investment attorney

Published on: December 28, 2011

BNY Mellon Investors Seeking Investment Attorneys for Securities Arbitration Claims

On December 14, 2011, a class action lawsuit was filed against Bank of New York Mellon Corporation, also known as BNY Mellon, in the United States District Court of the Southern District of New York. The lawsuit was filed for the class period of February 28, 2008, to August 11, 2011. Investment attorneys are encouraging individuals who acquired BNY Mellon stock through personal investment, inheritance or employment to explore possible securities arbitration claims as a means of recovering losses.

BNY Mellon Investors Seeking Investment Attorneys for Securities Arbitration Claims

Underwriters named in the lawsuit include BNY Mellon Capital, Barclays, Citigroup, Merrill Lynch, Goldman Sachs, UBS and Morgan Stanley. Under Section 11 and Section 12(a)(2) of the Securities Act of 1933, underwriters of public offerings may be held liable if they fail to conduct a due diligence investigation of the information provided in prospectuses and registration statements.

The class action lawsuit states that, “The Underwriter Defendants underwrote BNY Mellon’s May 11, 2009 and/or June 3, 2010 common stock offering which were conducted pursuant to materially false and misleading offering materials and are charged with violations of the Securities Act in their capacity as underwriters for such offering.” Furthermore, allegations of the class action state that “throughout the Class Period, defendants concealed and failed to disclose material adverse facts about the Company’s financial well-being, business relationships, and prospects,” and goes on to claim that as a result of the wrongful acts and omissions of the defendants, combined with the “precipitous decline” of the common stocks’ market value that resulted from the disclosure of a FX trading scheme, investors suffered damages.

Published on: December 26, 2011

Variable Annuities and Variable Annuity Fraud

by InvestorLawyers

Investment attorneys are seeking investors who purchased variable annuities based on recommendations that were unsuitable and/or contradicted their investment goals. Because of the complicated nature of variable annuity contracts, many investors are uncertain of the risks or negative aspects associated with them.

Variable Annuities and Variable Annuity Fraud

What are Variable Annuities?

Variable annuities are popular investment vehicles for retirement; essentially, they are insurance contracts that are joined with an investment product. They have insurance-like properties but function as tax-deferred savings vehicles by providing a tax deferral using the insurance policy. The combination of the investment product and insurance contract provides four appealing features: a tax deferral on earnings, the ability to name a beneficiary for the account, the ability to use your life expectancy to receive payments for life and the ability to receive guarantees based on the insurance component.

Published on: December 23, 2011

FINRA Ruling: Wells Fargo Fined, Complaint Filed Against Chen

by InvestorLawyers

December 15, 2011, the Financial Industry Regulatory Authority (FINRA) announced its decision to fine Wells Fargo Investments LLC for “unsuitable sales of reverse convertible securities through one broker to 21 customers, and for failing to provide sales charge discounts on Unit Investment Trust (UIT) transactions to eligible customers.” The fine totals $2 million; in addition, Wells Fargo must pay restitution to customers who had unsuitable reverse convertible transactions and/or did not receive the sales charge discounts on UIT transactions. Furthermore, the stock broker misconduct of Alfred Chi Chen led FINRA to file a complaint against him.

Finra Ruling: Wells Fargo Fined, Complaint Filed Against Chen

UITs offer sales charge discounts on purchases that exceed certain thresholds, often called “breakpoints,” or involve redemption or termination proceeds from another UIT during the initial offering period. Wells Fargo’s insufficient monitoring of the reverse convertible sales caused them to fail to provide breakpoint and rollover and exchange discounts in the sales of UITs to eligible customers from January 2006 to July 2008.

The registered representative, who is no longer with Wells Fargo, Alfred Chi Chen, made unauthorized trades in multiple customer accounts. In some cases, the customer accounts belonged to deceased individuals. FINRA filed a complaint against Chen, in addition to its decision to fine Wells Fargo. According to FINRA’s investigation, Chen’s broker misconduct extended to 21 clients, most of which had limited experience in investments, low risk tolerances and/or were elderly. To these 21 clients, Chen made hundreds of unsuitable recommendations for reverse convertible investments. Repayment of reverse convertibles, which are interest-bearing notes, is tied to the performance of a stock, basket of stocks, or another underlying asset. These investments were unsuitable for many of Chen’s low-risk profile clients because they risk sustaining a loss if the value of the underlying asset falls below a certain level at maturity or during the term of the reverse convertible, according to FINRA.

Published on: December 22, 2011

SEC Issues Wells Notices to Harbinger Capital; Investors Seeking Representation

by InvestorLawyers

Following the recent notices sent by the Securities and Exchange Commission to Harbinger Capital, Philip Falcone, Omar Asali and Robin Roger, some investors of Harbinger Capital are seeking representation for possible securities arbitration claims. Philip Falcone, 49, is the manager of the New York-based hedge fund Harbinger Capital Partners LLC, which was valued three years ago at $26 billion but has now fallen to a value of only $5.7 billion. Furthermore, a wireless technology venture that is being backed by Falcone, LightSquared LP, is facing regulatory and political roadblocks.

SEC Issues Wells Notices to Harbinger Capital; Investors Seeking Representation

A statement by Harbinger said the Wells Notices issued by the SEC are related to alleged “violations of the federal securities laws’ anti-fraud provisions in connection with matters previously disclosed and an additional matter regarding the circumstances and disclosure related to agreements with certain fund investors.” The firm also stated that, should an enforcement action be brought by the SEC, they “intend to vigorously defend against it.”

The SEC and the U.S. Attorney’s Office are investigating Harbinger over a loan that was paid to Falcone from one of his funds. The loan amounted to over $113 million and was allegedly used to pay personal taxes. The kicker? The transaction was completed without notifying investors. In addition, the SEC is investigating whether preferential treatment was given to some investors over others. According to a statement made by Harbinger, withdrawals from its main hedge fund are anticipated to be suspended December 30, 2011.

Published on: December 21, 2011

Purchasers of China Automotive Systems Inc. May Have Valid Securities Arbitration Claim

by InvestorLawyers

Stock fraud lawyers are investigating potential claims for investors against China Automotive Systems Inc. A class action lawsuit was filed against China Automotive on October 25, 2011, in the United States District Court for the Southern District of New York. The lawsuit, which was filed against the company as well as several of its officers, is applicable to purchasers of China Automotive securities from March 25, 2010, through March 17, 2011.

Purchasers of China Automotive Systems Inc. may have Valid Securities Arbitration Claim

According to the complaint, China Automotive violated Sections 10(b) and 20(a) of the Securities Exchange Act. More specifically, according to the complaint, China Automotive:

Did not properly account for convertible notes that were issued on February 15, 2008;

Published on: December 19, 2011

Allegations Against China Medical May Lead to Claims for Investors

by InvestorLawyers

Investment attorneys are seeking investors who purchased China Medical Technologies Inc. securities in connection with recent fraud allegations made against the company. Officers and directors of China Medical may have violated federal securities laws and, as a result, investors in the company may have a valid securities arbitration claim. China Medical, a Chinese company listed in North America, handles the developing, manufacturing and marketing for medical devices, including molecular and immunodiagnostic products.

Allegations against China Medical may lead to Claims for Investors

China Medical shares saw a 23 percent plunge on December 6, 2011. The significant plunge in value marks an all-time low for the firm’s shares. The plunge followed Glaucus Research Group’s allegations that Xiaodong Wu, China Medical’s CEO, “orchestrated an acquisition to embezzle roughly $20-$23 million from the public company.” According to the research firm, China Medical acquired an entity at a price far over its value that the firm believes is secretly related to China Medical’s CEO.

Furthermore, Glaucus alleges that the firm’s primary business segment was sold to the chairman by China Medical. This primary business segment — which develops products that are used in the treatment of benign tumors and solid cancers — was the firm’s biggest revenue generator from the time of the firm’s inception. The reason for this transaction stems from the impending suspension of China Medical’s permit to sell HIFU products by the Chinese FDA. China Medical’s core business segment would have been rendered worthless if the company’s permit was suspended.

Published on: December 15, 2011

Investment Attorneys Seeking Victims of Inofin Fraud

by InvestorLawyers

The alleged $110 million Inofin fraud has investment attorneys looking for investors who suffered losses as a result of their investments with Inofin. According to the Class Action Complaint filed by the Securities and Exchange Commission in April, 2011, Inofin was in violation of the Massachusetts Uniform Securities Act. The complaint has been filed against Inofin, Inofin President Michael Cuomo, Inofin Chief Operating Officer Melissa George and Inofin Chief Executive Officer Kevin Mann, and alleges that the group sold unregistered securities and acted as a Massachusetts broker-dealer without being registered.

Investment Attorneys Seeking Victims of Inofin Fraud

Despite the fact that Inofin was never registered with the Massachusetts Securities Division of the Offices of the Secretary of the Commonwealth or the SEC, the company allegedly collected around $110 million by selling unregistered securities. Unregistered securities are securities that have not been registered with the Securities and Exchange Commission, and selling them violates the Securities Act of 1933. For more information on unregistered securities, please see the previous blog entry, “Investment Fraud: Unregistered Securities.”

According to the complaint, Inofin and its principal officers violated Section 10(b) (Rule 10b-5) of the Securities Exchange Act of 1934 and Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933. In addition to the selling of unregistered securities, the SEC alleges that material misrepresentations of financial reports were made from 2006 to 2011 in an attempt to hide a negative net worth and the company’s deteriorating financial conditions.

Published on: December 14, 2011

Customers of LPL Financial, Jack Kleck May Have Valid Securities Arbitration Claim

by InvestorLawyers

Stock broker fraud lawyers are investigating potential securities arbitration claims against LPL Financial and Jack Kleck, a former LPL broker. LPL Financial was fined $100,000 in late November for failure to adequately supervise Kleck. LPL was fined by the Oregon Department of Consumer and Business Services.

Customers of LPL Financial and Jack Kleck May Have Valid Securities Arbitration Claim

Kleck, who was LPL Financial’s branch manager in La Grande, “sold investments in high-risk oil and gas partnerships to nearly three dozen Oregon residents, including many elderly people,” according to the State of Oregon. In addition, Kleck’s recommendations were unsuitable for his clientele and were not in keeping with their age and investment objectives. The State of Oregon stated, “Many of Kleck’s clients were in their 70s and 80s, and some were not capable, due to poor health, of making sound investment decisions.” According to Oregon’s decision, LPL violated securities laws including failure to supervise and failure to properly enforce company policies and procedures.

By law, broker-dealers must make “suitable” recommendations to their clients. Under FINRA Rule 2111, brokers are required to consider investment objectives, tax status, financial status, age, risk tolerance, time horizon, liquidity needs, other investments and experience when determining if a recommendation is a suitable investment for a client. For example, broker-dealers handling a customer’s conservative investment portfolio may not recommend high-risk investments that are not in keeping with the customer’s investment objectives. For more on the suitability standard, see the previous blog post, “FINRA Revises Suitability Rule 2111.”

Published on: December 12, 2011

Investment Fraud: Unregistered Securities

by InvestorLawyers

A common form of investment fraud is the selling of unregistered securities. In many cases, investors can recover their losses in securities arbitration. In short, unregistered securities are securities that have not been registered with the Securities and Exchange Commission (SEC). Before a stock, bond or note can be sold to the public, it must be registered with the SEC. In fact, it must be registered before it can even be offered to the public. Any security is considered to be unregistered if it does not have an effective registration statement.

Investment Fraud: Unregistered Securities

While the offering of unregistered securities is a violation of Section 5 of the Securities Act of 1933, there are some exceptions. So when is it legal and when is it illegal? According to Section 5(c) of the Securities Act of 1933, “It shall be unlawful for any person, directly or indirectly, to make use of any means or instruments of transportation or communication in interstate commerce or of the mails to offer to sell or offer to buy through the use or medium of any prospectus or otherwise any security, unless a registration statement has been filed as to such security, or while the registration statement is the subject of a refusal order or stop order or (prior to the effective date of the registration statement) any public proceeding or examination under section 8.”

Seems fairly cut and dry, so when is it legal? Exemptions to the restriction of the sale of unregistered securities include:

Published on: December 9, 2011

Bank of America, JPMorgan, Morgan Stanley, Others Charged With Misleading Marketing

by InvestorLawyers

The Federal Housing Finance Agency (FHFA), acting as conservator for Fannie Mae and Freddie Mac, has filed securities lawsuits against a total of 17 financial entities in both federal and state courts. States in which the lawsuits were filed are New York and Connecticut. Financial institutions affected by the lawsuits, which were filed in September 2011, include Bank of America, Credit Suisse, Citigroup, Countrywide, Goldman Sachs, JPMorgan Chase, Merrill Lynch, Morgan Stanley and Deutsche Bank. These institutions, along with 8 others, violated federal securities and common laws when selling mortgage-backed securities. This is not the first time many of these financial institutions have been charged with securities fraud, and investment attorneys are doubtful that it will be the last.

The FHFA is seeking civil penalties as well as damages. Allegedly, the financial institutions violated fiduciary duty by providing misleading loan descriptions as a part of their sales and marketing materials. The marketing materials did not reveal the true risk factors associated with the loans. According to the FHFA’s press release, “Based on our review, FHFA alleges that the loans had different and more risky characteristics than the descriptions contained in the marketing and sales materials provided to the Enterprises for those securities.”

Congress and regulators have put forth a continuing effort to deal with the practices of institutions that led to the financial crisis of 2008 and this lawsuit is part of that goal. It is similar to the one filed on July 27, 2011 against UBS Americas Inc. The Housing and Economic Recovery Act of 2008 gives the FHFA the authority to file complaints such as this one.