, stocks and money markets. Some mutual funds, funds of funds, invest in other mutual funds rather than in individual securities.
Mutual funds may also be categorized according to the investment strategy that they follow. Funds that attempt to reduce tax liability, for example, are called tax-efficient funds. Some mutual funds are managed actively while others try to imitate an index.
Every mutual fund has its own rewards and risks. In general, the greater the potential return, the greater the risk of loss.
When you’re looking for a mutual fund, be sure to shop around, comparing mutual funds of the same type with each other. If you find a mutual fund that interests you, carefully examine its prospectus. Think about the goals, risks, and expenses involved in investing. Is the mutual fund’s aim in keeping with your own? Are the risks acceptable to you?
If you feel overwhelmed by your investment options, do what many other investors do: consult a financial expert. If you were advised to invest in funds that were higher risk than was explained to you by your financial advisor, you may have a claim to recover your losses. Contact Carlson Law for a free consultation.
Tags: bond funds, Broker Fraud, Financial Industry Regulatory Authority, financial loss, invest, Investment, investment loss, investment recovery, money market, mutual funds, Negligent Misrepresentation, Securities Fraud Attorney San Diego, Stock Fraud Attorney, stockbrokers, stocks
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Mutual Funds 101
Mutual funds are sold by companies that pool money (capital) from many investors. This capital is then invested in bonds, stocks and/or other securities. Investors in the fund all have shares, and these shares represent a part of the fund’s holdings.
If you’re interested in making an investment, a mutual fund may or may not be the right choice for you. Like all investments, they come with many different levels of risk. They aren’t insured or guaranteed by financial institutions or government agencies, even those sold by banks. However, because mutual funds are often a mix of various bonds and/or stocks, the risk is some mutual funds is “spread out” or diversified. That said, some mutual funds are not diversified, and it is important to understand that a mutual fund investment can be very high risk, or very low risk, depending upon the holdings and the goals of the fund. Each fund must be looked at individually to determine if it is appropriate for the investor, in the same manner as any individual stock or other investment.
Mutual funds are managed by professional fund managers. These managers invest the money investors contribute into individual stocks, bonds and other securities. And because mutual funds buy and sell securities in large amounts at one time, they usually incur fewer fees, thus operating in a cost-efficient manner. However, it is very important to carefully examine prior to purchase all of the fees and costs associated with the fund you are purchasing as they can vary greatly and take a significant bite out of your return.
If you feel your financial advisor placed you in inappropriate mutual fund investments and/or failed to disclose the fees and costs associated with investment or that the underlying holdings of the fund were beyond your tolerance for risk, you may have a case. Call Carlson Law at 858-544-9300 for a free consultation.
Tags: bonds, Broker Fraud, capital, disclosure, diversification, Fiduciary Duty Breach, financial, financial loss, FINRA, Fraud Attorney, Investment, investment attorney, investment loss, Investor, investors, losses, mutual fund, mutual funds, Negligent Misrepresentation, San Diego, securities, Securities Fraud Attorney San Diego, securities lawsuit, Stock Loss, stocks, unsuitability, Unsuitable
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)
Making financial investments with money from a loan on your home is generally a poor, high risk activity. And it’s a particularly poor idea when the investment is a private placement that’s speculative and unable to be liquidated easily or traded publically. Brokerage houses that encourage clients to take out extra mortgages or home equity loans in order to buy risky investments in limited partnership and private placements are often held liable for their customers’ financial loss.
In 2009, the Ameritas Investment Corporation was fined $100,000 by the Financial Industry Regulatory Authority (FINRA) for not supervising one of its brokers whose deceptive financial recommendations to customers included home refinancing to purchase securities. The broker was fined $60,000 by FINRA, and her license was suspended for five years.
If your broker encouraged you to take out real estate loans in order to invest in any private securities, limited partnerships or other investments, you should seek the advice of a securities attorney. Contact Carlson Law for a free consultation.
Tags: Broker Fraud, Fiduciary Duty Breach, financial loss, Investment Fraud, investment loss, investment recovery, limited partnerships, Negligent Misrepresentation, private securities, San Diego, Securities Arbitration, Securities Attorney, Securities Fraud Attorney San Diego, securities lawsuit
Posted in Broker Fraud, Fiduciary Duty Breach, Investment Fraud, Negligent Misrepresentation, Securities Arbitration, Securities Fraud, Securities Law, Securities Litigation, Stock Fraud | Comments (1)
