Colling, Gilbert, Wright & Carter Securites Fraud

WASHINGTON, Jan. 23 /PRNewswire/ -- Securities Litigation and Consulting Group, Inc. ("SLCG") has issued an updated report on six Regions Morgan Keegan (RMK) bond funds: Advantage Income Fund (RMA), High Income Fund (RMH), Strategic Income Fund (RSF), Multi-Sector High Income Fund (RHY), Select High Income Fund (MKHIX) and Select Intermediate Bond Fund (MKIBX).


The SLCG report explains how the RMK funds collectively lost $2 billion in 2007 because they held concentrated holdings of low-priority tranches in structured finance deals backed by risky debt including subprime mortgages and credit default swaps. The study concludes that losses suffered by investors in these funds were not the result of a "flight to quality" or a "mortgage meltdown".

The study shows that RMK misrepresented hundreds of millions of dollars of illiquid asset-backed securities in its SEC filings as corporate bonds and preferred stocks thereby making the funds seem more diversified and less risky than they were. The study also illustrates how, contrary to Securities and Exchange Commission guidance, RMK repeatedly compared the performance of its funds to an index - the Lehman Brothers Ba Index - that contained only corporate bonds and no structured finance securities despite the fact that the funds invested 60% to 70% of their portfolios in structured finance. In addition, the study reports that Morgan Keegan -- the broker-dealer -- misled investors by comparing the performance of the Select High Income Fund to the CSFB High Yield Index which, like the Lehman Brothers index contained none of the securities that dominated the RMK fund's portfolio.

Securities Litigation and Consulting Group, Inc. ("SLCG") is a financial economics consulting firm based in the Virginia suburbs outside of Washington, DC. SLCG provides consulting services and expert witnesses to law firms, publicly-traded corporations, banks, brokerage firms and individuals involved in complex litigation throughout the United States. SLCG's staff includes PhD, MA and BA level professionals with academic, industry and government experience. Its experts have testified in state and federal court and in various arbitration forums.

The attorneys at Colling, Gilbert, Wright & Carter are currently investigating and filing arbitration claims on behalf of investors who have experienced losses associated with the RMK Funds. If you have lost money investing in any of the RMK bond funds, please contact our office for a free case evaluation.

According to recently released Reuters news report, The Securities and Exchange Commission accused Robert Allen Stanford, the chief of the Stanford Financial Group, on Tuesday of conducting “a massive ongoing fraud” in the sale of about $8 billion of high-yielding certificates of deposit held in the firm’s bank in Antigua. Also named in the suit were two other executives and some affiliates of the financial group.

The company and its executives have been charged with misrepresenting the safety and liquidity of the uninsured C.D.’s. The S.E.C. complaint accuses Stanford Financial Group and its offshore banking affiliate of falsely stating client funds were invested in liquid financial instruments, when in fact they were invested in private equity funds and real estate.

The S.E.C. has requested that the defendants’ assets be frozen and that a receiver be appointed to take control of business operations. It also requested that the assets of the bank and other offshore units be returned to the U.S. The agency also requested the passports of all key Stanford executives be surrendered.

The S.E.C. has been under fire for ignoring warning signs leading up to the alleged Madoff $50 billion Ponzi scheme. S.E.C investigators had been monitoring the Stanford situation but increased the scrutiny after the Madoff scheme collapsed.

If you have invested money with the Stanford Financial Group or suspect your advisor may have misrepresented your investments, please contact our offices.

According to a recent article on Bloomberg.com, a Financial Industry Regulatory Authority (FINRA) arbitration panel has ordered Credit Suisse Group AG, Switzerland’s second-biggest bank, to pay more than $400 million to STMicroelectronics NV over claims the banking giant improperly sold the semiconductor maker auction-rate securities. The FINRA arbitration panel awarded the Claimant $400 milllion in damages plus an additional $6.5 million in attorney's fees.

Auction-rate securities (ARS) are long-term bonds or perpetual shares with interest rates adjusted periodically through a dealer-run bidding process. The market collapsed about a year ago when dealers withdrew support, leading to hundreds of failed auctions, higher borrowing costs for some issuers and leaving thousands of investors stuck with securities they couldn't’t sell.

In a series of August 2008 blogs, we reported when the U.S. Securities and Exchange Commission and state regulators forced several banks and brokerages, including Wachovia, Citibank and Merrill Lynch, to buy back more than $50 billion in auction-rate securities to settle claims that the firms falsely touted the investments as safe, cash-like investments. In September, 2008, Credit Suisse agreed to buy back about $550 million in securities from retail clients and pay a $15 million fine to resolve probes by state regulators.

If you hold auction rate securities or auctions rate preferreds, please contact our office to discuss your options for recovering your funds.

Labels: broker misconduct

A coalition of several insurance companies and marketers last month sued the SEC in federal court to try to overturn a new rule that classifies index annuities as securities. The group, known as the Coalition for Indexed Products, filed the lawsuit in the U.S. Court of Appeals for the District of Columbia Circuit. The coalition argues that the new rule, adopted by the SEC in December 2008, conflicts with congressional intent of annuity regulation and also with two Supreme Court decisions.

Annuities have long been the subject of much litigation and controversy. Several large insurance companies have been Defendants in class-action litigation alleging the companies target retirees and senior citizens for the products which are very complex and in many instances unsuitable for the older customer base. State regulators, including the Florida Department of Financial Services and FINRA have issue alerts regarding the sale of annuities to seniors.

Colling, Gilbert, Wright & Carter is currently representing numerous individuals alleging misrepresentation in the marketing and sale of annuities as well as the unsuitability of the product. Annuities have long been one of the the highest commission paying and most expensive products sold to retail investors.

If you believe you have been sold an annuity product without proper explanation of the terms and conditions, please contact our office for a free evaluation. Thank you.