investment attorney

Published on: February 27, 2012

LPL Financial Investors of Direct Invest LLC May Be Eligible to Recover Losses Through Securities Arbitration

Investment attorneys are investigating claims on behalf of investors against LPL Financial regarding the sale of private placements. The many investors who sustained losses in private placements, specifically Direct Invest LLC, may be able to recover losses through securities arbitration. Earlier this month, a Financial Industry Regulatory Authority Arbitration Panel awarded two LPL investors $1.4 million as a result of losses they sustained from Direct Invest LLC. Their investments included Braintree Park LLC and Heron Cove LLC. In addition to the $1.4 million award, LPL was also ordered to pay hearing session fees totaling $35,700.

LPL Financial Investors of Direct Invest, LLC may be Eligible to Recover Losses Through Securities Arbitration

According to claimants’ allegations, LPL’s sale of investments in Direct Invest LLC was fraudulent in that the investments were marketed as private placements to retirees, promising that the investments could generate a consistent income stream. Claimants alleged that the sources of the projected distributions, the real estate market and the actual properties were misrepresented by LPL. Furthermore, claimants stated that they were told that their received distributions would come from real estate operations while, in actuality, a large part of the distributions came from the use of leverage or a return of their own investment.

The original FINRA claim also named Meridian Capital Partners LLC and Orchard Securities LLC as respondents. However, the claims against these firms were resolved with claimants prior to the FINRA panel’s ruling. Therefore, details of how the issues were resolved are not present in this case.

Published on: February 24, 2012

News: Bank of America Faces More Allegations

by InvestorLawyers

Investment attorneys turn their eyes to Bank of America once again, only two months into the New Year. Bank of America Corp. has been subpoenaed by William Gavin, the Massachusetts securities regulator, over LCM VII Ltd. and Bryn Mawr CLO II Ltd., two related collateralized loan obligations. These two CLOs led to investor losses totaling $150 million. The subpoena will, hopefully, help authorities in determining if Bank of America knew it was overvaluing the assets of the portfolios. Both Bryn Mawr and LCM were sold in 2007, prior to the 2008 merger between Bank of America Securities and Merrill Lynch.

News: Bank of America Faces More Allegations In 2012

Bank of America held commercial loans from small banks amounting to around $400 million in 2006. In 2007, securities packages were put together from these loans and then sold to investors. The subpoena arrives only one day after Bank of America, JP Morgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc. settled allegations of engaging in abusive mortgage practices. These abusive practices included engaging in deceptive practices in the offering of loan modifications, a failure to offer other options before closing on borrowers with federally insured mortgages, submitting improper documents to the bankruptcy court and robo-signing foreclosure documents without proper review of the paperwork.

The settlement amounted to $25 billion and involved federal agencies plus authorities in 49 states. This settlement is designed to give $2,000 to around 750 borrowers whose homes were foreclosed upon after the home values dropped 33 percent from their 2006 worth, and to provide mortgage relief. In addition, all five banks will pay $766.5 million in penalties to the Federal Reserve. This is considered to be the biggest federal-state settlement ever. Bank of America will also pay $1 billion to settle allegations that it, together with its Countrywide Financial unit, engaged in fraudulent and wrongful conduct.

Published on: February 23, 2012

Fannie Mae, Freddie Mac Investors Could Recover Losses Through Securities Arbitration

by InvestorLawyers

Stock fraud lawyers are investigating potential securities arbitration claims for investors who suffered losses through their investments in Fannie Mae and Freddie Mac Preferred Securities. Claims are currently being filed against Merrill Lynch and other brokerage firms with the Financial Industry Regulatory Authority’s (FINRA) Office of Dispute Resolution. According to the allegations of claims already filed with FINRA, fraudulent misrepresentation and omission of material facts occurred when the investments were solicited to investors. The actual risks associated with Freddie Mac and Fannie Mae preferred stock investments were not fully and accurately disclosed to investors with a conservative portfolio.

Fannie Mae and Freddie Mac Investors Could Recover Losses Through Securities Arbitration

Allegedly, retail investors were told that the investments were as safe as de-facto government-backed bonds. However, this was not the case. In fact, significant risks were associated with Fannie Mae and Freddie Mac-preferred stocks. In reality, preferred stocks are more volatile than bonds and have characteristics that make them much more risky than corporate bonds’ guaranteed status. These risks were not disclosed to investors.

Furthermore, in the event that the company should encounter a financial problem when waiting for the company’s assets, preferred stockholders would wait behind bond holders. In a company like Freddie Mac or Fannie Mae, if the company fails, bondholders would be the first to receive repayment. It is for this reason that holders of Freddie Mac and Fannie May-preferred stock suffered an extreme default risk. Preferred stock holders were not informed that they were not fully protected. In addition, Freddie Mac and Fannie Mae eliminated preferred dividend payments, which, for income purposes, was an important disclosure fact related to a product investment.

Published on: February 22, 2012

Bernoulli High Grade CDO-II Investors Could Recover Losses Through Securities Arbitration

by InvestorLawyers

Merrill Lynch customers who purchased Bernoulli High Grade Collateralized Debt Obligations could recover their losses through securities arbitration. Bernoulli High Grade CDO-II was sold to institutional and high-net-worth customers of Merrill Lynch. The Bernoulli High Grade CDO-II was underwritten by Merrill Lynch in 2007. However, all 30 of the CDOs underwritten by Merrill Lynch in 2007 were either in technical default, had their best-rated portion cut to junk, were in danger of being liquidated or were in the process of being liquidated by the summer of 2008. Stock fraud lawyers are now investigating how Bernoulli High Grade CDO-II was marketed and sold by Merrill Lynch.

Bernoulli High Grade CDO-II Investors Could Recover Losses Through Securities Arbitration

Securities that are backed by underlying pools of loans or bonds are CDOs, or collateralized debt obligations. While these investments are inherently risky, they are relatively common among “qualified investors.” Currently, stock fraud lawyers are also investigating if Merrill Lynch properly disclosed the CDO risks to investors in the sale of Bernoulli High Grade CDO-II. Furthermore, the value of Bernoulli High Grade CDO-II may have been inflated and overstated by Merrill Lynch. Many investment attorneys believe that Merrill Lynch either knew or should have known the 2007 CDO deals were bad in the existing mortgage market conditions, given the poor performance of the CDOs.

On January 31, 2012, a Financial Industry Regulatory Authority Arbitration Panel awarded $1.38 million to Bobby Hayes, an investor who purchased Collateralized Debt Obligations from Merrill Lynch in 2007. For more on this case, see the previous blog post, “After Securities Arbitration, Merrill Lynch Must Pay $1.4 Million to Investor Over CDO Loss.”

Published on: February 20, 2012

Lexington Capital CDO Investors Could Recover Losses Through Securities Arbitration

by InvestorLawyers

Merrill Lynch customers who purchased Lexington Capital Funding III Collateralized Debt Obligations could potentially recover their losses through securities arbitration. Lexington Capital was sold to institutional and high-net-worth customers of Merrill Lynch. The Lexington Capital CDO was underwritten by Merrill Lynch in 2007. However, all 30 of the CDOs underwritten by Merrill Lynch in 2007 were either in technical default, had its best-rated portion cut to junk, was in danger of being liquidated or was in the process of being liquidated by the summer of 2008. Stock fraud lawyers are now investigating how Lexington Capital was marketed and sold by Merrill Lynch.

Lexington Capital CDO Investors Could Recover Losses Through Securities Arbitration

Securities that are backed by underlying pools of loans or bonds are called CDOs, or collateralized debt obligations. While these investments are inherently risky, they are relatively common among “qualified investors.” Currently, stock fraud lawyers are also investigating if Merrill Lynch properly disclosed the CDO risks to investors in the sale of Lexington Capital. Furthermore, the value of Lexington Capital may have been inflated and over-stated by Merrill Lynch. Many investment attorneys believe that Merrill Lynch either knew or should have known the 2007 CDO deals were bad in the existing mortgage market conditions, given the poor performance of the CDOs.

On January 31, 2012, a Financial Industry Regulatory Authority Arbitration Panel awarded $1.38 million to Bobby Hayes, an investor who purchased Collateralized Debt Obligations from Merrill Lynch in 2007. For more on this case, see the previous blog post, “After Securities Arbitration, Merrill Lynch Must Pay $1.4 Million to Investor Over CDO Loss.”

Published on: February 17, 2012

Securities Arbitration May Be Better Path for UBS Lehman Brothers Investors

by InvestorLawyers

Investment attorneys continue to seek investors who suffered significant losses in Lehman Brothers 100 Percent Principal Protection Notes and who wish to pursue securities arbitration claims in order to recover losses. Lehman Brothers 100 Percent Principal Protection Notes, also known as Principal Protected Notes, were issued by UBS Financial Services and have resulted in significant losses for many investors.

Securities Arbitration May be a Better Path for UBS Lehman Brothers 100% Principal Protected Notes Investors

Many claims have been filed on behalf of Lehman note holders in the Lehman bankruptcy proceedings, but there are many more investors who must take action if they wish to recover these losses. Though many investors hope to recover losses through the class action that has been filed, individual securities arbitration claims may prove to return a larger percentage of losses to investors. Based on the Third Amended Joint Chapter 11 Plan of Lehman Brothers, it appears that investors will only receive about 21 cents on the dollar through the class action lawsuit. Therefore, investors should attempt to recover losses by any means available to them, including securities arbitration. Furthermore, investors should act immediately due to potential statutes of limitations.

Customers of UBS Financial Services who suffered losses as a result of their investments in Lehman Brothers 100 Percent Principal Protection Notes are encouraged to contact a stock fraud lawyer immediately for more information about filing a securities arbitration claim with the Financial Industry Regulatory Authority’s Office of Dispute Resolution. One way to do this is to look for an attorney who is experienced at representing clients with these kinds of claims. You will want someone who knows the history of rulings relative to these claims, as well as someone who understands how to recover as much money as possible for his or her clients.

Published on: February 16, 2012

Did You Purchase Lyon Capital CLO with Banc of America? You May Have a Securities Arbitration Claim

by InvestorLawyers

Investment attorneys are seeking Banc of America Securities customers who purchased Lyon Capital Management VII Collateralized Loan Obligations. Banc of America sold Lyon Capital to its institutional and high-net-worth customers. The CLOs were issued in July 2007. However, at this time, the value of investment, which was created by pooling loans together, was already declining. Lyon Capital’s value quickly declined and, eventually, was liquidated. The poor performance of Lyon Capital indicates that Banc of America either knew, or should have known, the existing market conditions made the deal a bad one. Investment attorneys are also questioning the valuation procedures that were used in pricing the loans.

Purchasers of Lyon Capital CLO with Banc of America Securities May Have Securities Arbitration Claim

A Financial Industry Regulatory Authority Arbitration Panel last week awarded $1.38 million to a Lyon Capital CLO investor. The award includes attorney’s fees, hearing session fees, interest and the entirety of the claimant’s investment losses. Allegations heard by the panel stated that Lyon Capital was worthless at the time of purchase. Only one month after closing the allegedly worthless deal, the disclosures about potential losses in similar loan pools was changed by Banc of America. August 2007’s prospectus stated that, because of the declining market values of loans, it was likely that “on the closing date [the value of the portfolio] will be substantially less than the principal amount.” The claimant further alleged that the investment was sold as a low-risk investment and Lyon Capital CLO was, in actuality, artificially inflated at the time of closing.

In light of the conduct of Banc of America in the sales of Lyon Capital and the recent related FINRA award, investment attorneys believe there may be other Lyon Capital investors who can seek to recover losses through securities arbitration. To find out more about your legal rights and options, contact an investment attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

Published on: February 15, 2012

Charles Schwab Charged with Violating FINRA Rules in Customer Agreements

by InvestorLawyers

On February 1, 2012, the Financial Industry Regulatory Authority (FINRA) announced that it had filed a complaint against Charles Schwab & Company. FINRA charged the firm with violating FINRA rules when it required the waiving of rights of customers to bring class actions against the firm. It is the belief of many investment attorneys, investors and others in the securities industry that investors should retain the right to file class actions against the firm in the event that broker misconduct occurs.

Charles Schwab Charged with Violating FINRA Rules in Customer Agreements

According to the complaint issued by FINRA, Charles Schwab is charged with amending its customer agreement in October 2011 to include a provision that required customers to waive their rights that allowed them to bring or participate in class actions against the firm. The amended agreements were sent to nearly 7 million customers.

Furthermore, the agreement included a provision that required customers to agree that, in arbitration proceedings, arbitrators would not be able to consolidate the claims of multiple parties. According to FINRA, both provisions are in violation of FINRA rules of language or conditions that may be placed in customer agreements by firms.

Published on: February 13, 2012

Broker Misconduct: Illegal Transfer of Funds Through Email Hacks

by InvestorLawyers

On January 27, 2012, the Financial Industry Regulatory Authority (FINRA) issued an Investor Alert warning investors of fraudsters compromising investor email accounts to send trading instructions as a way to commit fraud. According to FINRA, fraudsters will use the email account to gain access to information that they can then use to request wire transfers to overseas accounts. Because this form of fraud can be committed by stock brokers and traders, stock broker fraud attorneys are encouraging defrauded investors to come forward with potential claims.

Broker Misconduct: Illegal Transfer of Funds Through Email Hacks

In some cases, firms failed to verify the instructions via telephone but released the funds anyway. This violation in procedure may entitle defrauded investors to a recovery of losses through securities arbitration. According to the SEC, four brokerage firms have been charged for allowing traders to trade in the U.S. securities market, despite the fact that they were unregistered. In the same case, Igors Nagaicevs, a trader, was charged with making $874,896 through unauthorized purchases and sales. He also broke into accounts 159 times from 2009 to August 2010. According to the SEC, he cost investors possibly over $2 million.

“Nagaicevs engaged in a brazen and systematic securities fraud, repeatedly raiding brokerage accounts and causing massive damages to innocent investors,” says the director of the SEC’s San Francisco regional office, Marc J. Fagel.

Published on: February 10, 2012

Have You Been a Victim of Cold-call Stock Broker Fraud?

by InvestorLawyers

Stock broker fraud lawyers are on the lookout for investors who have been the victim of cold-calling fraud. Even though the number of sales calls has been reduced by the National Do Not Call Registry, securities firms still commonly use cold-calling as a tool for generating investments. Because not all cold-calls indicate fraud, cold-call scams remain a dangerous possibility for investors.

Have You Been a Victim of Cold-Call Stock Broker Fraud?

Individuals who have made investments based on a cold-call may have been the victim of fraud. Here are several indicators that a cold-call may have been a scam:

The caller used high-pressure sales tactics. Cold-calling fraudsters often use scripts that contain a list of retorts for every possible objection and will continue to attempt a sale as long as the investor remains on the line.