Colling, Gilbert, Wright & Carter Securites Fraud

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Wednesday, November 18, 2009

CA Attorney General Recovers $1.4 Billion from Wells Fargo for ARS Investors

Thousand of investors were sold auction rate securities (ARS) with the promise the investments were like cash and liquid in a day or two notice. When the auctions failed last year, investors learned these creations of Wall Street were anything but leading to consequential damages as a result of investors not having access to needed funds.

Many state have already entered into settlements with the issuing firms, requiring the securities to be redeemed within a specified period. In the latest such action, the California Attorney General announced a settlement with Wells Fargo Bank. The full text of the November 18, 2009 press release appears below:

San Francisco- Attorney General Edmund G. Brown Jr. today announced a landmark $1.4 billion settlement with three Wells Fargo affiliates to pay back investors, charities and small businesses that purchased auction-rate securities based on "misleading advice."

"Wells Fargo convinced thousands of investors to purchase auction-rate securities with promises of robust returns and liquidity, but when the market collapsed, investors were left out in the cold," Brown said. "Based on misleading advice, investors bought these risky securities. Now, retail investors and small businesses are finally getting their money back."

Under today's settlement, Wells Fargo will buy back $1.4 billion in non-liquid auction-rate securities from thousands of retail customers, charities, and small businesses nationwide, including about $700 million to California investors. Wells Fargo will also pay legal costs and future monitoring expenses incurred by Brown's office.

In February 2008, nationwide auction markets froze, and investors have been unable to sell their securities.

Earlier this year, Brown filed the suit against three Wells Fargo affiliates-Wells Fargo Investments, LLC; Wells Fargo Brokerage Services, LLC; and Wells Fargo Institutional Securities, LLC-for violating California's Securities Law. Brown's suit contended that Wells Fargo routinely misrepresented, marketed and sold auction-rate securities as safe, liquid and cash-like investments, omitting material facts. The company was also charged with failing to supervise and train its sales agents and selling unsuitable investments.

The lawsuit contended that Wells Fargo ignored clear industry and internal warnings about risk and previous auction failure. In March 2005, the Securities and Exchange Commission (SEC), the "Big 4" accounting firms, and the Financial Accounting Standards Board all determined that auction-rate securities should not be considered "cash equivalents."

Despite these warnings, Wells Fargo continued to aggressively sell and falsely market auction-rate securities as safe, liquid, cash-like investments until the nationwide auction markets froze in early 2008.

In marketing and selling these investments, Wells Fargo failed to inform investors about how auction-rate securities or the auction process worked, as well as the risks and consequences of auction failure.

If you have purchased a auction rate security and have suffered consequential damages or still have money frozen, please contact us for a free case evaluation. Thank you.

posted by William B. Young Jr. Esq. at 10:22 AM

Wednesday, November 11, 2009

Two Bear Stearns Hedge Fund Managers Acquitted

According to recent Associated Press article, the two Bear Stearns executives who ran hedge funds that crashed in 2007 during the subprime mortgage meltdown and almost toppled the financial markets were acquitted on Tuesday of lying to investors about the looming crisis on Wall Street. The full text of the article appears below:

Jurors found Ralph Cioffi and Matthew Tannin not guilty of conspiracy
and other charges in an alleged fraud that cost 300 investors about $1.6
billion and nearly caused the demise of Bear Stearns itself. The firm barely
avoided bankruptcy in a rescue buyout by JPMorgan Chase & Co. The jury
began deliberating on Monday.

Both men had been charged with three counts of securities fraud and two counts of wire fraud. Cioffi was also charged with insider trading. Tannin left the courtroom without comment.

The Bear Stearns hedge fund collapse, in March 2008, ushered in a waive of investment firm and bank failures, bankruptcies and a near collapse of the entire financial system. Among the failures were Washington Mutual and Lehman Brothers Holdings. Among the near failures were Merrill Lynch, Citigroup, Wachovia, Fannie Mae and Freddie Mac.

If you have lost money in investments issued or sold by any of these institutions, please contact our office for a free case evaluation. Thank you.

posted by William B. Young Jr. Esq. at 5:54 AM

Monday, November 9, 2009

More Information Releaed on Morgan Keegan RMK Bond Fund Probe

Additional information was released last week regarding the SEC's probe of the Morgan Keegan RMK bond funds. Apparently, state regulators are now getting into the game. The investigation results will determine if and how many securities related charges will ultimately be filed against Morgan Keegan for its sale and management of the funds. The article appears below:

Regions Financial Corp., the Birmingham, Ala.-based parent company of Memphis-based Morgan Keegan & Co. Inc., disclosed in a regulatory filing this week more information about the multiple regulatory probes into Morgan Keegan and the group of toxic mutual funds the firm once sold.

In addition to investigations from staff of the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority, Regions said state securities regulators also are in the mix.

“A joint state task force has indicated that it is considering charges against Morgan Keegan, related entities and certain of their officers in connection with sales of the funds,” the disclosure reads. “Discussions are ongoing with the state securities commissioners in the task force about the proposed charges and possible resolutions.”

In the Sept. 24, 2008, issue of The Memphis News, sister publication of The Daily News, more details of the state probe into the Morgan Keegan mutual funds were reported. At that time, eight state securities regulators were investigating the issue.

If you have lost money related to the Regions Morgan Keegan RMK bond funds, please contact this office for a complimentary case evaluation. Thank you.

posted by William B. Young Jr. Esq. at 6:31 AM

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