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March 12, 2008

Countrywide Financial, Merrill Lynch, and Citigroup Executives Defend Their Hefty Compensations Following Subprime Mortgage Crisis

Appearing before the U.S. Congress last week, Countrywide Financial CEO and founder Angelo Mozilo, Ex-Citigroup CEO Charles Prince, and Ex-Merrill Lynch Chairman and CEO Stanley O’Neil gave their testimonies to the House Committee on Government and Oversight Reform.

The three men say that reports about their compensation are “grossly exaggerated” and that they too have lost millions of dollars from the mortgage debacle. On Thursday, the Congressional issued a report stating that the three men earned $460 million between 2002 and 2006.

All three men say their income from the firms are tied to the profits that the companies made in the years prior to the mortgage crisis and that their company stock has dropped dramatically since then.

Mozilo reportedly stood to earn $115 after Countrywide’s pending sale to Bank of America is completed. He now has agreed to forfeit $37.5 million.

O’Neal received $161 million after stepping down from Merrill Lynch. Prince left Citigroup last November with about $68 million.

Other Wall Street CEO’s that have generated media buzz for their generous compensations:

-Last year, Goldman Sachs Chairman and CEO Lloyd Blankenfein received $68 million—the largest bonus ever for an industry head.

-Robert Nardelli, Chrysler Chairman and CEO, took away $210 million in stock options, money, and retirement benefits after being asked to leave Home Depot.

In 2006, 386 Fortune 500 firm chiefs received $10.8 million in compensation.

Shepherd Smith and Edwards represents stockbroker fraud clients that have lost money because of the negligence or misconduct of a member of a securities industry. One of our securities fraud lawyers can discuss your case during a free consultation.

Related Web Resources:

Mortgage mess CEOs defend pay, CNN Money.com, March 7, 2008

Congress quizzes financial execs on CEO pay 'lottery', USA Today, March 7, 2008

Committee Holds Hearing on CEO Pay and the Mortgage Crisis, House Committee on Government and Oversight Reform

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Posted In: Citigroup , Countrywide Financial , Morgan Stanley , Subprime Mortgage

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December 23, 2007

Citibank and Columbia University Sued for Charging College Students Extremely High Interest Rates on School Loans

A former Columbia University student is suing Citibank and Columbia University for what he is calling “modern-day slavery,” for allegedly colluding to charge unreasonably high interest rates on student loans.

Brian Baxter, 57, is now a licensed psychotherapist and a social worker. He graduated from Columbia University in the 1990’s with a BA in sociology and a master’s in social work. Baxter says that he is still paying back the interest on his student loan even though it has been 10 years since he graduated.

He says that his $65,000 loan has turned into $172,000. Creditors take 15% of his paycheck regularly. Baxter says he will likely spend the rest of his life paying back his debt.

Baxter is accusing Columbia of guiding him toward Citibank, the school’s preferred lender and is calling the alleged collusion an act of “modern-day slavery.” He says he filed the lawsuit on behalf of all first-generation, low-income college students.

New York Attorney General Andrew Cuomo is investigating the lending practices of universities and colleges. So far, 63 U.S. colleges and universities have been named as having misled students who applied for student loans. Over 25 schools and at least 12 lenders have reached settlement agreements collectively valued at $13.7 million. Other lawsuits are pending. Students have been repaid $3.4 million.

Governor Cuomo is examining whether school officials received kickbacks for encouraging students to sign up with certain lenders. There is evidence that allegedly shows how schools, lenders, and financial officers benefited from certain arrangements that ended up costing students money. Some schools supposedly have a “preferred-lender” list, while others have exclusive “preferred-lender” deals. Other evidence revealed that some loan companies have school financial aid officers on their boards.

Shepherd Smith and Edwards represents clients who have been financially taken advantage of by a member of the securities industry. Faiilure to disclose conflicts of interest is inappropriate and wrong. Contact Shepherd Smith and Edwards and ask for your free consultation.

Related Web Resources:

Columbia and Citibank 'Modern Day Slavers' Suit, New York Post, December 17, 2007

Columbia U., Citibank sued for 'slavery', UPI.com, December 17, 2007

Cuomo: School loan corruption widespread, USA Today

New York State Attorney General Mario Cuomo

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October 21, 2007

HSBC Securities, Citigroup Global Markets Inc., UBS Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Inc., and Interactive Brokers LLC Among Firms Disciplined by NYSER

The New York Stock Exchange Regulation Inc. is disciplining nine companies and eight people for numerous violation. The firms disciplined include:

Merrill Lynch, Pierce, Fenner & Smith: Fined $100,000 for violating rule 123c about 480 times when it cancelled or submitted securities orders after the mandatory cutoff period.

Citigroup Global markets Inc: Find $300,000—half of this to be payed to NASDAQ; the other half to be paid to NYSE. The firm made inaccurate reports about short interest positions in securities that were listed on the NYSE.

Interactive Brokers LLC: Fined $250,000. The firm was fined for violations related to day-trading minimum balances.

HSBC Securities (USA) Inc.: Fined $500,000. Over a several year period, the firm recommended and sold CDs that were not appropriate for their targeted 1900 investors. The firm allegedly engaged in misrepresentations and withheld risks during these transactions.

UBS Securities LLC: Fined $150,000. The firm did not make disclosures in its published research reports about investment baking relationships and non-investment-banking connected compensation.

Eight individuals were also fined for numerous violations, including former securities specialist Freddie DeBoer, broker Stephen Mara, and Adam Lazarus.

DeBoer was fined $300,000 and was permanently barred because he intentionally defrauded customers involved in the sale or purchase of securities. Lazarus was barred for 30 months because of short term purchases sales that were “unauthorized and unsuitable” and involved four customer accounts. Mara was suspended for two weeks and censured because of his involvement in a “physical altercation” on the exchange floor

A number of other people were permanently barred because they failed to reveal that they had criminal records and for recordkeeping violations.

NYSE Regulation can discipline brokerage firms and brokers for broker misconduct. However, you if you want to recover any investments you may have lost because of the illegal actions of any member of the securities industry, your best bet is to retain the services of an experienced stockbroker fraud attorney. Over the years, Shepherd Smith and Edwards has recovered the losses of thousands of investors throughout the United States. Let us help you.

Contact Shepherd Smith and Edwards today and ask for your free consultation.

Related Web Resources:

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Posted In: Citigroup , HSBC Securities , Interactive Brokers LLC , Merrill Lynch , NYSER , UBS

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October 9, 2007

Citigroup, Lehman Brothers, DeutscheBank and other Firms Fined for Failing to Deliver Trade Confirmations.

NYSE Regulation fined 14 of its member firms a total of $10.4 million in fines for failing to deliver trade confirmations to their clients and other violations.

Citigroup Global Markets received the heaviest fine of $2.25 million for failing to deliver trade confirmation documents in more than a million consumer transactions. Lehman Brothers and DeutscheBank were each fined $1.25 million.

Other firms sanctioned included UBS Securities; Bear Stearns & Co.; Credit Suisse Securities (USA) LLC ; Banc of America Securities LLC; Goldman Sachs & Co.; JP Morgan Securities; Wachovia Capital Markets LLC; and Keefe, Bruyette & Woods Inc. Fines levied against these firms ranged from $375,000 to $800,000.

According to the New York Stock Exchange (NYSE) enforcement wing, the violations occurred between July 1, 2003 and Oct 31, 2004. These include failures to ensure delivery of prospectuses to customers who purchased securities and mutual funds, failure to deliver product descriptions to customers purchasing exchange traded funds and failure to establish and maintain appropriate supervisory procedures regarding such activities.

Each of the member firms also agreed to certify that its current policies and procedures are reasonably designed to ensure compliance with current federal securities laws and regulations regarding such requirements. This action was one of the final acts by the regulatory staff of the NYSE prior joining the Financial Industry Regulatory Authority (FINRA) which has taken over all former NASD and NYSE regulatory responsibilities.

Shepherd Smith and Edwards represents investors nationwide in claims against securities firms. We have represented investors in more than 1,000 securities cases. To learn whether we may be able to assist you with a claim contact us to arrange a free consultation with one of our attorneys.

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Posted In: Bank of America , Bear Stearns , Citigroup , Credit Suisse , Deutsche Bank , Goldman Sachs , J P Morgan - Chase , Stockbroker Regulation , UBS , Wachovia

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July 24, 2007

Citigroup's Smith Barney Unit Ordered to Pay $50 Million over Widespread Fraud Charges

In one of its final regulatory acts before being folded into the NASD, the New York Stock Exchange’s regulatory unit has censured and fined Smith Barney $50 million over illegal trades, failures to supervise and record-keeping violations. The firm agreed to the sanctions without admitting or denying the charges.

The Smith Barney unit of Citigroup Global Markets Inc. will pay a fine of $10 million to the NYSE, and a fine of $5 million to the State of New Jersey, related to a "separate regulatory matter arising out of the same conduct." An additional $35 million will be paid into a restitution fund to compensate victims.

The NYSE regulators say Smith Barney agreed to these huge sanctions to resolve charges related to a variety of fraudulent trading activities, including excessive trading, improper trading in mutual fund shares, improper trading in variable annuity mutual fund sub-accounts, illegal market timing trades, plus the firm’s failures to supervise and to maintain adequate books and records.

The market timing charges also included deceptive acts to conceal the identities of the brokers involved as well as their customers, said the NYSE adding that, during a two year period, Citigroup financial consultants engaged in 250,000 market timing trades, generating approximately $32.5 million in gross revenues.

Shepherd Smith and Edwards represents investors nationwide in claims against members of the securities industry. We have helped numerous clients to recover in claims against both Smith Barney and Citicorp. To learn whether we can also assist you to recover contact us to arrange a free consultation with one of our attorneys.

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Posted In: Citigroup , Smith Barney - Citigroup , Stockbroker Regulation

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June 18, 2007

NASD Says Citigroup To Pay $15.2 Million For Misleading BellSouth Retirees

Citigroup Global Markets Inc is being charged $3 million by NASD to settle charges connected to misleading materials it allegedly gave Bellsouth employees during retirement meetings and seminars held in North Carolina and South Carolina. NASD also says that Citigroup has to pay over 200 ex-Bellsouth employees $12.2 million in restitution. The latter comes came from a civil class action involving Smith Barney, which had tried to get the case dismissed under SLUSA.

NASD says that Citigroup neglected to properly supervise certain brokers located in Charlotte, North Carolina that used the misleading sales materials during numerous meetings with BellSouth Corp. employees. The materials made “exaggerated and unwarranted projections of future earnings” and did not elaborate on the related risks of making certain investments.

Following these presentations, over 400 BellSouth employees opened more than 1100 accounts via these brokers. Many of their investors had retired early from BellSouth and had less than $350,000 in savings. Many of them cashed out their 401(k) accounts and pensions and invested these funds with the Citigroup brokers.

Also disciplined by the NASD:

*Jeffrey Sweitzer, who developed the sales campaigns, directed many of these seminars, drafted the misleading materials, and managed the brokers. He suspended for 18-months and ordered to pay a $125,000 fine.

*Matthew Muller was suspended for $9 months and ordered to pay $50,000 for his participation in numerous seminars and in-person meetings.

*Joseph Zentner received a 30-day suspension and was fined $30,000 for helping Sweitzer prepare some of the misleading materials.

All three men are being ordered to complete 40 hours of training on complying with federal securities laws and NASD rules.

*Randall Matz, a branch office manager, was suspended from his supervisory role for 90 days and fined $60,000.

*Elizabeth Harris, a branch operations manager, was also suspended from acting as a supervisor for 45 days. She is being ordered by NASD pay a $30,000 fine. Both must pass an NASD Qualification Exam before they can return to these roles.

All parties, including Citigroup, agreed to the suspensions and fines without admitting to or denying the charges.

Shepherd Smith and Edwards has represented many former employees of telephone companies with similar complaints against various brokerage firms. We have an excellent track record for helping these investors recover their losses. If you are an investor who has lost money because of the misconduct of broker-dealers or anyone else in the securities industry, contact Shepherd Smith and Edwards to schedule your free consultation.

Related Web Resources:

Citigroup to pay $15.2 million for misleading retirees, Reuters, June 6, 2007

Citigroup Global Markets to Pay Over $15 Million to Settle Charges Relating to Misleading Documents and Inadequate Disclosure in Retirement Seminars, Meetings for BellSouth Employees, P.R. Newswire

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Posted In: Citigroup , Smith Barney - Citigroup

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May 30, 2007

Former Head of Commodity Trading and Head Trader at Citibank Both Jailed for Inflating Profits

After his former boss was sentenced, a former head of American trading on the Citibank NA commodity desk was sentenced in May to 12 months and a day in prison and ordered to pay approximately $188,000 after pleading guilty to conspiring to falsify bank records and to commit wire fraud, said a U.S. Attorney for the Southern District of New York.

U.S. Attorney Michael Garcia said Charles Craig Gile schemed to inflate trading profits of the Citibank commodity desk by as much as $20 million during 2003 to increase his stature at the firm and make himself eligible for bonuses. Garcia added that Gile and David Becker, Head of Commodities Trading at Citicorp, understated the market risk and overstated the financial performance of Citibank's commodity holdings that year. In March, Becker was sentenced to 15 months in prison.

Garcia said the defendants accomplished their scheme using various means, including inputting false data into computer models used to estimate the value of positions held by the commodity desk. Other false inputs were apparently made to artificially decrease the amount of risk being taken by the trading desk. The models therefore showed millions of dollars of artificially inflated profits for Citibank.

The government further charged that Gile and Becker caused false information to be reported to Citibank's financial control department, which monitored the commodity desk. In addition to the prison sentence, Gile was ordered to pay $185,819 in restitution and a $3,000 fine.

The law firm of Shepherd Smith and Edwards represents investors seeking recovery of damages in securities fraud claims Contact us if you would like to schedule a free confidential consultation with one of our securities attorneys.

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Posted In: Citigroup , Fraudulent Trading

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May 27, 2007

Citigroup, Merrill Lynch and Lehman Ex-Brokers Face Retrial in Eavesdropping Case

Three former brokers of Citigroup, Merrill Lynch and Lehman Brothers face a second trial on charges they conspired to commit fraud by allowing day traders to eavesdrop on orders being discussed on investment firms' internal “squawk boxes.” Four current and former executives at the day trading firm A. B. Watley Group will also be retried for their alleged roles in the scheme.

After a seven-week trail seven defendants including these former brokers were acquitted of securities fraud and other charges, but the jury deadlocked on the conspiracy charges opening the door to a retrial.

Prosecutors assert the brokers conspired to give Watley traders access to large orders broadcast over intercoms, or “squawk boxes”, in exchange for cash and commissions. The traders bought or sold stock ahead of the orders in anticipation of share-price swings, prosecutors say.

During the first trial, John J. Amore, Watley’s former chief executive and a prosecution witness, testified he introduced the intercom scheme when he was hired in 2002 as a consultant. Amore pleaded guilty to conspiracy to commit securities fraud prior to the trial.

The law firm of Shepherd Smith and Edwards represents institutional and individual investors in investment claims. Collectively, we have recovered more than $100 million from investment and securities brokerage firms. If you or your firm has sustained significant losses in investments contact us to arrange a free confidential consultation with one of our securities litigation lawyers.

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Posted In: Citigroup , Lehman Brothers , Merrill Lynch , Securities Fraud

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May 16, 2007

Citigroup Will Pay $200,000 in SEC Sanctions Connected to LMWW Auction Market Misconduct

Last week, Citigroup Global Markets Inc. said it would pay a $200,000 fine to settle charges by the Securities and Exchange Commission. The charges are connected to Leg Mason Wood Walker Inc’s allegedly improper interference with auction rate securities. Citigroup is LMWW’s merger successor.

According to the SEC, the penalty amount was determined based on LMWW’s willingness to cooperate, the “relatively small share of the auction rate securities markets," and LMWW’s decision to report the allegedly illegal practices at a later time than did other broker-dealers from an earlier settlement.

During that related case, 15 broker-dealers—Citigroup included—said they would pay penalties of over $13 million related to charges that they participated in violative practices affecting the $200 billion auction rate securities market.

Because Citigroup already is facing a cease and desist order connected to the earlier case, the SEC did not request an order for this case.

The SEC says that auction rate securities are preferred stock or bonds that have dividend yields or interest rates that are reset on a periodic basis via auctions. Institutional investors are the ones that primary participate in this type of market.

LMWW allegedly underwrote and supervised a limited amount of these auctions. The SEC is accusing LMWW of bidding for its proprietary account during these auctions so that there wouldn’t be failed auctions without proper disclosure. As a result, LMWW was able to influence the clearing rate, which determines the interest of yield an issuer has to pay investors until the next auction takes place.

In instances where LMWW lowered the clearing rate, investors were able to get a lower return rate on investments. The SEC says that investors might not have known of the credit risks and liquidity connected with certain securities when LMWW’s actions influenced the clearing rate.

For nearly 20 years, Shepherd Smith and Edwards has represented thousands of investor clients in their claims against hundreds of brokerage firms. Our team of attorneys, legal staff, and consultants jointly have over 100 years experience in the securities industry, which makes us extremely qualified to provide legal representation to clients nationwide in filing claims against financial companies.

To discuss whether we can help you recover your investment loss, contact Shepherd Smith and Edwards today to schedule your free consultation.

Stock Broker Fraud Blog

Published by Houston Securities Fraud Lawyers Shepherd Smith & Edwards

Countrywide Financial, Merrill Lynch, and Citigroup Executives Defend Their Hefty Compensations Following Subprime Mortgage Crisis

Citibank and Columbia University Sued for Charging College Students Extremely High Interest Rates on School Loans

HSBC Securities, Citigroup Global Markets Inc., UBS Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Inc., and Interactive Brokers LLC Among Firms Disciplined by NYSER

Citigroup, Lehman Brothers, DeutscheBank and other Firms Fined for Failing to Deliver Trade Confirmations.

Citigroup's Smith Barney Unit Ordered to Pay $50 Million over Widespread Fraud Charges

NASD Says Citigroup To Pay $15.2 Million For Misleading BellSouth Retirees

Former Head of Commodity Trading and Head Trader at Citibank Both Jailed for Inflating Profits

Citigroup, Merrill Lynch and Lehman Ex-Brokers Face Retrial in Eavesdropping Case

Citigroup Will Pay $200,000 in SEC Sanctions Connected to LMWW Auction Market Misconduct

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