September 30, 2011

Prospective Securities Class Action Lawsuit Accuses David Lerner Associates Inc. Accused of Recycling Investor Capital and Using a Credit Line to Meet Dividend Payout

According to Investment News, the amended complaint of a prospective securities class action case is claiming that the nontraded REITs sold by David Lerner Associates Inc. used investor distributions and borrowed from a credit line to fulfill the targeted dividend payout. The broker-dealer is accused by the Financial Industry Regulatory Authority of giving out performance figures for its APPLE REITs while implying that investments in the future would likely render similar result. FINRA is suing financial firm for securities fraud and marketing unsuitable products to investors. The investors filed their securities fraud complaints soon after. They are now waiting for their class action status to be approved.

Per the amended complaint, David Lerner brokers told clients that Apple REITs were low risk investments that would shield their savings from any stock market turbulence. Also, not only was the amount of distribution that investors were paid not equal the income earned from the Apple REITs, which had mostly invested in Hilton and Marriott hotels that offered extended stays, but also, clients were allegedly promised consistent yearly returns of 7-8%.

Although David Lerner had represented that cash flow would be the basis for distributions, offering documents said that distributions from other sources could only occur on occasion and in “certain circumstances.” The complaint accuses the broker-dealer and other defendants of issuing distributions without taking profitability into account while obtaining properties at prices that could not be justified considering the distributions that were being paid.

David Lerner Associates denies the plaintiffs’ allegations. The broker-dealer and its brokers earned $341.5 million in commissions and Apple REITs sales. They also earned a 2.5% marketing expense.

Investors had filed two class actions against David Lerner this summer. They had purchased $5.7 billion in Apple REIT offerings from the financial firm’s brokers. Plaintiffs are accusing the broker-dealer of targeting inexperienced and elderly investors, leaving out key information about how the trusts were run, misrepresenting the REITs value, and failing to reveal the risks involved.


Nontraded REITs
Nontraded real-estate investment trusts gather cash from investors to purchase property. They pay the rental income as a regular dividend. Last year alone, they took in approximately $8.3 billion in investments.

Earlier this month, FINRA put out a warning to investors that they carefully consider the risks involved in investing in nontraded REITs. The SRO cautioned that some risks are not immediately obvious and may not properly explained by financial firms.

The Apple REITs were sold and written by David Lerner, which has opened and sold over 120,000 accounts involving these.

Read the Complaint (PDF)

Lerner resorted to tricks to plump up Apple distributions: Suit, Investment News, October 14, 2011

Apple REIT investors could trade bad for worse, MarketWatch, July 21, 2011

Finra Sues David Lerner Firm, The Wall Street Journal, June 1, 2011

Shepherd Smith Edwards & Kantas LTD LLP Investigates Claims Concerning David Lerner Associates' Sale of Apple REITs, Globnewswire, August 3, 2011


More Blog Posts:
David Lerner & Associates Ignored Suitability of REITs When Recommending to Investors, Claims FINRA, Stockbroker Fraud Blog, June 8, 2011

Ameriprise Must Pay $17 Million for REIT Fraud, Stockbroker Fraud Blog, July 12, 2009

W.P. Carey & Co Settles SEC Charges Over Payments of Undisclosed REIT Compensation, Stockbroker Fraud Blog, March 25, 2008

Continue reading "Prospective Securities Class Action Lawsuit Accuses David Lerner Associates Inc. Accused of Recycling Investor Capital and Using a Credit Line to Meet Dividend Payout" »

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Posted In: Class Action Lawsuits

August 17, 2011

8/31/11 is Deadline for Opting Out of $100M Oppenheimer Mutual Funds Class Action Settlement

Our securities fraud lawyers would like to remind you that if you want to opt out of the $100M class action settlement with Oppenheimer Mutual Funds you have to do so by August 31, 2011. OppenheimerFunds Inc. agreed to pay that amount over accusations that it mismanaged its Oppenheimer Champion Fund (OCHBX, OPCHX and OCHCX) and its Oppenheimer Core Bond Fund (OPIGX). The class action was filed by investors accusing OppenheimerFunds of misrepresenting in its offering documents the degree of risk involved in complex securitized instruments, including mortgage-backed securities and credit default swaps.

Under the class action agreement, Champion Fund investors are to be paid $52.5 million. Core Bond investors are to receive $47.5 million. While this amount may seem like a lot, with thousands of class action claimants, Core Bund Fund investors will likely receive approximately 12 cents on the dollar, while Champion Fund investors will receive about 3 cents on the dollar.

This is not a lot of money for your losses, which is why you may want to seriously consider opting out of the class action and pursuing your own securities lawsuit or arbitration claim. Please contact our stockbroker fraud law firm today and ask for your free case evaluation.

You have until August 31, 2011 to send a written exclusion to the class counsel. Your letter cannot be postmarked after the deadline. Failure to opt out will prevent you from filing your own case at a later today. You should, however, get your share of the settlement.

OppenheimerFunds is a Massachusetts Mutual Life Insurance Company subsidiary. Defendants of the class action were charged with violating the Investment Company Act of 1940 and the Securities Act of 1933.

The Oppenheimer Core Bond Fund lost at least 33% of its value in 2008. During the first three months of 2009 it lost another 10%. The bond was promoted as appropriate for and offered by a number of 529 college savings plans, a number of annuities, and retirement plans. The Champion Fund lost about 80% of its value in 2008.

While staying part of a class action in a securities case may appear to be the easy way to recover your investment losses, this is truly not the case. Why should you get back so much left when you’ve lost so much?

By retaining the services of an experienced securities fraud law firm, you increase your chances of recovering the maximum amount possible. We know how devastating it can be to lose money that you have worked so hard for and saved.

OppenheimerFunds Settles Mismanagement Case for $100 Million, Bloomberg Businessweek, July 26, 2011

OppenheimerFunds to pay $100 million to settle mismanagement case, Denver Post, July 27, 2011

More Blog Posts:
Mortgage-Backed Securities Lawsuit Against Bank of America’s Merrill Lynch Now a Class Action Case, Stockbroker Fraud Blog, June 25, 2011

Class Members of Charles Schwab Corporation Securities Litigation Can Still Opt Out to File Individual Securities Claim, Stockbroker Fraud Blog, December 6, 2010

Wells Fargo Settles Mortgage-Backed Securities Class Action Case for $125M, Institutional Investor Securities Blog, July 19, 2011

Continue reading "8/31/11 is Deadline for Opting Out of $100M Oppenheimer Mutual Funds Class Action Settlement " »

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Posted In: Class Action Lawsuits , Credit Default Swaps (CDS) , Financial Firms , Mortgage Backed Securities , Oppenheimer

June 25, 2011

Mortgage-Backed Securities Lawsuit Against Bank of America’s Merrill Lynch Now a Class Action Case

Merrill Lynch, a unit of Bank of America Corp. (BAC) is now the defendant of a class action securities fraud lawsuit filed on behalf of at least 1,800 investors. A federal judge certified the class status, which involves all investors in mortgage-backed securities that were sold beginning February 2006 through September 2007.

The named plaintiffs of the MBS lawsuit are the Connecticut Carpenters Annuity Fund, the Wyoming state treasurer, Mississippi Public Employees’ Retirement System, the Connecticut Carpenters Pension Fund, and the Los Angeles County Employees Retirement Association. The investors are accusing Merrill of misleading them in the offering documents for $16.5 billion of certificates.

While including yourself as a class action plaintiff may seem like an easy way to recoup your losses, Shepherd Smith Edwards & Kantas LTD LLP founder and stockbroker fraud attorney William Shepherd says, “On average, victims with securities class action claims usually get back a net recovery of about 8% of their losses.” Such claims often face numerous obstacles. Also, only federal securities claims can be brought in class action cases, and these can be challenging to prove. “Some securities class action complaints end up settled but with the terms favoring the defendants and with large fees going to the investors’/victims’ attorneys,” notes Shepherd. Many consider the investor class the losers when such a case is concluded. ** It is important, however, to note that our securities fraud law firm has no information at this time to suggest that this is going to be the result in this matter.

One alternative you should explore is filing your own, individual claim. While many securities class action cases have very short “opt out” dates, if you “opt out" of the class in a timely manner, you can file an individual case ( claims under state law are often easier to prove). Our securities fraud law firm has represented many investors who have done both.

Merrill Must Face Class Action Over Mortgage Securities, Bloomberg, June 20, 2011


More Blog Posts:
Ambac Financial Group, Insurers, and Bank Underwriters to Pay $33M to Settle Securities Lawsuits Alleging Concealed Risks Related to its Bond-Insurance Business, Stockbroker Fraud Blog, May 18, 2011

Number of Securities Class Action Settlements Reached in 2010 Hit Lowest Level in a Decade, Says Report, Stockbroker Fraud Blog, March 31, 2011

Class Action Plaintiffs Dispute Bank of America’s $137M Settlement with State Attorney Generals Over Municipal Derivatives, Institutional Investor Securities Blog, December 31, 2010

Continue reading "Mortgage-Backed Securities Lawsuit Against Bank of America’s Merrill Lynch Now a Class Action Case" »

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Posted In: Bank of America , Class Action Lawsuits , Financial Firms , Merrill Lynch , Mortgage Backed Securities

March 31, 2011

Number of Securities Class Action Settlements Reached in 2010 Hit Lowest Level in a Decade, Says Report

Per a new study by Cornerstone Research Inc., 86 securities class action settlements were approved in 2010—that’s significantly less than the 101 securities class action settlements that the courts approved in 2009. The settlements for last year’s cases totaled $3.1 billion. In 2009, the settlements reached $3.8 billion.

One reason for this may be that some securities class action lawsuits, including a number of complaints related to the 2007 – 2009 financial collapse, are taking a longer time to settle because they are likely more complex. Close to 200 securities class actions related to the credit crisis have been filed. Largest settlements under consideration include:

$624M - Countrywide Financial Corp.
$475M - Merrill Lynch & Co. Inc.
$124.8M - New Century Financial Corp.
$80M - MoneyGram International Inc.

Also per the report, total funds in court-approved settlements for 2010 dropped 17.8% from the settlement fund level in 2009. 70% of securities class action cases that were settled last year included allegations over generally accepted accounting principals—compare that to the 65% of cases settled the year before.

Our stockbroker fraud law firm represents individuals and institutions with securities cases against investment advisers, broker-dealers, brokers, and others. Filing your own claim or lawsuit usually gives you the opportunity to recover more than you would if you opt to be part of a securities class action complaint. Over the years, we have helped thousands of investors who have suffered financial losses get their money back.


Related Web Resource:
Read the Report (PDF)


Related Blog Posts:
Charles Schwab & Co. Defendant in Class-Action Securities Fraud Lawsuit Filed on Behalf of Schwab Total Bond Market Fund Investors Over CMOs and Mortgage-Backed Securities, Stockbroker Fraud Blog, September 7, 2011

$277 Million Verdict Against Apollo Group for Alleged Misstatements to Investors Upheld by US Supreme Court, Institutional Investors Securities Blog, March 22, 2011

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Posted In: Class Action Lawsuits

December 6, 2010

Class Members of Charles Schwab Corporation Securities Litigation Can Still Opt Out to File Individual Securities Claim

The US District Court has approved an amendment to the proposed Charles Schwab Corporation Securities Litigation settlement. The Supplemental Notice of Proposed Settlement of Class Action has been sent to the affected class members, which includes those who may have held Schwab YieldPlus Fund shares on September 1, 2006 and gotten more of them between May 31, 2006 and March 17, 2008. Shares may have been obtained through a dividend reinvestment in the Fund or through purchase. Affected class members cannot have been a resident of California on September 1, 2006.

The Supplemental Notice notes that there has been a clarification in the release claims’ scope that affected class members will be giving Schwab if they decide to take part in the settlement. More claims than those in the federal securities class litigation are now included in the amended release. Class members now have another chance opt out of the class action complaint.

Exclusion Deadline: Your notice of exclusion must be postmarked no later than January 14, 2011 and cannot be received after January 21, 2011.

Objection Deadline: Postmark must also be no later than January 14, 2011 and received no later than January 21, 2011.

There will be a fairness hearing on February 11, 2011.

For those that decide to proceed with the class, you don’t need to do anything to stay eligible. Class members will get the compensation for the federal securities claims that they were notified about in the previous notice about the settlement.

Filing an Individual Securities Claim Against Charles Schwab
For those of you that do choose to be excluded from the Charles Schwab class action case and any related benefits, you can file your own Section 17200 and/or federal securities claims and/or other possible claims. Filing an individual claim may allow a claimant to recover more than if he/she had stayed with the class action case. Individual investment fraud claims also take less time to resolve than do lengthy class action cases. Our stockbroker fraud lawyers represent clients with securities fraud cases against Charles Schwab.

To explore your legal options, contact our securities fraud law firm today.

Related Web Resources:
Read the Supplemental Notice

Schwab Yield Plus Settlement Frequently Asked Questions

Charles Schwab, Stockbroker Fraud Blog

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Posted In: Charles Schwab , Class Action Lawsuits , Financial Advisers , Securities Fraud

September 27, 2010

Class Auction-Rate Securities Lawsuit Against Raymond James Financial Survives Dismissal

In the U.S. District Court for the Southern District of New York, U.S. District Judge Lewis A. Kaplan has allowed some of the investor claims in the class action auction-rate securities lawsuit against broker dealer Raymond James Financial Inc. (RJF) and its broker-dealer subsidiary to proceed. This is the first ARS class action case filed since the auction rate securities market failed in 2008 to survive a dismissal motion. The case can now go to the discovery stage.

Kaplan, who had dismissed an earlier lawsuit in this case, let the plaintiffs move forward with their ARS case on the claim that Raymond James & Associates Inc. (RJA) violated antifraud provisions between November 2007 and February 13, 2008. A claim against RJF was allowed to proceed because of its “operational and management control” of RJA during this time. Other claims were dismissed.

Investors had filed the initial class action in April 2008 against RJA, RJF, and Raymond James Financial Services Inc. (RJFS), another Raymond James broker-dealer subsidiary. The plaintiffs contended that between April 8, 2003 and February 13, 2008, the two subsidiaries told financial advisers that ARS were extremely liquid, short-term investments that could work well for any investor with at least $25,000 and with as little as a week to invest. However, when the ARS market failed, over $300 million in ARS became illiquid. Per Kaplan, RJA sold $2.3 billion of ARS, underwrote $1.2 billion, and was the auction dealer for over $725 million.

ARS cases filed by individual investors have been faring better than class-action ARS lawsuits. Of the class-action and group complaints filed against some 19 underwriters and broker-dealers since the ARS market failed, Bloomberg.com reports that Citigroup, Deutsche Bank AG, and at least six other financial firms have managed to get the lawsuits thrown out by judges ruling that the complaints failed to meet pleading requirements. Some plaintiffs were told to refile their lawsuits and provide more details.

Raymond James Auction Rate Class-Action Fraud Suit Is First to Be Upheld, Bloomberg, September 8, 2010

Court Clears Lawsuit Against Raymond James, FA-Mag.com, September 9, 2010

Continue reading "Class Auction-Rate Securities Lawsuit Against Raymond James Financial Survives Dismissal" »

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Posted In: Auction-Rate Securities , Class Action Lawsuits , Financial Firms , Raymond James

September 17, 2010

Securities Fraud Lawsuit Against Calamos Investments Filed on Behalf of Calamos Convertible Opportunities and Income Fund Shareholders

Calamos Asset Management, Inc., the Calamos Convertible Opportunities and Income Fund (NYSE: CHI), Calamos Advisors LLC, current trustees, and one former Fund trustee are now the defendants of a putative class action securities complaint purportedly submitted on behalf of a class of common fund shareholders. The securities fraud lawsuit is alleging breach of fiduciary duty, the aiding and abetting of that breach, and unjust enrichment related to the redemption of auction rate preferred securities (ARPS) after the ARS market collapsed in 2008.

In the securities fraud lawsuit filed by Christopher Brown, Calamos Holdings LLC founder John Calamos Sr. is accused of allowing the investment firm and its management team to benefit from investors’ losses. Brown’s complaint is a refiling of a lawsuit filed in federal court last July. That complaint was withdrawn earlier this month and the claims resubmitted in state court.

Brown contends that Calamos and others were aware they were breaching their fiduciary duty when they let fund advisers benefit while investors sustained financial losses in the “multiple millions of dollars.” Brown wants all losses restored.

He claims that even as the ARS market failed, a burden was not placed on the Calamos Convertible Opportunities and Income Fund, which held auction market preferred shares. However, in June and August, Calamos managers allegedly redeemed some of the funds’ holdings, which were replaced with debt financing that was “less favorable.” Brown says that because this advanced the interests of the managers, the funds’ investment advisors and affiliates but not the interests of common shareholders, it was a breach of fiduciary duty.

Brown is seeking class-action status for any investors in the fund since March 19, 2008. He wants a judge to prevent Calamos trustees from earning fees from the fund or acting as advisers.

Related Web Resources:
Calamos Investments Statement on ARPS Lawsuit for Convertible Opportunities and Income Fund, Centredaily.com, September 15, 2010

Calamos founder sued by investor who claims bad fund management, Chicago Business, September 14, 2010


Continue reading "Securities Fraud Lawsuit Against Calamos Investments Filed on Behalf of Calamos Convertible Opportunities and Income Fund Shareholders" »

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Posted In: Auction-Rate Securities , Calamos Investments , Class Action Lawsuits , Financial Firms , Securities Fraud

September 7, 2010

Charles Schwab & Co. Defendant in Class-Action Securities Fraud Lawsuit Filed on Behalf of Schwab Total Bond Market Fund Investors Over CMOs and Mortgage-Backed Securities

A class-action securities complaint has been filed against Charles Schwab & Co. on behalf of investors that own Schwab Total Bond Market Fund (Nasdaq: SWBLX) shares that were purchased after May 31, 2007. The securities fraud lawsuit accuses Charles Schwab of causing the fund to deviate from its fundamental business objective, which was to track the Lehman Brothers U.S. Aggregate Bond Index, and of violating the California Business & Professions Code.

According to the plaintiffs’ legal representation, the defendant caused investors to suffer financial losses when it started investing in high-risk mortgage backed securities without letting shareholders know. Per the fund’s prospectus, Charles Schwab is supposed to obtain shareholder approval through a vote.

The plaintiffs contend that by investing 25% of the fund’s portfolio assets in high-risk, non-agency collateralized mortgage obligations (CMO’s) and mortgage-backed securities that were not part of Lehman’s US Aggregate Bond Index, Charles Schwab failed to stay true to its stated fundamental investment objective. They claim that this deviation led to tens of millions of dollars in shareholder losses because of the decline in the non-agency mortgage-backed securities value. According to their lawyers, the investors ended up experiencing a negative 12.64% in differential in total return for the fund compared to the Lehman Bros. U.S. Aggregate Bond Index from August 31, 2007 to February 27, 2009.

The investor plaintiffs are seeking restitution for all class members and for the return of management and other associated fees collected after the fund’s alleged deviation from its fundamental business objective.

Related Web Resources:
Class Action Lawsuit Filed Against Charles Schwab & Co., Star Global Tribune, September 7, 2010

Plaintiffs charge Total Bond Market Fund deviated from stated investment strategy, Investment News, September 7, 2010


Related Blog Stories Resources:
Schwab Must Pay SSEK Client $604,094 Over California Yield Plus Fund Investments, Says FINRA Arbitration Panel, Stockbrokerfraudblog.com, April 22, 2010

Securities Law Firm Shepherd Smith Edwards & Kantas LTD LLP Investigates Investor Claims Related to Short Term Bond Funds, Stockbrokerfraudblog.com, August 9, 2008

Continue reading "Charles Schwab & Co. Defendant in Class-Action Securities Fraud Lawsuit Filed on Behalf of Schwab Total Bond Market Fund Investors Over CMOs and Mortgage-Backed Securities" »

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Posted In: Charles Schwab , Class Action Lawsuits , Collateralized Mortgage Obligations , Financial Firms , Mortgage Backed Securities , Securities Fraud

July 20, 2010

Securities Class Action Against Morgan Stanley by Xerox and Kodak Retirees Dismissed by Appeals Court

The U.S. Second Circuit Court of Appeals in New York has upheld a lower court’s ruling to dismiss that the securities class action filed by Eastman Kodak Co. and Xerox Corp. against Morgan Stanley. The plaintiffs, retirees from both companies, are accusing the broker-dealer of advising them that if they retired early their investments would be enough to support them during retirement. They also claim that the investment bank persuaded them to open accounts that cost them the bulk of their wealth. According to the plaintiffs’ attorney, the retirees gave up job security and employment rights after they were told that if they retired early they could avail of a 10% withdrawal rate from their individual retirement accounts.

However, upon retiring, the retirees that invested lump-sum retirement benefits with Morgan Stanley experienced “disastrous” value declines. Also, they had invested with two Morgan Stanley broker, Michael Kazacos and David Isabella, that were later barred from the securities industry. Last year the broker-dealer settled FINRA charges over the two men’s activities by paying over $7.2 million.

The appeals court says that because of the 1998 Securities Litigation Uniform Standards Act, the plaintiffs are precluded from pursuing class state law claims, including misrepresentation claims. While the statute lets plaintiffs file lawsuits in state court to get around 1995 Private Securities Litigation Reform Act’s securities fraud pleading requirements, federal preemption of class actions claiming “misrepresentations in connection with the purchase or sale of a covered security” are allowed. The three-judge panel also said that because the retirees waited too long to file their securities fraud lawsuit, they cannot raise other federal securities law claims.

Related Web Resources:
Xerox, Kodak retirees lose Morgan Stanley appeal, Reuters, June 29, 2010

Morgan Stanley to Pay More than $7 Million to Resolve FINRA Charges Relating to Misconduct in Early Retirement Investment Promotion, FINRA, March 25, 2009

1998 Securities Litigation Uniform Standards Act, The Library of Congress

Continue reading "Securities Class Action Against Morgan Stanley by Xerox and Kodak Retirees Dismissed by Appeals Court " »

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Posted In: Broker Fraud , Broker-Dealers , Class Action Lawsuits , Financial Firms , Morgan Stanley , Securities Fraud

January 23, 2010

Securities Class Actions are No Longer the Fad as Investors Hire Their Own Attorney to Recover Far More!

According to Advisen Ltd, 910 securities lawsuits were filed in 2009 in the wake of the economic crisis—a 13% increase from the 804 complaints filed in 2008. 239 securities fraud class action lawsuits were filed in 2009—the same number filed in 2008. Advisen reported a 22% increase in the number of regulator-filed securities fraud complaints last year compared to the year before.

The author of Advisen’s report, John W. Molka III, says lawsuits over the Madoff ponzi scam and the credit crisis kept regulators and litigators busy during the first half of last year. Plaintiffs’ lawyers then had a backlog of other complaints to work on during the second half of the year.

Molka says that even though there wasn’t a change in the number of securities class action complaints filed, overall they made up a smaller percentage (about 25%) of the total number of lawsuits submitted. This decline in securities class action lawsuits has been going on since 2005, when they comprised about 50% of all securities complaints.

Advisen says that meantime, regulators continue to increase their enforcement efforts with lawsuits and actions. Securities actions filed in state courts and breach of fiduciary complaints are also growing in number.

To obtain the maximum recovery for your securities case, you should speak with a securities fraud law firm about your legal options. Our securities fraud lawyers represent clients with arbitration claims and securities lawsuits against negligent financial firms and other liable entities.

Related Web Resources:
Advisen, Ltd.

Read the Report, Advisen

Continue reading "Securities Class Actions are No Longer the Fad as Investors Hire Their Own Attorney to Recover Far More! " »

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Posted In: Class Action Lawsuits , Securities Fraud

November 20, 2009

Number of Securities Lawsuits Increased During 3rd Quarter

According to commercial insurance consulting firm Advisen, 169 securities lawsuits were filed during 2009’s third quarter—an 11% increase from the 152 complaints that were filed during the previous quarter. 249 securities lawsuits were filed in the 1st quarter.

The most common kind of securities lawsuit filed this past quarter was securities fraud lawsuits that were brought by law enforcement agencies and regulators. 70 securities fraud complaints and 55 securities class actions were filed during 3Q. 50 securities fraud complaints and 38 cases were filed in the 2Q.

Advisen Executive Vice president Dave Bradford says the percentage of securities fraud lawsuits is expected to grow now that the Securities and Exchange Commission appears to be increasing its securities fraud enforcement initiatives under President Barack Obama. The SEC has been attempting to recoup from its failure to detect the $50 billion Ponzi scam that Bernard Madoff ran for years.

One reason for the decline in securities lawsuits during the 3rd quarter may be due to a drop in credit crisis- and Madoff-linked lawsuits. Only 6 securities cases related to Madoff were filed in 3Q—compare that to the 54 lawsuits filed during 1Q and the 17 complaints submitted in 2Q. Since December 2008, at least 109 Madoff-related securities lawsuits have been filed.

Advisen reports that some 335 credit-crisis securities lawsuits have been filed. 46 complaints were filed in the 1Q, 24 in 2Q and 9 in 3Q.

During the 3rd quarter, 63 securities cases were awarded or settled. The average award or settlement was $11.6 million.

Securities Fraud Lawsuits
To increase your chances of recouping your investment, it is important that you speak with an experienced securities fraud law firm about your case.


Related Web Resources:
Securities lawsuits increase in third quarter: Advisen, Business Insurance, October 14, 2009

Feds say Bernard Madoff's $50 billion Ponzi scheme was worst ever, NY Daily News, December 13, 2008

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Posted In: Class Action Lawsuits , Madoff Ponzi Scheme , Miscellaneous , Securities Fraud

September 2, 2009

Disgruntled Investors Continue to File Securities Fraud Litigation Against Merrill Lynch Even Eight Months After Its Acquisition by Bank of America Corp.

The plaintiffs of some 166 of the 221 cases filed against Merrill Lynch & Co. since January 1, 2009 are alleging securities fraud-related violations. This means that Bank of America Corp, which acquired the broker-dealer at the beginning of the year, has assumed responsibility for the outcome of these civil cases. Some of these investor fraud claims were filed as late as last month.

Some cases discuss Merrill’s involvement in the marketing, underwriting, and selling of securitizations, or asset-backed securities. Other cases delve into Merrill’s dealings in the auction-rate securities market. A number of the securities fraud cases against Merrill are class action lawsuits. Merrill Lynch is the lead defendant in many of the cases and one of several financial firms named in the other complaints.

Some of the Securities Fraud Cases Against Merrill Lynch:
Gordon v. Royal Bank of Scotland Group plc.: Merrill Lynch and several other financial firms are accused of misrepresenting or omitting key information in offering documents when participating in securitization underwriting.

Public Employees Retirement System of Mississippi v. Merrill Lynch & Co. Inc.: Merrill is accused of violated specific sections of the 1933 Securities Act when it allegedly made bogus statements in registering and offering documents connected to asset-backed securities.

Teva Pharmaceutical Industries Ltd. v. Merrill Lynch & Co. Inc.: The pharmaceutical company plaintiff contends that it lost $5 million when investing in ARS that the broker-dealer structured and sold.

Ginsberg v. Merrill Lynch & Co. Inc.: This class action claim accuses Merrill of failing to tell shareholders that the firm was significantly exposed to collateralized debt obligations and other high-risk financial products. The plaintiffs claim that senior management at Merrill Lynch let bogus information go out during conference calls and in registration statements and news releases.

If you are a former Merrill Lynch investor and you believe you were the victim of securities fraud, our stockbroker fraud law firm would be happy to offer you a free case evaluation.


Related Web Resources:
Gordon v. Royal Bank of Scotland Group plc, S.D.N.Y., 09-cv-00704, 1/28/09

In re: Merrill Lynch & Co. Inc., Auction Rate Securities (ARS) Marketing Litigation, Justia Docket

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Posted In: Auction-Rate Securities , Bank of America , Broker Fraud , Class Action Lawsuits , Collateralized Mortgage Obligations , Financial Firms , Merrill Lynch

February 27, 2009

Morgan Stanley Court Case Demonstrates Why Securities Arbitration is Often a Better Forum

Many lawyers and investors complain about securities arbitration. According to Shepherd Smith Edwards & Kantas LTD LLP Founder and Stockbroker Fraud Attorney William Shephard, however, the following Morgan Stanley case is “one of many cases filed in court which would have likely not been dismissed in securities arbitration.”

Earlier this month, the U.S. District Court for the Southern District of New York tossed out a securities class action lawsuit filed against Morgan Stanley, Morgan Stanley DW Inc. (MSDWI), Morgan Stanley & Co. Inc. (MS&Co.), the Technology Fund, the Information Fund, Morgan Stanley Investment Management Inc., Morgan Stanley Investment Advisors Inc. (MSIA), and Morgan Stanley Distributors Inc. The class action case is on behalf of investors in the Morgan Stanley Information Fund and Morgan Stanley Technology Fund over alleged improprieties in initial public offering shares allocations, as well as alleged conflicts of interest between Morgan Stanley’s research and investment banking departments.

According to the court, the investors claim they lost millions of dollars in the purchase of the funds as a result of violations of the 1933 Securities Act. The plaintiffs are also claiming that Morgan Stanley, MSDWI, and MS&Co. publicly said that they kept a “Chinese Wall” between their research and investment banking departments so there wouldn’t be any conflicts of interest when, in fact, this wall had fallen and MS & Co. was acting to benefit its investment banking departments. They also claim they were told that analyst recommendations and research were not influenced by the interests of Morgan Stanley or its affiliates.

Among the conflicts of interest, the investors are alleging that the defendants engaged in at least one of the a number of roles involving companies that with shares included among the funds’ portfolio securities for the class periods, including:

• As underwriters for certain securities.
• As investment bankers for certain companies with securities in the funds’ portfolios.
• Preparing and sending out research reports and recommendations about companies that had shares in the funds’ portfolios.
• Trying to get first-time or more underwriting and additional business from the companies that had shares in the portfolios.

The plaintiffs contend that MS & Co. factored in how much investment bank business research analysts were able to secure when determining their total compensation. This resulted in MS & Co.'s promotion of Morgan Stanley shares or those of potential clients, which then would lead to the price inflation of the companies’ shares. They also claimed that the portfolio funds had a substantial amount of Morgan-Stanley sponsored-stocks and that Morgan Stanley took part in “laddering,” which involved rewarding customers with “hot” IPO shares when they went after research tie-ins that artificially inflated an IPO stock’s aftermarket share price.

The court, however, dismissed the lawsuit saying that the plaintiffs failed to plead material omissions that Morgan Stanley should have disclosed.

Related Web Resources:
Morgan Stanley Suits Over Conflicts Tossed, Law360.com, February 4, 2009

Morgan Stanley

Continue reading "Morgan Stanley Court Case Demonstrates Why Securities Arbitration is Often a Better Forum" »

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Posted In: Arbitration , Class Action Lawsuits , Financial Firms , Morgan Stanley

February 13, 2009

UBS Sued by New Orleans Employees’ Retirement System for Alleged Tax Scam that Helped the Rich While Causing Investor Losses

In the US District Court for the Southern District of New York, UBS AG was named as a defendant in a class action lawsuit alleging that the company engaged in a tax scam designed to help rich US investor avoid federal taxes. The plaintiff in the case is the New Orleans Employees Retirement System, which includes purchasers that publicly traded UBS securities between May 4, 2004 and January 26, 2009.

The 120-page complaint says that UBS would encourage analysts and investors to consider “new net money” that came to the investment bank during each reporting period as a major indicator of the company's performance and future prospect. The securities fraud class action lawsuit, however, contends that UBS employed a fraudulent scam to lure a material amount of this “new net money.” This scheme also helped extremely rich US investors avoid federal taxes by placing billions of their dollars in undeclared Swiss bank accounts.

The New Orleans Employees' Retirement System claims the investment bank's Swiss bankers acted improperly and violated Securities and Exchange Commission regulations when they sold securities in the United States even though they lacked the necessary licensing. The plaintiff contends that UBS's fraudulent actions led to the firm generating fees worth hundreds of millions of dollars each year and that these funds were used to create more loans through fractional lending.

The lawsuit also accuses UBS of taking action to conceal the tax scam from investors, the Internal Revenue Service, and the Department of Justice while purposely making it appear that the firm’s Wealth Management division was growing at an unprecedented pace.

The plaintiff says UBS's claims that it had “robust internal controls” and “state of the art risk management tactics” were misleading and false because while UBS was providing these reassurances to investors, it was in fact engaged in its tax evasion scam.

In addition to UBS, defendants in the class action case include Marcel Ospel, Phillip Lofts, Peter Wuffli, Mark Branson, Peter Kurer, Martin Liechti, Peter Kurer, and Raoul Weil.

The putative Class is seeking billions of dollars in damages.

Related Web Resources:
The New Orleans Employees' Retirement System, Through Its Counsel Labaton Sucharow LLP, Files Class Action Lawsuit Against UBS AG in Connection With Tax Haven Scheme -- UBS, Trading Markets, January 30, 2009

UBS AG

New Orleans Employees' Retirement System v. UBS AG, Justia Docket

Continue reading "UBS Sued by New Orleans Employees’ Retirement System for Alleged Tax Scam that Helped the Rich While Causing Investor Losses " »

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Posted In: Class Action Lawsuits , Financial Firms , Securities Fraud , UBS

July 25, 2008

Judge Approves Citigroup Falcon Fund Investors’ Decision to Withdraw Lawsuit

In New York, a judge has approved the decision by investors of a Citigroup Falcon Fund to drop their lawsuit asking for more data about how the bank plans to liquidate the fund.

On February 22, Citigroup announced it was providing the Falcon Funds a $500 million line of credit and consolidating $10 billion in liabilities and assets.
Citigroup began suspending distributions and redeptions and started closing down the fund in March. The fund’s value dropped by 80% and Citigroup offered to pay investors 45 cents for every dollar.

The investors had been asked to tender shares of Falcon Strategies Two LLC, but they wanted corrections made to the offering memo because misleading and missing information made it impossible for them to value their stakes. U.S. District Judge Sidney Stein, who this week approved the withdrawal of the investors' class action suit, rejected their motion to push forward the lawsuit about the tender offer. He said the plaintiffs were trying to turn the securities laws' anti-fraud provisions into provisions of broad disclosure.

The Falcon Funds mainly invested in fixed-income securities and other debt instruments, and they may have been exposed to weaknesses in the mortgage, credit, and bond markets. Citigroup brokers are accused of recommending the funds to investors looking for conservative investments when, in fact, the funds may have been accompanied by a high level of risk.

Related Web Resources:

The Law Firm of Shepherd Smith Edwards & Kantas LTD LLP Investigates Losses in Falcon Hedge Funds, Primenewswire.com, July 2, 2008

Citigroup Alternative Investments LLC : Falcon Strategies Two B LLC Hedge Fund, Stanford Law School

Continue reading "Judge Approves Citigroup Falcon Fund Investors’ Decision to Withdraw Lawsuit" »

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Posted In: Citigroup , Class Action Lawsuits

January 17, 2008

Class Action filed against Morgan Stanley on Behalf of Former Eastman Kodak Employees

Lawyers have filed a class action suit against Morgan Stanley for a group of former Eastman Kodak employees they say were persuaded to retire early and invest their retirement assets through Morgan Stanley.

According to the Dow Jones News Wire, the class action is seeking nearly a half billion dollars in damages from Morgan Stanley because its brokers advised the Kodak employees retire early with promises of financial security that never materialized. One of the attorneys estimates 1,000 investors or more are involved. If so, the claim seeks approximately $500,000 per former Kodak retiree.

Firms which report the results of class action cases estimate that recovery in securities class action cases is LESS THAN THREE PERCENT of the actual losses to investors! If one were to assume that 1,000 Kodak retirees lost, on average, $500,000, each may receive LESS THAN $15,000 according to this average.

Claims against brokerage firms for enticing employees to retire early in order to invest their retirement assets are not uncommon. In fact, such retirees’ claims are usually much more likely to be successful than those of other investors. A few have even resulted in awards of full recovery of losses, plus the retiree’s legal fees and costs. Securities attorneys report that brokerage firms are often likely to settle such individual claims for the majority of the losses.

As well, individual claims for investment fraud victims usually take much less time than lengthy class actions. For example, claim forms are now being sent to Enron investors based on their losses from 1997 to 2001. Eight to ten years is a long time to wait and, in fact, many Enron shareholders have likely misplaced or destroyed their records.

When class action claims are filed, class members can instead chose to hire their own attorney. By doing this, they often recover far more than victims who simply accept whatever outcome is obtained in the class action.

Class action cases for a few hundred or a few thousand dollars in losses by each victim can make sense. Even a small recovery is better than none. Yet, those with claims of $50,000 or more should instead discuss their options with an attorney skilled that area of the law and in representing victims in their own claims. Free consultations can be available to do this.

The securities fraud speicialists at Shepherd Smith and Edwards law firm have represented thousands of investors in securities arbitration against hundreds of securities firms, including Morgan Stanley and other major U.S. stock brokerage firms. Our experienced attorneys and staff assist retirees and other victims of wrongdoing of investment brokers, advisors or their firms. If you or someone you know might be a victim of such conduct, contact Shepherd Smith and Edwards for a free case evaluation by one of our attorneys.

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Posted In: Class Action Lawsuits , Morgan Stanley , Retirement Funds

July 31, 2007

Loss on Enron, Worldcom, etc.? It May Not Be Too Late!

Usually lawsuits must be filed within a few years after the wrongful acts, or when one knew or should have known of the wrongdoing. For example, federal and most state securities laws require lawsuits to be filed by 2 or 3 years after the problem is known or made public, but no later than 5 years in any event.

However, if a class action is filed on behalf of shareholders, this “tolls” the limit for filing a case for those the case seeks to represent. If, for example, if a shareholder decides to “opt out” of the class action, or it is later decided the class action can not be maintained, the “window” for such shareholders to file their own cases remains open. (Caution: The remaining time to file a case may then be quite short.)

WorldCom Inc. bondholders were in this position. A class action was filed, including a class of bondholders. Some of these bondholders decided to file their own case before the class was “certified” (when the court decides whether the class members have claims common to all of them, etc.) Using strange reasoning, the federal judge presiding over their case decided that, because these bondholders did not wait for the class to be certified, they could not use the tolling benefit of the class action. Because the case was otherwise filed too late, it was dismissed.

The U.S. Court of Appeals for the Second Circuit disagreed and reversed that decision. (In re WorldCom Securities Litigation, 2d Cir., No. 05-6979-cv, 7/26/07). The appeals court said that the initiation of a class action puts defendants on notice of the claims, whether or not plaintiffs choose to become part of the class and whether or not they file their cases before the class is certified.

Victims of securities fraud are often included in class actions without their knowledge. Often they are notified of class actions years later. Either way, class actions can keep the window open to file lawsuits for as long as a decade. Currently Enron shareholders await word from the U.S. Supreme Court whether the recent dismissal of their case against Merrill Lynch and others will become final. If so, they could individually or in small groups sue Merrill Lynch and the other defendants. All Enron shareholders should already be in contact with an attorney.

Shepherd Smith and Edwards represents victims of securities fraud. If you, your company or pension fund, or someone you know lost in Enron, it is worthwhile to learn whether it is too late to act. For more information contact us today to arrange a free consultation with one of our attorneys.

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Posted In: Class Action Lawsuits , Enron , Merrill Lynch

July 20, 2007

Securities Class Action Filings Fall Dramatically

WIth securities class actions being dismissed at an alerming rate and charges being filed against high-profile securities class action attorneys, it's not suprising that securities class action filings fell 42% in the first half of 2007. In fact, this is the fourth consecutive semi-annual drop in filings of such cases, according to the Stanford Law School Class Action Clearinghouse and Cornerstone Research.

The study group has propounded a variety of possible theories for the precipitous drop in securities class actions. One absolutely preposterous theory, unsupported by data, is that securities fraud has dropped because of prior settlements and fines. A spokesman from the Stanford group states: "Economic theory suggests these factors should lead to a decline in the incidence of fraud--exactly what we have seen occur since the middle of 2005."

Another of the group's questionable explanations for the decrease in securities class action filings is a "strong stock market" hypothesis. Under that hypothesis, decreased levels of class action filings correlate to a strong stock market with low volatility. Yet, historical data also does not support this hypothesis.

Meanwhile, no mention was made in the group's report of the chilling effect of the wholesale dismissal of large numbers of class action cases by Wall Street friendly judges, for example, the case filed by Enron shareholders against Merrill Lynch and other firms. One Stanford Group spokesmen mentioned, but dismissed, any possible effect of indictments, guilty pleas and threats currently persued against leading class action attorneys by politically appointed federal prosecutors.

Judging from its irrational thinking, this study must have either been conducted in Stanford’s “Ivory Tower” or, more likely, the study group is funded by Wall Street, insurance companies and/or other anti-lawsuit factions.

Although securities class action claims may soon be extinct Shepherd Smith and Edwards specializes in representing clients one at a time. We have served thousands of individual and institutional victims of misconduct by members of the securities industry. Hiring an experienced law firm can greatly increase your chance of recovery. To learn whether your or your firm's investments were mishandled contact us to arrange a free consultation with one of our attorneys.

Related Web Resources:

The Stanford Group's latest mid-year report of securities class action claims.


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Posted In: Class Action Lawsuits

July 19, 2007

Enron Victims, Now Victims of Their Own Government, Finally Find Friends in Former Regulators

Defrauded Enron shareholders recently lost again, this time as victims of federal judges who seem intent on helping Wall Street crooks rather than Wall Street victims. With their case before the U.S. Supreme Court, the Enron shareholders lost yet again when the SEC and Bush Administration, who had indicated they would intervene, missed a deadline. Now, three former SEC Commissioners are asking the Supreme Court to allow them to intervene to help.

In 2001, the total value of Enron shares plummeted from over $80 billion to almost zero. Enron officials and its auditors were indicted, several persons were convicted and some are now serving jail terms. The auditing firm of Arthur Anderson was forced to close. The scandal then turned to several Wall Street firms which are claimed ot have played a large role in assisting Enron to falsify its books.

Several individuals and firms were accused - and four former Merrill Lynch Brokers were convicted of by a jury - for arranging loans to appear as sales in order for Enron to book the loans as profits. Yet, just as the Enron shareholders’ claims against Merrill Lynch were headed for trial, business-friendly appointed appellate judges dismissed the case.

The judges’ decision stated that the federal securities law simply does not allow investors to recover from Wall Street firms that assist companies to defraud them. (Changes by Congress in the last decade forbid securities class actions to be filed under any other law.) The Enron shareholders then appealed to the Supreme Court to try to reinstate their case.

Because this is the same law the SEC must use to regulate Wall Street participants, one would think the “Wall Street police” would object to being hamstring by this outcome. However, the politically appointed SEC commissioners now take the side of Wall Street firms rather than the investors it is designed to protect. In fact, the SEC did nothing on the Enron case until embarrassed by the press into stating it would intervene on behalf of the investors.

The SEC says it submitted documents to the Office of the U.S. Solicitor General, which speaks for the Bush administration before the Supreme Court. However, the Solicitor General’s office says it did not accept the SEC's position and instead allowed the deadline to pass for filing legal briefs in the case. That decision came after both President Bush and Treasury Secretary Henry Paulson said that if the Enron shareholders were allowed to win this would put U.S. companies at a disadvantage to foreign rivals and expose businesses to liability for fraud.

Shocked by the situation, a bipartisan group of former SEC leaders, including former SEC Chairmen William H. Donaldson (R) and Arthur Levitt (D), and former SEC Commissioner Harvey J. Goldschmid (D), have now asked the Supreme Court for permission to submit their own post-deadline brief on behalf of the Enron shareholders calling this a "critical" case.

"Holding liable wrongdoers who actively engage in fraudulent contact that lacks a legitimate business purpose does not hinder, but rather enhances, the integrity of our markets and our economy," wrote their lawyers, New York University law professor Arthur R. Miller and former SEC lawyer Meyer Eisenberg. "We believe that the integrity of our markets is their strength."

Federal Prosecutors in the Bush Administration also seek to put the Enron shareholders' lead attorney in jail and recently indicted his former firm and law partners.

Shepherd Smith and Edwards is a securities law firm which represents investors nationwide in claims against investment firms. If they fail in their appeal, we plan to represent many of the Enron shareholders in individual claims against Merrill Lynch and others. To learn whether we can assist you in a claim contact us to arrange a free confidential consultation with one of our attorneys.

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Posted In: Class Action Lawsuits , Enron , SEC

July 8, 2007

Update: Do Insurance Companies Use Scam Artists to Sell Unsuitable Annuities to the Elderly?

According to the Government Accounting Office (GAO) Americans over 65 hold more than $15 trillion in assets and, with "Baby Boomers" soon reaching retirement age, that figure will likely balloon. As financial firms, including insurance companies, design products aimed at this pot of gold, scam artists lick their chops for a piece of the action. Unfortunately, their paths cross.

As we very recently reported, a federal judge in Hawaii dismissed a class action suit against Midland National Insurance saying that, because different sales pitches were used by different salespersons, the claims by elderly Hawaiians can not go forward. Meanwhile, regulators warn that scam artists are selling insurance products to the elderly. Thus, it appears that insurance companies can simply look the other way while con artists victimize the elderly using their annuities. [OUR FIRM PURSUES CLAIMS ONE AT A TIME TO AVOID THIS PROBLEM.]

A NY Times article today reports that a Massachusetts insurance agent became a "certified senior adviser" then advertised this and other credentials to retirees. Yet, he did not mention how easily he received that title: He paid $1,095 for a correspondence course, then took a multiple-choice exam with dumbed-down questions. The agent, and over 18,700 other applicants since 1997, passed the course.

The article further states that insurance companies, eager for sales representatives, embraced this agent as they have thousands of other such newly credentialed advisers. As his retiree business boomed, insurers paid the agent commissions over $720,000 the following year.

Massachusetts regulators then stepped in, filing a lawsuit claiming the agent improperly sold annuities and other products to the elderly. While the agent denies any wrongdoing, one of his clients - a 73-year-old widow caring for a son with Down syndrome - said he tricked her into buying complicated insurance contracts that left her unable to pay dental and home-repair bills. "His office was filled with things saying he was certified to help seniors," she said

According to the Times article, this salesman is one of tens of thousands of financial advisers who work hand-in-hand with insurance companies to reach "older Americans using impressive-sounding credentials like 'certified elder planning specialist,' 'registered financial gerontologist,' 'certified retirement financial adviser' and 'certified senior adviser'."

In only a few days, titles are obtained sounding similar to "certified financial planner" (CFP), and other credentials that require years of study, difficult tests and extensive background checks. "The degree isn't worth the paper it's written on," said another Massachusetts financial adviser, who took the certified senior adviser exam but does not use the credential. "It's a scam - a way to put a title on a business card that impresses gullible seniors," he said.

Advocates of the elderly complain that scam artists, many using such credentials, often give financial advice they are not qualified to offer. Yet, an overwhelming number are being paid by country's largest insurance companies - including Allianz Life, Old Mutual Financial Network and American Equity Investment Life Insurance - to sell elderly clients complicated investments that economists say most retirees should never own.

Some programs linked to insurance companies have taught agents to use abusive sales techniques, regulators say. Allianz, Old Mutual and American Equity have been listed as sponsors of seminars with names like the "Million Dollar Academy", where thousands of sales representatives were advised to scare retirees by saying, "I am all that stands between you and potential catastrophic loss." Other seminars instructed agents to "drive a wedge" between retirees and their established advisers.

"The insurers are happy to turn a blind eye to what salesmen are doing, as long as they make a sale," said Minnesota's attorney general, who is suing several companies, including Allianz, contending their products are inappropriate.

Allianz, Old Mutual and American Equity, whose revenues last year were a combined $163 billion, said they investigate the backgrounds of all agents, screen all sales to consumers to make sure they are appropriate, and have terminated representatives using improper sales methods. Those companies said they were not aware of abusive methods taught at any seminar they endorsed and otherwise distanced themselves from such tactics.

The North American Securities Administrators Association, an association of state regulators, reports that over one-third of all cases of financial exploitation of the elderly involve annuities. Hundreds of class actions have been filed against insurers over annuity sales to the elderly, including one in Minnesota against Allianz for nearly 400,000 plaintiffs. Yet, the latest ruling in Hawaii may change that.

Sales agents accused of wrongdoing say they followed the guidance of insurance companies. "I did what I was told," says the agent charged by Massachusetts regulators ..."If it was so wrong, why did everyone let me do it for so many years?"

Meanwhile, insurance companies pay commissions on annuities which are often two, three or even 10 times the amount paid on mutual funds, which have more strictly regulated cost disclosures. Such high and difficult to ascertain commissions are no doubt a factor in why annuities sales, according to the Insurance Information Institute, reached $182.8 billion last year.

Shepherd Smith and Edwards is a securities litigation firm dedicated to helping those who are victims of investment fraud to recover their losses. We have filed hundreds of claims involving improper sales of annuities to retirees and others. Contact us today to schedule a free consultation.

Related Web Resource:

Referenced New York Times Article

Posted by Shepherd Smith Edwards & Kantas LTD LLP | | Email This Post

Posted In: Annuities and Insurance , Class Action Lawsuits , Senior Investors

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