Posts Tagged ‘Wall Street’

FINRA System Open to Investment Adviser Disputes

November 16th, 2012

English: Wall Street sign on Wall Street

On Thursday, November 1st, 2012, FINRA Dispute Resolution issued guidance to attorneys who represent investors and those who represent non-FINRA investment advisers as to the availability of the arbitration and mediation services of the FINRA forum to resolve their disputes.

FINRA, The Wall Street funded watchdog, has long acted as the arbitration system in which investors and securities brokerages could, and were often forced by contract, to settle their legal disputes.  However, until now, whether that system was open to registered investment advisers and individual investors was dubious and unclear.

Despite the fact that using FINRA arbitration might be more cost effective than going to court, most investment advisers are opposed to the changes.   David Tittsworth, executive director of the Investment Adviser Association questioned the ruling, noting that there are few registered investment adviser account agreements requiring clients to forgo court and instead arbitrate any disputes.

Those favoring the changes say that using FINRA will be more cost effective than going through the expensive process of court and that for those investment adviser contracts which currently require arbitration, FINRA offers a much better financial deal than other arbitration services.

While the guidance provides some clarity as to how lawyers and investors can proceed, one thing to note is that FINRA does not regulate investment advisers.  Therefore, FINRA can only do so much.  Even with a ruling that goes against an investment adviser, unlike rulings against brokers, FINRA lacks the authority to suspend the adviser for failure to pay.

Carlson Law Firm is reviewing potential claims against investment advisers.  To speak with an attorney regarding your, please call Carlson Law Firm 619-544-9300 for a free consultation.

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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.

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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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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)

Will the SEC File Investment Fraud Charges Against Credit-Rating Companies?

July 5th, 2011
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According to the Wall Street Journal, in May 2011 the Securities and Exchange Commission (SEC) acknowledged that credit-rating agencies, desirous of pleasing the companies they rate, are sometimes less than objective in their evaluations. To mitigate this problem, the SEC has proposed that credit-rating firms operate under stricter guidelines.
This month, the Journal reports that the SEC is currently contemplating civil fraud charges against some of these credit-reporting firms for their part in the development of mortgage-bond deals that precipitated the recent financial crisis.
During its investigation, the SEC is examining the research done by Standard & Poor, Moody’s Investors Services, and other ratings agencies into the subprime mortgages (and additional loans) that underpinned recent ill-fated mortgage-bond deals. Was the research adequate? Or was it so slipshod as to constitute negligence or fraud?
Although a Standard & Poor spokesperson declined knowledge of any SEC investigation, she maintained that the ratings firm would cooperate with any request made by the SEC.
The SEC’s inquiry into ratings firms is part of its larger investigation into Wall Street’s culpability in the recent financial crisis. The investigation may or may not result in investment fraud charges being brought against the companies under scrutiny.

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

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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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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MEDICAL CAPITAL INVESTOR AWARDED $400,000 BY FINRA ARBITRATOR

April 29th, 2011
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In 2010 Peak Securities, a brokerage house that promoted and sold Medical Capital securities, was found guilty of fraud, negligence, breach of contract, and breach of fiduciary duty by a Financial Industry Regulatory Authority (FINRA) mediator. In this award against brokers selling fraudulent Medical Capital investments, an investor who experienced financial loss due to Medical Capital securities received a $400,000.00 award.

 

Hundreds of investors who bought fraudulent Medical Capital notes through brokerage firms have filed arbitration claims against those firms.  And in our opinion, this judgment for a Medical Capital investor will be the first of many.

The SEC exposes Medical Capital fraud.

The heart of a 2010 Securities and Exchange Commission (SEC) complaint concerning investment fraud focused on Medical Capital.

Medical Capital professed to supply financial backing to providers of healthcare. According to company execs, they bought the accounts receivables of these providers and made loans to them. The accounts receivables were supposedly sold as notes to investors via private placements, also known as Regulation D offerings.

But it appears to have been a Ponzi scheme.

Medical Capital spent millions of investor dollars on administrative costs. Executives also spent millions on a Hollywood film, a yacht, and other extravagant items. And they failed to make interest and principal payments in a timely manner. They even pretended that no previous notes had been defaulted on.

But that’s not all.

According to the SEC receiver, hundreds of millions in medical receivables that had been packaged as Regulation D offerings were either overvalued or fictional. That’s right! Some had never even existed.

It’s been estimated that 20,000 investors bought $2.2 billion worth of Medical Capital notes, approximately $1 billion of which are in default. And that means massive losses for investors.

Comparable cases are pending.

In early 2010, another brokerage firm dealing in Medical Capital notes was sued, this time by the Massachusetts Securities Division of the Office of the Secretary of the Commonwealth. According to the lawsuit, Securities America, Inc. committed wide scale fraud–hundreds of millions of dollars worth of it—by marketing Medical Capital notes. The state alleges that the firm not only failed to perform with due diligence, but it also failed to disclose obvious risks to its investors, despite the urgings of its own president and a third party.

At Carlson Law, we believe that the arbitration award against Peak Securities foreshadows future arbitration awards against Securities America and the other brokerage firms that sold Medical Capital as well as other fraudulent and/or high-risk private placements such as Provident and DBSI.  For further questions and information, contact our securities fraud attorney in San Diego today.

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