Colling, Gilbert, Wright & Carter Securites Fraud

According to a September 26, 2008 Investment News article , the purchase of WaMu Investments, Inc. by JP Morgan Chase will give the combined entity approximately 15% of the market.

Accounting for roughly 10% of the nation's retail-securities business done at banks, JP Morgan Chase & Co. is set to become even more dominant in that segment once it completes its $1.9 billion takeover of Washington Mutual Inc.

WaMu Investments Inc., the Irvine, Calif.-based broker-dealer of the Seattle-based bank holding company, employs approximately 60 Series 7 (general securities representatives) brokers and 500 Series 6 (mutual fund sales) platform representatives.

JP Morgan Chase has approximately 2000 Series 7 brokers and 10,000 Series 6 (mutual fund sales) reps. Meanwhile, WaMu accounts for about 5% of the bank brokerage business. Both banks specialize in mutual fund investments.

The stockbroker fraud attorneys at Colling Gilbert Wright & Carter are actively pursuing investment fraud cases to recover losses associated with unsuitable variable annuities, mutual funds and other investment products purchased from WaMu and JP Morgan Chase. Please contact our offices for a free consultation.

The North American Securities Administrators Association (NASAA), the Financial Industry Regulatory Authority (FINRA) and the Securities Exchange Commission (SEC) have recently released a report to Assist Financial Services providers in servicing older investors.

A portion of the press release announcing the new report follows:

FOR IMMEDIATE RELEASE
2008-220

Washington, D.C., Sept. 22, 2008 - As part of the Securities and Exchange Commission's third annual Seniors Summit held in Washington today, the staff of the SEC along with the Financial Industry Regulatory Authority (FINRA) and the North American Securities Administrators Association (NASAA) released a joint report outlining practices that financial services firms can use to strengthen their policies and procedures for serving older investors as they approach and enter retirement.

Projections show that nearly one in every six Americans will be age 65 or older by the year 2020. Given the increasing number of investors who need advice and guidance, financial services firms are actively developing new products and increasingly providing financial advice and services to senior investors. The SEC, FINRA, and NASAA view the protection of senior investors as a top priority.

The regulators' report - Protecting Senior Investors: Compliance, Supervisory and Other Practices Used by Financial Services Firms in Serving Investors - provides practical examples of proactive steps being taken financial services firms in serving senior investors.

SEC Chairman Christopher Cox said, "Today's market turmoil affects senior investors very directly, because for them, investing for the longer term isn't an option. They and the more than 76 million baby boomers will directly benefit from this report on developing high standards for firms'interactions with senior investors."

NASAA President Fred Joseph said, "The practices outlined in this report, combined with strong regulation, effective industry compliance and supervision, and increased investor awareness, help ensure that the financial needs of our growing senior population are being met by brokers, investment advisers and others in the financial services industry. We appreciate the efforts of those in the industry who shared their successful programs with us and we look forward to continue working with the SEC, FINRA, and the financial services industry in the fight against senior investment fraud."

FINRA CEO Mary Schapiro said, "FINRA is working closely with firms to make sure they treat seniors properly and educate brokers how best to interact with this growing segment of the investor population. The Joint Report will prove to be a valuable resource to financial services professionals as they struggle with the range of issues associated with an aging customer base - and it is my belief that this report will help make the securities industry a leader among industries when it comes to developing guidelines to serve senior customers."

This is welcome albeit belated news for seniors who have seen their retirement savings ravaged by unscrupulous insurance brokers, investment advisers and greedy wall street firms. Retirement savings represent a huge portion of the investable assets in this country but also represent the most vulnerable part of the population. Brokerage firms for years have been peddling 72-t programs and early retirement plans with unrealistic income projections as have insurance agents peddling variable and fixed annuities with huge commissions and long surrender periods.

The stockbroker fraud attorneys at Colling Gilbert Wright & Carter help seniors and retirees recover losses associated with unsuitable investment advice and products. Please contact our offices today if you believe you have been sole investment products or services resulting in losses to your retirement nest egg.

The latest consequence of the credit crises and another example of securities fraud subsequent massive government bailouts are the preferred stock losses. In early September, the rating services began slashing the ratings on Fannie Mae and Freddie Mac preferred shares, creating borrowing problems for the issuers and eventually leading to the massive government bailout.

The major brokerage firms such as Merrill Lynch, Citigroup/Smith Barney, Wachovia/AG Edwards, Morgan Stanley, Edward Jones, JP Morgan and others have sold preferred stocks to their most conservative investors as ultra-safe investments. These firms' representatives presented/misrepresented the shares as a conservative investment that would give investors, often retirees, the upside potential of a stock with the downside protection of a bond (with U.S. Government backing). While the backing part turned out to be correct, at least as to the bailout of the mortgage giants, the individual investors (and taxpayers) have once again been left holding the proverbial bag.

Estimates show over a million investors were sold Fannie Mae and/or Freddie Mac preferreds with the representation these investments were suitable for ultra-conservative investors looking for an income stream. In fact, many clients were persuaded to sell other more secure holdings to raise capital to invest in these inherently risky shares. Preferred have much the same risk characteristics of stocks, not bonds. In the event the issuer fails, as was the case with Freddie and Fannie, bond holders are first in line to get paid and our offered some protection of default. Not so with preferred holders.

If a broker represents preferred shares as ultra-safe investments suitable for conservative investors or fails to explain all the potential risks associated with the investment, the qualifies as a misrepresentation and/or omission which is actionable under most state securities laws. However, account holders with brokerage firms must sign a new account form before the firm will accept the account. Tne new account form serves a contract requiring the investors to take any claim for loss recovery to NASD/FINRA arbitration.

The stock market and broker fraud attorneys at Colling Gilbert Wright and Carter have extensive experience handling NASD/FINRA arbitration claims on behalf of individual investors. If you have lost money as a result of an investment in Fannie Mae or Freddie Mac preferred shares, please contact us for a free case evaluation.

The Lehman Brother bankruptcy filing on September 15 will have repercussions in many sectors of the financial markets. However, there is one sector that is not getting much press and that is the mom and pop individual investor. According to an article in the September 16, 2008 Wall Street Journal, Lehman marketed and sold vehicles called exchange-traded notes or ETNs. See also CNN.com article entitled "Demise of Lehman Shows Risk of Exchange Traded Notes.

These products were sold through other brokerage firms and trade similar to a stock. They were marketed as a way for investors to participate in the performance of various stock and comodity indexes. However, what may not have been adequately disclosed is the product is really just unsecured debt of Lehman. Not good.

According to Matt Hougan, editor of Index-Universe.com, a Web site that tracks index-based investments, Lehman has three ETNs in the marketplace with only about $13 million in assets to cover obligations far greater. Because they are unsecured debt, the holders will have to get in line with other creditors. Mr. Hougan believes the investors are looking to only get "pennies on the dollar."

If you have purchase an Exchange Traded Note(s) from your broker, please contact us to discuss your options for recovering your losses.

According to various news outlets, Bank of America reached a deal to buy Merrill Lynch for $29 a share. At $44 billion, Merrill would be sold at about two-thirds of its value of one year ago, and half its all-time peak value of early 2007.

The two financial giants were first reported to be in talks about a possible merger by the Wall Street Journal yesterday. The merger agreement was confirmed in an article in today's on-line journal.

Bank of America had considered buying Lehman Brothers Holdings Inc., but pulled out of that deal and considers Merrill Lynch to be a better fit, the Journal said on its Web site, citing people familiar with the matter.

BOA has the most deposits of any U.S. bank, while Merrill Lynch is the world's largest brokerage. A combination of the two would create a global banking giant to rival Citigroup Inc. - the biggest U.S. bank in terms of assets.

Major banks and brokerages met this weekend with government officials to try to formulate a rescue of Lehman. However, with no government financial support, banks were reluctant to make an acquisition. According to another on-line journal article, Lehman is poised to declare bankruptcy absent an eleventh hour rescue. The financial markets are prepared for a down opening as the rumours Lehman may fail has sent new fears about the health of the U.S. banking and financial markets.

If you have questions about your options for recovering losses related to the turmoil in the credit markets, please contact the law offices of Colling, Gilbert, Wright & Carter. Thank you.