Colling, Gilbert, Wright & Carter Securites Fraud

Friday, June 27, 2008

Federal Reserve Releases Minutes of Bear Stearns Rescue Meeting

A June 27, 2007 Wall Street Journal article reveals the discussions surrounding the Fed's rescue plan to save Bear Stearns after the company was brought to the brink of bankruptcy by two hedge fund managers (see our June 19, 2007 Bear Stearns Blog entry).

The Bear Stearns fund managers, much like managers of the Schwab YieldPlus, Morgan Keegan Funds and the Evergreen Ultra-Short Fund, over concentrated their investments in untested and volatile subprime mortgage backed securities and then covered up the risk associated with those funds. The subsequent collapse of the credit markets has cost investors billions of dollars that they thought were invested in relatively safe, money market alternatives.

If you would like a case evaluation for losses associated with any of the funds listed above, email wyoung@thefloridafirm.com or call (866) 352-3476.

posted by William B. Young Jr. Esq. at 7:23 AM

Friday, June 20, 2008

Evergreen Liquidating Ultra-Short Fund After 18% Drop

Wachovia Corp., the parent company of Wachovia Bank, has decided to liquidate the shares of their Evergreen Ultra Short Opportunities Fund. The fund, much like the Schwab Yield Plus, has suffered extensive losses due to overexposure to sub prime mortgage backed securities. Many investors who believe they were mislead as to the fund holdings are filing Evergreen Fund lawsuits.

According to a June 19, 2008 Bloomberg news article, Investors in the Ultra-Short Opportunities Fund will receive $7.48 a share, or the June 18, 2008 net asset value, in return for their shares. Wachovia will finance the redemptions to guarantee the price. This news came on the heals of the arrest of two Bear Stearns hedge fund managers who allegedly lied to investors about the mortgage related risk in the two funds they managed while liquidating their own shares (front running).

The Evergreen fund has lost 20 percent this year, second worst among ultra-short bond funds tracked by Morningstar. Schwab's YieldPlus fund, which is down 29 percent this year, is the worst performer among ultra-short funds, which were marketed to investors as safe alternatives to money-market accounts that provided higher returns by taking slightly more risk.

If you have experienced Evergreen Fund losses in the Evergreen Ultra-Short Opportunities Fund, Schwab Yield Plus or any of the Morgan Keegan RMK Income Funds, please contact our office at (866) 352-3476 or email us for a free case evaluation. Thank you.

posted by William B. Young Jr. Esq. at 7:32 PM

Thursday, June 19, 2008

Crime and Delusion on Wall Street - Two Former Bear Stearns Fund Managers Arrested

The credit crisis has hit wall street again as two Bear Stearns hedge fund managers were charged with defrauding investors by concealing problems that led to last year's infamous hedge fund collapse and brought the firm to the brink of bankruptcy, costing investors and employees billions. These arrests are the first in what regulators and law enforcement claims will be a widening probe of managers and their investments in sub-prime vehicles and structured products. See the June 19, 2008 CNN/MONEY article.

The fund managers' arrests raised investor fears the worst of the subprime mortgage crisis is not over and investment firms brace for the next round of bond and income fund losses. This is just the latest scandal brought on by Wall Street's over indulgence in subprime investment vehicles and the subsquent cover ups that have cost investors billions of dollars.

Bond fund investors who have lost money in either the Bear Stearns hedge funds, the RMK Morgan Keegan Funds, and/or the the Schwab YieldPlus Select and Investors funds, may email our offices for complimentary case evaluation.

posted by William B. Young Jr. Esq. at 5:22 PM

Thursday, June 12, 2008

Schwab YieldPlus Manager Sold Shares held by other Schwab Funds While Company Encouraged Customers to Hold Their Shares

A Naples law firm has filed a FINRA arbitration claim on behalf of a Vero Beach investor alleging the risk level of the Schwab YieldPlus Fund was understated and the Fund was misrepresented as a safe alternative to cash. According to a June 12, 2008 Yahoo Finance press release , a key allegation in the claim, filed on behalf of the Florida investor, is the fact "YieldPlus manager Kimon Daifotis sold 2.9 million shares of the YieldPlus Fund between Jan. 31, 2008 and April 1, 2008 on behalf of other Schwab mutual funds. The YieldPlus Fund's stock value dropped from $8.93 per share to $6.98 per share during that time, a 21.8 percent decline. At the same time, Schwab's portfolio managers and the company's web site encouraged investors to hold their shares of the YieldPlus Fund, according to the arbitration claim filed with FINRA (Financial Industry Regulatory Authority)."

Althoug the article goes on to say although class action lawsuits have been filed against Schwab, investors may want to pursue individual claims. Please contact our firm to explore your options for recovery of your losses.
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posted by William B. Young Jr. Esq. at 7:13 PM

Tuesday, June 10, 2008

Schwab May Pay Up to $260 Million to Settle Claims

A recent Bloomberg article indicates Charles Schwab & Co. may end up paying $260 million or a half-quarter's profit to save face with some the firm's Schwab YieldPlus mutual fund clients. While the firm is not offering settlements to all investors (retirees and less sophisticated investors appear to get preference), the company is apparently trying to earn back some of the good will lost with the YieldPlus' stunning losses over the past several months.

Although Schwab is offering some fund holders settlements, the amounts typically are a small fraction of most investor losses. The Attorneys at Colling Gilbert Wright & Carter believe you should know all your options for recovery before settling with Schwab and signing away any future rights you may have. Please contact us for a free case evaluation.

posted by William B. Young Jr. Esq. at 1:01 PM

Wednesday, June 4, 2008

Auction Rate Securities (ARS) - What You Need to Know

Many investors who were told they could safely place their money in an Auction Rate Security (ARS) with the assurance the investment would be liquid. However, recent turmoil in the credit markets has created a living nightmare for those in need of their cash.

Practically every major bank and investment firm marketed these products to their clients as a safe alternative to money markets, even certificates of deposit. Now, as the auctions have failed, many investors wonder if they will ever recover their principal, even as they still receive the periodic interest payments.

How do you know if your investment is likely to be wiped out? Depending on the firm and the underlying investment(s) in the ARS, you may have a devistating financial crisis or an annoying short-term loss of the use of your money. The underlying investment often holds the key to which situation you face. Many ARS's have AAA rated or government guaranteed investments within the security. Others are backed by problem loan portfolios or defaulting bond holdings. How the security is priced on your statement is also indicative of the severity of your problem. The information (or lack thereof) you are receiving from your bank or brokerage can also be telling.

Our firm is actively working with ARS holders to determine the nature of their investment and the options available for recovering their frozen assets. Contact us today for a free consultation.

posted by William B. Young Jr. Esq. at 6:58 PM

Schwab Now Offerring Discounted Commissions for YieldPlus Losses

The news continues to get worse for Charles Schwab YieldPlus (SWYSX and SWYPX) victims. Schwab was offering "good will" payments to select Schwab YieldPlus fund holders who sustained losses. This was documented in my May 19, 2008 blog entry. These "good will" payments are actually settlements as YieldPlus owners must sign a release to receive compensation. Even then, the payments were typically in the 2 to 10cents on the dollar loss range. Also it is believed Charles Schwab does not include reinvested dividends in their loss calculations.

Very recently Schwab has begun offering clients discounted commissions or fees instead of cash payments. The offers still work out to the same cents on the dollar loss offers Schwab was making earlier but now clients must remain with the firm to recoup any type of compensation for their losses. Some clients find this insulting after the way this fund was represented as an alternative to money market with a slightly higher yield and slightly higher risk. Most investors would not knowingly risk 25 or 30% of their principal for a half to one percent higher yield.

The attorneys at Colling Gilbert Wright & Carter believe filing an individual arbitration claim, rather then participating in a class action or settling with Schwab, offers clients the best opportunity to recover a meaningful portion of their YieldPlus losses.

posted by William B. Young Jr. Esq. at 10:10 AM

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