Colling, Gilbert, Wright & Carter Securites Fraud
Keep up on the latest Securities Fraud news and litigation by following our blog.
Friday, August 29, 2008
Picking Up The Pieces - Morgan Keegan Attempts to Move Forward After RMK Fund Debacle
An August 22, 2008 Memphis Business Journal article chronicles life at Morgan Keegan post Kelsoe and the RMK fund meltdown.
In essence, Morgan Keegan has transferred management of the seven distressed funds from in-house manager Morgan Asset Management (MAM) to outside boutique manager Hyperion Brookfield Asset Management (Hyperion). Hyperion reportedly specializes in turning around distressed mutual funds but most observers hold out little hope these funds will ever return to form. One Morningstar analyst was quoted as saying "It's good for fresh eyes,..but I still think they inheriting junky portfolios." Ouch!
For Morgan Keegan's part, distancing Kelsoe and his team from the firm and the funds was a priority. They allegedly overloaded the three open-end and four closed-end bond/income funds with mortgage backed securities and other structured products that became illiquid and difficult to value during last summer's credit market implosion. See my August 23, 2008 blog regarding the recipe for disaster that was the investment strategy of the RMK funds.
The RMK Select High Income Fund (MKHIX); the RMK Select Intermediate Bond Fund (MKIBX), the RMK Select Short Term Bond Fund (MSBIX); the RMK High Income, Inc. (RHY), the RMK Strategic Income, Inc. (RSF); the RMK Advantage Income, Inc. (RMA); and the RMK Multi-Sector Income, Inc.(RHY) have lost between 50 and 80% in the past year alone. Fund holders, many of whom were sold these funds as secure investments, are angry and lashing out with lawsuits and arbitration claims to recover their losses.
Morgan Keegan and it's investors aren't the only losers here. Another repercussion from the RMK debacle is the reported exodus of financial advisers who were also allegedly mislead by the fund managers and marketing side. With their client books decimated and their reputations tarnished, many MK reps are seeking higher ground on which to rebuild their tattered careers.
The question becomes...can Morgan Keegan survive and prosper post-RMK? The company reportedly has insurance to cover losses related to investor suits but the long-term future remains a subject of speculation. Clearly, the losses related to the RMK Funds was not what Regions Financial Corp. bargained for when they purchased the brokerage firm (the bank wrote off $75 million in the 4th qtr of 2007 related to two of the funds' losses). However, observers say the brokerage-related gains to Regions operations still outweigh the losses. The firm produced a net income of $165.9 million on revenues of $1.3 billion, "a good return on capital" according to FTN Midwest Securities bank analyst Jeff Davis and new Morgan Keegan CEO, John Carson predicts another good year in 2008. However, as lawsuits and arbitration claims continue to stack up, only time will truly tell.
For further information on the RMK Fund arbitration litigation, please contact Colling, Gilbert, Wright & Carter. Thank you.
In essence, Morgan Keegan has transferred management of the seven distressed funds from in-house manager Morgan Asset Management (MAM) to outside boutique manager Hyperion Brookfield Asset Management (Hyperion). Hyperion reportedly specializes in turning around distressed mutual funds but most observers hold out little hope these funds will ever return to form. One Morningstar analyst was quoted as saying "It's good for fresh eyes,..but I still think they inheriting junky portfolios." Ouch!
For Morgan Keegan's part, distancing Kelsoe and his team from the firm and the funds was a priority. They allegedly overloaded the three open-end and four closed-end bond/income funds with mortgage backed securities and other structured products that became illiquid and difficult to value during last summer's credit market implosion. See my August 23, 2008 blog regarding the recipe for disaster that was the investment strategy of the RMK funds.
The RMK Select High Income Fund (MKHIX); the RMK Select Intermediate Bond Fund (MKIBX), the RMK Select Short Term Bond Fund (MSBIX); the RMK High Income, Inc. (RHY), the RMK Strategic Income, Inc. (RSF); the RMK Advantage Income, Inc. (RMA); and the RMK Multi-Sector Income, Inc.(RHY) have lost between 50 and 80% in the past year alone. Fund holders, many of whom were sold these funds as secure investments, are angry and lashing out with lawsuits and arbitration claims to recover their losses.
Morgan Keegan and it's investors aren't the only losers here. Another repercussion from the RMK debacle is the reported exodus of financial advisers who were also allegedly mislead by the fund managers and marketing side. With their client books decimated and their reputations tarnished, many MK reps are seeking higher ground on which to rebuild their tattered careers.
The question becomes...can Morgan Keegan survive and prosper post-RMK? The company reportedly has insurance to cover losses related to investor suits but the long-term future remains a subject of speculation. Clearly, the losses related to the RMK Funds was not what Regions Financial Corp. bargained for when they purchased the brokerage firm (the bank wrote off $75 million in the 4th qtr of 2007 related to two of the funds' losses). However, observers say the brokerage-related gains to Regions operations still outweigh the losses. The firm produced a net income of $165.9 million on revenues of $1.3 billion, "a good return on capital" according to FTN Midwest Securities bank analyst Jeff Davis and new Morgan Keegan CEO, John Carson predicts another good year in 2008. However, as lawsuits and arbitration claims continue to stack up, only time will truly tell.
For further information on the RMK Fund arbitration litigation, please contact Colling, Gilbert, Wright & Carter. Thank you.
posted by
William B. Young Jr. Esq.
at
12:24 PM
Saturday, August 23, 2008
Morgan Keegan Funds "Example of How to Sink a Fund in Short Order"
According to an August 22, 2008, Memphis Business Journal article Morningstar senior fund analyst, Lawrence Jones, has cited the Morgan Keegan & Co. RMK Select and RMK Closed-End Funds as an "investment manager case study" on how illiquid, thinly traded securities can blow up a mutual fund.
This revelation is not news to purchasers of the RMK Select High Income Fund (MKHIX), the RMK Select Intermediate Bond Fund (MKIBX), RMK Select Short Term Bond Fund (MSBIX), RMK Select High Income, Inc. (RHY), RMK Strategic Income, Inc. (RSF), RMK Advantage Income, Inc.(RMA), and RMK Mult-Sector Income Inc. (RHY). These investors, many of whom are retirees, thought they were purchasing conservative, income producing funds. Instead, they have suffered catastrophic losses that can never be recovered.
At the center of the controversy is the allegation Morgan Keegan and its representatives aggressively marketed and sold these funds as conservative investments with minimal share price fluctuation. However, as a result of the thinly traded, illiquid and esoteric nature of the underlying holdings, the funds have lost approximately 80% of their value over the past year.
There are numerous class actions lawsuits and arbitration claims alleging the nature of the investments and the risk associated with them was not disclosed to investors. If you believe you were sold any of the above referenced RMK Morgan Keegan Select open-end funds or Regions Morgan Keegan closed-end funds without adequate risk disclosure, please contact our office for a free case evaluation.
This revelation is not news to purchasers of the RMK Select High Income Fund (MKHIX), the RMK Select Intermediate Bond Fund (MKIBX), RMK Select Short Term Bond Fund (MSBIX), RMK Select High Income, Inc. (RHY), RMK Strategic Income, Inc. (RSF), RMK Advantage Income, Inc.(RMA), and RMK Mult-Sector Income Inc. (RHY). These investors, many of whom are retirees, thought they were purchasing conservative, income producing funds. Instead, they have suffered catastrophic losses that can never be recovered.
At the center of the controversy is the allegation Morgan Keegan and its representatives aggressively marketed and sold these funds as conservative investments with minimal share price fluctuation. However, as a result of the thinly traded, illiquid and esoteric nature of the underlying holdings, the funds have lost approximately 80% of their value over the past year.
There are numerous class actions lawsuits and arbitration claims alleging the nature of the investments and the risk associated with them was not disclosed to investors. If you believe you were sold any of the above referenced RMK Morgan Keegan Select open-end funds or Regions Morgan Keegan closed-end funds without adequate risk disclosure, please contact our office for a free case evaluation.
posted by
William B. Young Jr. Esq.
at
2:28 PM
Saturday, August 16, 2008
Wachovia Securities to buy back $8.8 billion in Auction Rate Securities
According to an August 15, 2008 InvestmentNews article, the brokerage and capital markets divisions of Wachovia Corp. have agreed to repurchase $8.8 billion in auction rate securities. The agreements, like those reached with Merrill Lynch, UBS, Citigroup, Morgan Stanley and JP Morgan Chase, came after investigations by state regulators into the sales practices surrounding these securities. Billions of investor dollars have been frozen since the market for ARS collapsed in February.
Wachovia Securities LLC, the bank's brokerage division, and Wachovia Capital Markets LLC of Charlotte, N.C., have also agreed to $50 million in fines to be distributed among the effected states.
Under the proposed settlement, Wachovia will offer to repurchase roughly
$5.7 billion of ARS held by individual investors, small businesses and charitable organizations and $3.1 billion of ARS held by other investors.
Following the announcement, Wachovia shares fell 12 cents to $15.69.
For additional information, please contact our offices.
Wachovia Securities LLC, the bank's brokerage division, and Wachovia Capital Markets LLC of Charlotte, N.C., have also agreed to $50 million in fines to be distributed among the effected states.
Under the proposed settlement, Wachovia will offer to repurchase roughly
$5.7 billion of ARS held by individual investors, small businesses and charitable organizations and $3.1 billion of ARS held by other investors.
Following the announcement, Wachovia shares fell 12 cents to $15.69.
For additional information, please contact our offices.
posted by
William B. Young Jr. Esq.
at
11:15 AM
Friday, August 8, 2008
Morgan Keegan Accused of Selling "Toxic Debt" to Seniors
According to a August 8, 2008, Business Week article, Memphis brokerage firm Morgan Keegan is under fire for allegedly failing to disclose the subprime risks of seven mutual funds. The subprime securities that created massive losses to Wall Street investment firms have created tragic losses for individual investors as well.
Regulators in at least five states are investigating whether the Memphis brokerage firm failed to disclose the level of risk associated with seven mutual funds overweighted in toxic debt and whether it inappropriately sold them to seniors and other small investors. Numerous lawsuits and arbitration claims filed around the country allege the brokerage firm did.
Many senior retirees were sold the RMK Morgan Keegan funds with the assurance the funds were safe and appropriate conservative investors who didn't wan't to expose their retirement funds to risk. However, undisclosed to these investors, the RMK Morgan Keegan bond and income fund holdings were over-concentrated in risky securities, including some backed by subprime mortgages. Collateralized debt obligations, the same investments that have wiped out billions on Wall Street, made up a quarter of the fund holdings.
The RMK Morgan Keegan closed and open-ended bond and income funds have lost, on average, approximately 75% in the past year, making this family of funds one of the the worst-performing funds in their respective categories.
The investigations, lawsuits, and arbitration cases focus on bond funds formerly run by Keegan's James C. Kelsoe, once a star manager. Unlike many peers, Kelsoe sidestepped the problems in the bond market when WorldCom imploded in 2002. His RMK Select High Income ranked in the top 1% of its category every year but one between 2000 and 2005, according to Morningstar, a mutual fund rating service.
Morgan Keegan promoted Kelsoe's funds as a stable source of income. For example, sales materials for the RMK High Income fund noted its "relative conservative credit posture" without "excessive credit risk." However, these same "conservative" funds owned mortgage pools as well as other exotic and untested complex, thinly traded, securities such as collateral debt obligations (CDOs), allegedly violating rules in the prospectuses limiting such investments.
Over the past year, the seven funds under Kelsoe's purview have lost 51% to 86%. On July 29 shareholders voted to replace Morgan Keegan and hire New York's Hyperion Brookfield Asset Management (BAM) to run the funds.
If you have experienced losses in a RMK Morgan Keegan bond or income fund(s), please contact our office for a free case evaluation.
Regulators in at least five states are investigating whether the Memphis brokerage firm failed to disclose the level of risk associated with seven mutual funds overweighted in toxic debt and whether it inappropriately sold them to seniors and other small investors. Numerous lawsuits and arbitration claims filed around the country allege the brokerage firm did.
Many senior retirees were sold the RMK Morgan Keegan funds with the assurance the funds were safe and appropriate conservative investors who didn't wan't to expose their retirement funds to risk. However, undisclosed to these investors, the RMK Morgan Keegan bond and income fund holdings were over-concentrated in risky securities, including some backed by subprime mortgages. Collateralized debt obligations, the same investments that have wiped out billions on Wall Street, made up a quarter of the fund holdings.
The RMK Morgan Keegan closed and open-ended bond and income funds have lost, on average, approximately 75% in the past year, making this family of funds one of the the worst-performing funds in their respective categories.
The investigations, lawsuits, and arbitration cases focus on bond funds formerly run by Keegan's James C. Kelsoe, once a star manager. Unlike many peers, Kelsoe sidestepped the problems in the bond market when WorldCom imploded in 2002. His RMK Select High Income ranked in the top 1% of its category every year but one between 2000 and 2005, according to Morningstar, a mutual fund rating service.
Morgan Keegan promoted Kelsoe's funds as a stable source of income. For example, sales materials for the RMK High Income fund noted its "relative conservative credit posture" without "excessive credit risk." However, these same "conservative" funds owned mortgage pools as well as other exotic and untested complex, thinly traded, securities such as collateral debt obligations (CDOs), allegedly violating rules in the prospectuses limiting such investments.
Over the past year, the seven funds under Kelsoe's purview have lost 51% to 86%. On July 29 shareholders voted to replace Morgan Keegan and hire New York's Hyperion Brookfield Asset Management (BAM) to run the funds.
If you have experienced losses in a RMK Morgan Keegan bond or income fund(s), please contact our office for a free case evaluation.
posted by
William B. Young Jr. Esq.
at
6:47 AM
Thursday, August 7, 2008
New York Attorney General Settles With Citigroup for $7Billion
New York Attorney General Andrew Cuomo issued a press release indicating he has reached a settlement worth more than $7 billion with Citigroup that requires the company to buy back auction-rate securities from about 40,000 customers in the U.S.
In order to garner the settlement, the AG had threatened to charge the Citi with fraudulent sales practices regarding auction-rate securities as well as the destruction of key documents.
One of the terms of the settlement requires Citigroup to buy back securities from retail customers, charities and small to mid-sized businesses by Nov. 5, 2008. In additoin, the banking giant will have to pay the State of New York $50 million in civil penalties with an additional $50 million to the North American Securities Administrators Association.
If you have purchased an Auction Rate Security, please contact our office for additonal information.
---
In order to garner the settlement, the AG had threatened to charge the Citi with fraudulent sales practices regarding auction-rate securities as well as the destruction of key documents.
One of the terms of the settlement requires Citigroup to buy back securities from retail customers, charities and small to mid-sized businesses by Nov. 5, 2008. In additoin, the banking giant will have to pay the State of New York $50 million in civil penalties with an additional $50 million to the North American Securities Administrators Association.
If you have purchased an Auction Rate Security, please contact our office for additonal information.
---
posted by
William B. Young Jr. Esq.
at
10:52 AM
Monday, August 4, 2008
Merrill Lynch Accused of Influencing Research for Own Benefit
According to a newly released Bloomberg article, four days before Merrill Lynch & Co. (ML) stopped supporting the auction-rate securities market and left and thousands of individual investors stuck with securities they couldn't sell, the firm's analysts recommended clients buy the toxic paper.
For example, one analyst wrote in a Feb. 8, 2008 research note ``Reports of the imminent demise of the auction market seem to be greatly exaggerated, again." The same analyst also remarked "we continue to be impressed by the auction market's resiliency.''
The remarks show Merrill's researchers were ``co-opted''during a seven-month drive by the New York-based firm's sales force to prevent a meltdown in the $330 billion market, Massachusetts Secretary of State William Galvin alleged yesterday in an administrative complaint accusing ML of faud. See July 31,2008 Boston.com article
According to Galvin, ``Research analysts routinely soft-pedaled significant negative
events affecting liquidity in the auction markets,'' he said in the complaint. At the same time, managers knew ``the auction markets were not functioning properly and were in fact in significant danger of collapsing,'' he said. ML has denied that its analysts acted improperly in recommending auction-rate securities (ARS).
ARS's are long-term bonds or preferred shares with interest rates adjusted typically every seven, 28 or 35 days through a dealer-run bidding process, providing them with the characteristics of money-market investments. Firms historically supported the auctions, without contractual obligation, when demand waned. Merrill is the second bank to face a complaint by Galvin after brokers stopped supporting the auctions in mid-February as losses from securities tied to subprime mortgages mounted. Massachusetts last month filed a complaint against UBS, Switzerland's biggest bank.
If you have lost money or had assets frozen in an ARS purchased from Merrill Lynch or UBS, contact our office for a free case evaluation.
For example, one analyst wrote in a Feb. 8, 2008 research note ``Reports of the imminent demise of the auction market seem to be greatly exaggerated, again." The same analyst also remarked "we continue to be impressed by the auction market's resiliency.''
The remarks show Merrill's researchers were ``co-opted''during a seven-month drive by the New York-based firm's sales force to prevent a meltdown in the $330 billion market, Massachusetts Secretary of State William Galvin alleged yesterday in an administrative complaint accusing ML of faud. See July 31,2008 Boston.com article
According to Galvin, ``Research analysts routinely soft-pedaled significant negative
events affecting liquidity in the auction markets,'' he said in the complaint. At the same time, managers knew ``the auction markets were not functioning properly and were in fact in significant danger of collapsing,'' he said. ML has denied that its analysts acted improperly in recommending auction-rate securities (ARS).
ARS's are long-term bonds or preferred shares with interest rates adjusted typically every seven, 28 or 35 days through a dealer-run bidding process, providing them with the characteristics of money-market investments. Firms historically supported the auctions, without contractual obligation, when demand waned. Merrill is the second bank to face a complaint by Galvin after brokers stopped supporting the auctions in mid-February as losses from securities tied to subprime mortgages mounted. Massachusetts last month filed a complaint against UBS, Switzerland's biggest bank.
If you have lost money or had assets frozen in an ARS purchased from Merrill Lynch or UBS, contact our office for a free case evaluation.
posted by
William B. Young Jr. Esq.
at
9:28 AM
Sunday, August 3, 2008
Merrill Lynch Takes Further Steps to Raise Cash and Reduce Subprime Risk Exposure
According to an article in the July 28, 2008 Wall Street Journal, Merrill Lynch (ML) announced a series of moves intended to lower the firm's risk exposure and further strengthen its balance sheet.
In a further blow to investors already reeling from subprime related investment losses, ML intends to raise approx. $8.5 billion by issuing new shares thereby diluting the stock value of current shareholders by approximately 34%. Sadly this story is looking more and more like Bear Stearns part deux.
The company also plans a third-quarter write-down of $4.4 billion associated with the sale of collateralized debt obligations (CDO's), a $500 million loss on the termination of credit hedges and an $800 million "maximum loss" related to the potential settlement of other CDO hedges. Merrill also expects to record an expense of $2.5 billion related to a reset payments and $2.4 billion of dividends as a result of the exchange of convertible preferred stock for common stock.
ML is still reeling from the firms huge subprime mortgage exposure and auction rate security (ARS) debacle. The wire house firm, as well as several others, has been under fire from state regulators for alleged misrepresentations in the sale of ARS's to retail investors.
Some observers believe ML's bad bet on subprime related debt and structured products may lead to the firm's ultimate demise. See Evan Cooper's opinion piece in the June 30, 2008 Investment News.
Those investors who have purchase ML common stock or were sold an ARS by a Merrill Lynch representative should contact our office to determine if you have a claim for damages.
In a further blow to investors already reeling from subprime related investment losses, ML intends to raise approx. $8.5 billion by issuing new shares thereby diluting the stock value of current shareholders by approximately 34%. Sadly this story is looking more and more like Bear Stearns part deux.
The company also plans a third-quarter write-down of $4.4 billion associated with the sale of collateralized debt obligations (CDO's), a $500 million loss on the termination of credit hedges and an $800 million "maximum loss" related to the potential settlement of other CDO hedges. Merrill also expects to record an expense of $2.5 billion related to a reset payments and $2.4 billion of dividends as a result of the exchange of convertible preferred stock for common stock.
ML is still reeling from the firms huge subprime mortgage exposure and auction rate security (ARS) debacle. The wire house firm, as well as several others, has been under fire from state regulators for alleged misrepresentations in the sale of ARS's to retail investors.
Some observers believe ML's bad bet on subprime related debt and structured products may lead to the firm's ultimate demise. See Evan Cooper's opinion piece in the June 30, 2008 Investment News.
Those investors who have purchase ML common stock or were sold an ARS by a Merrill Lynch representative should contact our office to determine if you have a claim for damages.
posted by
William B. Young Jr. Esq.
at
8:17 PM
Hyperion Brookfield Announces Its Appointment as Advisor to Certain RMK Morgan Keegan Funds
According to Market Wire, Jul 29, 2008 Hyperion Brookfield Asset Management, Inc. ("Hyperion Brookfield") announced its appointment as Investment Advisor to certain funds that were previously managed by Morgan Asset Management, Inc., investment adisory arm of Morgan Keegan, Inc. (collectively, the "Funds").
Hyperion Brookfield was approved by stockholders and, effective today, has assumed its duties as Investment Advisor to the following Funds:
- RMK Advantage Income Fund, Inc. (RMA);
- RMK High Income Fund, Inc. (RMH: NYSE);
- RMK Multi-Sector High Income Fund, Inc. (RHY: NYSE);and
- RMK Strategic Income Fund, Inc. (RSF: NYSE); Collectively, the ("Closed-End Funds")
And the following series of the Morgan Keegan Select Fund, Inc.:
- Regions Morgan Keegan Select High Income Fund (MKHIX:RMK Select:High Inc.);
- Regions Morgan Keegan Select Short Term Bond Fund (MSBIX:RMK Select Short Term Bond);and
- Regions Morgan Keegan Select Intermediate Bond Fund (MKIBX:RMK Select Intermediate Bond; Collectively, the ("Open-End Funds")
According to the new managers, "the well publicized problems in mortgage and credit markets have had a significant impact on the Funds. Redemptions and deleveraging have contributed to a concentration in complex mortgage-backed securities, asset-backed securities and collateralized debt obligations."
In reality, the misrepresentation in the marketing and sale of the RMK Morgan Keegan funds, coupled with the over concentration in subprime mortgage exposure lead to catastrophic investor losses in these bond and income funds. For more information on how you may recover losses related to these RMK Morgan Keegan funds, please contact our offices.
Hyperion Brookfield was approved by stockholders and, effective today, has assumed its duties as Investment Advisor to the following Funds:
- RMK Advantage Income Fund, Inc. (RMA);
- RMK High Income Fund, Inc. (RMH: NYSE);
- RMK Multi-Sector High Income Fund, Inc. (RHY: NYSE);and
- RMK Strategic Income Fund, Inc. (RSF: NYSE); Collectively, the ("Closed-End Funds")
And the following series of the Morgan Keegan Select Fund, Inc.:
- Regions Morgan Keegan Select High Income Fund (MKHIX:RMK Select:High Inc.);
- Regions Morgan Keegan Select Short Term Bond Fund (MSBIX:RMK Select Short Term Bond);and
- Regions Morgan Keegan Select Intermediate Bond Fund (MKIBX:RMK Select Intermediate Bond; Collectively, the ("Open-End Funds")
According to the new managers, "the well publicized problems in mortgage and credit markets have had a significant impact on the Funds. Redemptions and deleveraging have contributed to a concentration in complex mortgage-backed securities, asset-backed securities and collateralized debt obligations."
In reality, the misrepresentation in the marketing and sale of the RMK Morgan Keegan funds, coupled with the over concentration in subprime mortgage exposure lead to catastrophic investor losses in these bond and income funds. For more information on how you may recover losses related to these RMK Morgan Keegan funds, please contact our offices.
posted by
William B. Young Jr. Esq.
at
11:45 AM
Auction Rate Securities Lead to Headaches/Lawsuites at Citigroup, Merrill Lynch & UBS
According to an August 1, 2008 Dow Jones Newswire, New York State Attorney General Andrew Cuomo said Friday he intends to take legal action against Citigroup Inc. for their marketing and sales of auction-rate securities.
According to Cuomo's office, Citigroup "repeatedly and persistently" made material misrepresentations and omissions in its underwriting, distribution and sale of auction-rate securities.
Citigroup represented that auction-rate securities were safe, liquid, and cash-equivalent securities," wrote David A. Markowitz, chief of Cuomo's Investor Protection Unit. "These representations were false, and had a severe detrimental impact on tens of thousands of Citigroup customers."
Citigroup would become the third major Wall Street company to face legal action over its sales of auction-rate securities in recent weeks.
Last week, Cuomo sued UBS AG (UBS) alleging similar misrepresentations to clients regarding the risks of auction-rate securities. In a similar action, Massachusetts regulators filed charges against UBS in June.
On July 31, 2008, Massachusetts regulators filed a civil-fraud complaint against Merrill Lynch & Co. for allegedly misrepresenting the nature of the securities to investors and for co-opting its "supposedly independent" research analysts to help them reduce its own inventory of the securities.
The attorneys at Colling, Gilbert, Wright & Carter are actively pursuing and litigating Auction Rate Securities (ARS) cases for arbitration and recovery of investor losses. If you own or have owned an ARS and have suffered a loss or cannot access your money, please call or email our offices for a free case evaluation.
According to Cuomo's office, Citigroup "repeatedly and persistently" made material misrepresentations and omissions in its underwriting, distribution and sale of auction-rate securities.
Citigroup represented that auction-rate securities were safe, liquid, and cash-equivalent securities," wrote David A. Markowitz, chief of Cuomo's Investor Protection Unit. "These representations were false, and had a severe detrimental impact on tens of thousands of Citigroup customers."
Citigroup would become the third major Wall Street company to face legal action over its sales of auction-rate securities in recent weeks.
Last week, Cuomo sued UBS AG (UBS) alleging similar misrepresentations to clients regarding the risks of auction-rate securities. In a similar action, Massachusetts regulators filed charges against UBS in June.
On July 31, 2008, Massachusetts regulators filed a civil-fraud complaint against Merrill Lynch & Co. for allegedly misrepresenting the nature of the securities to investors and for co-opting its "supposedly independent" research analysts to help them reduce its own inventory of the securities.
The attorneys at Colling, Gilbert, Wright & Carter are actively pursuing and litigating Auction Rate Securities (ARS) cases for arbitration and recovery of investor losses. If you own or have owned an ARS and have suffered a loss or cannot access your money, please call or email our offices for a free case evaluation.
posted by
William B. Young Jr. Esq.
at
11:18 AM
Have you been
a victim of fraud?
We Can Help
Previous Posts
- SunTrust Securities Slapped with $4.1 Million Doll...
- Elderly Investor Receives $1.6 Million Including T...
- Investor Awarded Damages against UBS in Lehman Str...
- CA Attorney General Recovers $1.4 Billion from Wel...
- Two Bear Stearns Hedge Fund Managers Acquitted
- More Information Releaed on Morgan Keegan RMK Bond...
- SEC Taps "Wizz Kid" to Head Up Enforcement Divisio...
- Citigroup Fined for Failure to Supervise Stock Tra...
- FINRA Extending Public Arbitrator Pilot Program
- Notice Issued for Comments on Morgan Stanley/Salom...
Archives
- May 2008
- June 2008
- July 2008
- August 2008
- September 2008
- October 2008
- November 2008
- December 2008
- January 2009
- February 2009
- March 2009
- April 2009
- May 2009
- June 2009
- July 2009
- August 2009
- September 2009
- October 2009
- November 2009
- December 2009
- January 2010
