Colling, Gilbert, Wright & Carter Securites Fraud

See November 5, 2008 Wall Street Journal Article:


"There are times when you can hardly believe what you have just read. This latest series of financial news articles is clearly one of those times.

In an somewhat shocking and puzzling move the Federal Reserve Bank of New York revealed that it has hired Michael Alix, the man who was in charge of risk management at Bear Stearns.

The collapse of Bear Stearns cost taxpayers a whopping $29 billion—the amount of money the Federal Reserve had to give JP Morgan Chase to step in and make good Bear Stearns’s obligations. More billions will likely be needed to be paid by taxpayers in attempt to end the banking crisis that first became evident by the collapse of the Bear. And that is what makes this latest move all the more curious:

Of all the risk management specialist on the street, why did the Fed tap the guy who's firm started the ugly chain of failure that to this day, grips the markets and has the U.S. banking system on very shakey ground?

Before taking the risk management position at Bear Stearns, Mr. Alix had spent 10 years with the company, and eight years at Merrill Lynch, another massive investment bank that failed in September. Quite a resume when one considers he is now in charge of ensuring the safety and future of the U.S. banking system. Yes, head scratching is in order.

So now, as the U.S. economy faces what is clearly one of toughest times ever, Mr. Alix—one of the main players in this unseemly drama has been given the high-profile job of making sure the banking system becomes more stable and less susceptible to future calamity.

How America expects to restore health and credibility to Wall Street by giving prestigious positions of influence and oversight to the very individuals who helped cause the problems in the first place is one of the mysteries investors are now grappling with and just another sign the good 'ol boy network is still alive and well on Wall Street.

The securities fraud attorneys at our firm are currently investigating claims related to Bear Stearns, Lehman Brothers, Charles Schwab, Wachovia, Fannie Mae/Freddie Mac and Merrill Lynch. If you have lost money while dealing with any of these firms, please contact our office for a free case evaluation.

On September 19, 2008 (the “Commencement Date”), the Securities Investor Protection Corporation (SIPC) filed a Complaint and Application seeking a protective decree as to Lehman Brothers Inc. (“Lehman”) under the Securities Investor Protection Act of 1970 (15 U.S.C. § 78aaa et seq.) in the United States District Court for the Southern District of New York. See Case No. 08-civ-8119 (GEL).


The SIPC is the U.S. investor's first line of defense in the event a brokerage firm fails, owing customer cash and securities that are missing from customer accounts. SIPC either acts as trustee or works with an independent court-appointed trustee in a brokerage insolvency case to recover funds. The statute that created SIPC provides that customers of a failed brokerage firm receive all non-negotiable securities - such as stocks or bonds -- that are already registered in their names or in the process of being registered. At the same time, funds from the SIPC reserve are available to satisfy the remaining claims of each customer up to a maximum of $500,000. This figure includes a maximum of $100,000 on claims for cash.

On September 20, 2008, the SIPC issued the following statement in relation to Lehman Brothers Inc. (LBI), a SIPC member:

SIPC President Stephen Harbeck said: “I am pleased to be able to report this morning that SIPC’s timely intervention under the Securities Investor Protection Act (SIPA) to initiate an action placing LBI in liquidation yesterday has reached a successful conclusion. The result is a situation where 630,000 Lehman Brothers Inc. customers should have full access to their accounts in very short order. We have striven to be innovative and flexible in working with all parties to achieve what will be the fastest-ever restoration of customer accounts in the history of the Securities Investor Protection Corporation.

The District Court in New York acted on the SIPC liquidation filing. The matter then proceeded immediately to Bankruptcy Court in a marathon session running from 4 p.m. yesterday to 1 a.m. today. Under the resulting asset purchase agreement, Barclays Capital Inc. (BCI) will acquire many of the business assets of LBI. Customer accounts will be transferred either to BCI or a separate trading platform. In both situations, customers are expected to have access to their accounts as promptly as is practicable.

For further information about Lehman brothers and you options for recovering losses in Lehman accounts for due to Lehman products, please contact our offices. Thank you.

We have received numerous inquiries from current and prospective clients about the priority their structured notes and other products will have in the Lehman bankruptcy proceeding.

Structured notes and products issued by Lehman Brothers, Inc. are considered senior unsecured debt instruments of Lehman Brothers Holdings, Inc. (LBHI). If you are a holder of a Lehman structured note or other structured products, the following information should provided some insight into your options for recovering some of your investment through the bankruptcy proceeding.

The bankruptcy filing on September 15, 2008, had a chilling effect on the market as a whole and in individual investors specifically. Because of the filing, Lehman note holders will no longer receive any interest or principal payments on their Lehman structured products. However, as a holder of what is considered to be senior unsecured debt of LBHI, a holder of the paper has a claim as a senior unsecured creditor against the company's bankruptcy estate.

A official Committee of Unsecured Creditors has been chosen by the the U.S. Trust monitoring the bankruptcy proceeding. That committee has been charged with maximizing the overall return to the unsecured creditors. Wilmington Trust Company has been chosen as indenture trustee for the structured products was chosen by the U.S. Trustee to serve on the official committee.

The bankruptcy court will ultimately approve a reorganization plan or oversee the liquidation of Lehman assets and determine the amount each class of creditor will receive from the estate. The order of priority of payments depends several factors but typically is as follows:

1. Secured Creditors, such as lien holders, have first priority up to the value of the secured interest.
2. Senior unsecured creditors,(structured note and product holders), generally are next in priority. Among the unsecured senior debt holders, there are certain priority claims (employee benefits and tax obligations).
3. Subordinated unsecured debt holders.
4. Preferred stock holders are next.
5. Common stock holders have last priority.

At this time, it is hard to predict how long the bankruptcy proceeding will take to be resolved but bankruptcy proceedings of similar nature typically take three or more years to make distributions to creditors and resolve the remaining claims.

For additional information on Lehman bonds and structured notes, please see our web page on Lehman notes or call us our offices at (866) 352-3476.