Colling, Gilbert, Wright & Carter Securites Fraud
Keep up on the latest Securities Fraud news and litigation by following our blog.
Thursday, February 18, 2010
FINRA Proposes New Reporting Rules for Customer Complaints
The Financial Industry Regulatory Authority (FINRA) issued a press release indicating they are proposing positive changes to the BrokerCheck system whereby all broker complaints will stay on the registered representative's record for 10 years. Under the old guidelines, complaint information dropped of the Central Record Depository (CRD) two years after the broker left the industry. This is widely viewed as a positive step in reporting requirements and helpful to investors pursuing claims against firms and their representatives. The full press release may be found below:
FINRA Proposes Further Expansion of Broker Information Publicly Available Through BrokerCheck
Washington, DC — The Financial Industry Regulatory Authority (FINRA) announced today that it is seeking authority to significantly expand the amount of information available to the public on current and former securities brokers through its free online BrokerCheck service.
The proposed expansion – which FINRA will submit to the Securities and Exchange Commission (SEC) in the near future – would increase the number of customer complaints reported publicly; extend the public disclosure period for the full record of a broker who leaves the industry from two years to 10 years; and, make certain information about former brokers available permanently, such as criminal convictions and certain civil and arbitration judgments.
"These proposed changes will provide additional information to investors who are considering whether to conduct, or continue to conduct, business with a particular securities firm or broker," said FINRA Chairman and CEO Rick Ketchum. "Just as important, they will provide valuable information about persons who have left the securities industry, often not of their own accord, but who can still cause great harm to the investing public. Recent regulatory and criminal proceedings in the financial services sector reveal that former brokers have been engaging in fraud and other misconduct long after establishing themselves in other segments of the financial services industry."
Specifically, FINRA's proposed expansion of BrokerCheck would:
Disclose all "historic" complaints against a broker dating back to 1999, when electronic filing of broker information began. Generally, historic complaints are customer complaints, arbitrations or litigations more than two years old that have not been adjudicated or have been settled for an amount less than the reporting requirement (currently $15,000). They are currently reported on BrokerCheck when the broker has three or more currently disclosable regulatory actions, customer complaints, arbitrations, litigations or historic complaints.
The new proposal would disclose all historic complaints dating back to 1999 for individual brokers who are currently registered or whose registrations were terminated within the preceding two years. If the SEC approves the entire package of BrokerCheck expansion proposals, the reporting of historic complaints would apply to brokers whose registrations were terminated within the preceding 10 years. Expand the disclosure period for former brokers. Currently, a broker's record is publicly available for two years after he or she leaves the securities industry. That two-year period coincides with the period in which an individual remains subject to FINRA's jurisdiction and within which an individual can return to the industry without having to take requalifying exams.
The new proposal calls for making a former broker's record public for 10 years, so investors can access information about individuals who may work in other sectors of the financial services industry or who have attained other positions of trust.
Further expand the amount of information that is permanently available on former brokers. Last year, BrokerCheck started making information about final regulatory actions (i.e., bars, suspensions, fines, etc.) against former brokers permanently available to the public. The new proposal would make additional information permanently available – including criminal convictions or pleas of guilty or nolo contendere; civil injunctions or findings of involvement in a violation of any investment-related statute or regulation; and arbitration awards or civil judgments based on the individual's involvement in an alleged sales practice violation.
FINRA, the Financial Industry Regulatory Authority, is the largest non-governmental regulator for all securities firms doing business in the United States. Created in 2007 through the consolidation of NASD and NYSE Member Regulation, FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. FINRA touches virtually every aspect of the securities business – from registering and educating industry participants to examining securities firms; writing rules; enforcing those rules and the federal securities laws; informing and educating the investing public; providing trade reporting and other industry utilities; and administering the largest dispute resolution forum for investors and registered firms.
If you believe you may have lost money due to broker negligence or fraud, please contact our office for a free case evaluation. Thank you.
FINRA Proposes Further Expansion of Broker Information Publicly Available Through BrokerCheck
Washington, DC — The Financial Industry Regulatory Authority (FINRA) announced today that it is seeking authority to significantly expand the amount of information available to the public on current and former securities brokers through its free online BrokerCheck service.
The proposed expansion – which FINRA will submit to the Securities and Exchange Commission (SEC) in the near future – would increase the number of customer complaints reported publicly; extend the public disclosure period for the full record of a broker who leaves the industry from two years to 10 years; and, make certain information about former brokers available permanently, such as criminal convictions and certain civil and arbitration judgments.
"These proposed changes will provide additional information to investors who are considering whether to conduct, or continue to conduct, business with a particular securities firm or broker," said FINRA Chairman and CEO Rick Ketchum. "Just as important, they will provide valuable information about persons who have left the securities industry, often not of their own accord, but who can still cause great harm to the investing public. Recent regulatory and criminal proceedings in the financial services sector reveal that former brokers have been engaging in fraud and other misconduct long after establishing themselves in other segments of the financial services industry."
Specifically, FINRA's proposed expansion of BrokerCheck would:
Disclose all "historic" complaints against a broker dating back to 1999, when electronic filing of broker information began. Generally, historic complaints are customer complaints, arbitrations or litigations more than two years old that have not been adjudicated or have been settled for an amount less than the reporting requirement (currently $15,000). They are currently reported on BrokerCheck when the broker has three or more currently disclosable regulatory actions, customer complaints, arbitrations, litigations or historic complaints.
The new proposal would disclose all historic complaints dating back to 1999 for individual brokers who are currently registered or whose registrations were terminated within the preceding two years. If the SEC approves the entire package of BrokerCheck expansion proposals, the reporting of historic complaints would apply to brokers whose registrations were terminated within the preceding 10 years. Expand the disclosure period for former brokers. Currently, a broker's record is publicly available for two years after he or she leaves the securities industry. That two-year period coincides with the period in which an individual remains subject to FINRA's jurisdiction and within which an individual can return to the industry without having to take requalifying exams.
The new proposal calls for making a former broker's record public for 10 years, so investors can access information about individuals who may work in other sectors of the financial services industry or who have attained other positions of trust.
Further expand the amount of information that is permanently available on former brokers. Last year, BrokerCheck started making information about final regulatory actions (i.e., bars, suspensions, fines, etc.) against former brokers permanently available to the public. The new proposal would make additional information permanently available – including criminal convictions or pleas of guilty or nolo contendere; civil injunctions or findings of involvement in a violation of any investment-related statute or regulation; and arbitration awards or civil judgments based on the individual's involvement in an alleged sales practice violation.
FINRA, the Financial Industry Regulatory Authority, is the largest non-governmental regulator for all securities firms doing business in the United States. Created in 2007 through the consolidation of NASD and NYSE Member Regulation, FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. FINRA touches virtually every aspect of the securities business – from registering and educating industry participants to examining securities firms; writing rules; enforcing those rules and the federal securities laws; informing and educating the investing public; providing trade reporting and other industry utilities; and administering the largest dispute resolution forum for investors and registered firms.
If you believe you may have lost money due to broker negligence or fraud, please contact our office for a free case evaluation. Thank you.
posted by
William B. Young Jr. Esq.
at
10:26 AM
Wednesday, February 10, 2010
UBS Continues to Lose Clients and Brokers over Recent Scandals
Union Bank of Switzerland's (UBS) Wealth Management division is still reeling from the multiple scandals that have plagued the firm for the past two years. Fresh on the heals of the accusations from the IRS that UBS was helping wealthy clients avoid income taxes came the structured note products that allegedly lost over a billion dollars for U.S. retail investors.
Many of the structured notes were marketed as "Principal Protected" or "Partially Principal Protected" but were actually backed by Lehman Brothers Holdings. As such, many clients have alleged they were lead to believe by UBS representatives they were buying relatively safe investments when in reality they were buying senior unsecured Lehman debt. The fallout following Lehman's bankruptcy filing on September 15, 2008 lead to both client and broker defections as well as a serious hit to the firm's brand image.
The following article from Smartmoney.com details UBS's struggles:
UBS AG's Wealth Management Americas unit continues to be plagued by asset outflows, as clients took out $11.6 billion in the fourth quarter--its third straight quarter of asset withdrawals.
The majority of outflows--$10.5 billion--came from within the U.S., as the brand has been damaged by a dispute with U.S. tax authorities over bank secrecy. UBS was also stung by financial adviser departures and limited recruiting of experienced brokers.
The wealth manager also reported a 3% drop in its adviser headcount, though more than a third of that decline was from advisers working in branches that were sold to Stifel Financial Corp. (SF).
Data on the wealth manager were revealed as parent company UBS reported its first quarterly profit in more than a year.
Total operating income at the UBS unit dropped 3% to $1.34 billion from $1.39 billion a year earlier, and nearly level with $1.33 billion at the end of the third quarter. Pre-tax profit plunged by more than a third to $171.5 million from $263 million a year earlier. UBS Wealth Management Americas posted a $106 million profit at the end of the third quarter.
The U.S. wealth management unit lost 202 advisers in the fourth quarter, 74 of whom went to Stifel. Overall, the advisory force's headcount fell to 7,084 from 7,286 at the end of the third quarter. A year ago, the brokerage had 8,607 advisers. Since that time, UBS has sold lower-producing branches, laid off rookie financial advisers, and suffered some attrition to its competitors.
By contrast, UBS' main rivals have much larger brokerage forces. Morgan Stanley Smith Barney has 18,135 advisers, Bank of America Corp.'s (BAC) Merrill Lynch boasts 15,006 brokers, and Wells Fargo & Co.'s (WFC) adviser headcount is 14,961.
During a conference call with analysts Tuesday, UBS Chief Financial Officer John Cryan said, "Despite the improvement in profitability [at the unit], financial adviser recruiting and net new money generation remain challenging."
For months, the UBS unit has been lagging behind its competitors in recruiting brokers as the firm put a hold on bringing in new talent. UBS's U.S. brokerage, however, recently rolled out a new recruiting deal in mid December that offers top-tier advisers as much as 280% of their annual production. That figure is up from a previous offer of 220%.
The UBS unit got new leadership during the quarter. Robert McCann was appointed head of Wealth Management Americas at the end of October. Since taking that position, McCann has offered some brokers a retention-like deal to stay with the firm, made several executive appointments, and reorganized the U.S. retail brokerage into two divisions from three regions.
"Bob McCann has put a new leadership team in place and we're optimistic for the longer-term prospects of the business," Cryan said during the call.
Alois Pirker, a research director at Aite Group, said in an emailed statement, "Outflows [at UBS] have increased in contrast to many of its competitors."
He said UBS's 2009 results "have shown that the firm still has not been able to regained the trust of its wealthy clients and that its competitors continue to take significant market share from the firm."
A UBS spokeswoman declined to comment on the statement. However, she referred to comments made by UBS Chief Executive Oswald Gruebel and Chairman Kaspar Villiger in a letter to shareholders Tuesday.
"In the coming quarters, we expect to see the effects of the progress we have made in improving operating efficiency, reducing risk, and rebuilding and re-focusing our businesses," the executives said.
"We are confident that the measures we are taking to address the causes of client asset outflows will be effective, but in the immediate future still expects to report outflows, with some pressure on margins," Villiger and Gruebel said.
-By Brett Philbin, Dow Jones Newswires; 212-416-2173; brett.philbin@dowjones.com
(END) Dow Jones Newswires
The attorneys at Colling Gilbert Wright & Carter are currently investigating and filing individual arbitration claims on behalf of former UBS cliens who were sold UBS structured notes. If you have lost money due to an investment in a UBS structured product, please contact our office for a free case evaluation. Thank you.
Many of the structured notes were marketed as "Principal Protected" or "Partially Principal Protected" but were actually backed by Lehman Brothers Holdings. As such, many clients have alleged they were lead to believe by UBS representatives they were buying relatively safe investments when in reality they were buying senior unsecured Lehman debt. The fallout following Lehman's bankruptcy filing on September 15, 2008 lead to both client and broker defections as well as a serious hit to the firm's brand image.
The following article from Smartmoney.com details UBS's struggles:
UBS AG's Wealth Management Americas unit continues to be plagued by asset outflows, as clients took out $11.6 billion in the fourth quarter--its third straight quarter of asset withdrawals.
The majority of outflows--$10.5 billion--came from within the U.S., as the brand has been damaged by a dispute with U.S. tax authorities over bank secrecy. UBS was also stung by financial adviser departures and limited recruiting of experienced brokers.
The wealth manager also reported a 3% drop in its adviser headcount, though more than a third of that decline was from advisers working in branches that were sold to Stifel Financial Corp. (SF).
Data on the wealth manager were revealed as parent company UBS reported its first quarterly profit in more than a year.
Total operating income at the UBS unit dropped 3% to $1.34 billion from $1.39 billion a year earlier, and nearly level with $1.33 billion at the end of the third quarter. Pre-tax profit plunged by more than a third to $171.5 million from $263 million a year earlier. UBS Wealth Management Americas posted a $106 million profit at the end of the third quarter.
The U.S. wealth management unit lost 202 advisers in the fourth quarter, 74 of whom went to Stifel. Overall, the advisory force's headcount fell to 7,084 from 7,286 at the end of the third quarter. A year ago, the brokerage had 8,607 advisers. Since that time, UBS has sold lower-producing branches, laid off rookie financial advisers, and suffered some attrition to its competitors.
By contrast, UBS' main rivals have much larger brokerage forces. Morgan Stanley Smith Barney has 18,135 advisers, Bank of America Corp.'s (BAC) Merrill Lynch boasts 15,006 brokers, and Wells Fargo & Co.'s (WFC) adviser headcount is 14,961.
During a conference call with analysts Tuesday, UBS Chief Financial Officer John Cryan said, "Despite the improvement in profitability [at the unit], financial adviser recruiting and net new money generation remain challenging."
For months, the UBS unit has been lagging behind its competitors in recruiting brokers as the firm put a hold on bringing in new talent. UBS's U.S. brokerage, however, recently rolled out a new recruiting deal in mid December that offers top-tier advisers as much as 280% of their annual production. That figure is up from a previous offer of 220%.
The UBS unit got new leadership during the quarter. Robert McCann was appointed head of Wealth Management Americas at the end of October. Since taking that position, McCann has offered some brokers a retention-like deal to stay with the firm, made several executive appointments, and reorganized the U.S. retail brokerage into two divisions from three regions.
"Bob McCann has put a new leadership team in place and we're optimistic for the longer-term prospects of the business," Cryan said during the call.
Alois Pirker, a research director at Aite Group, said in an emailed statement, "Outflows [at UBS] have increased in contrast to many of its competitors."
He said UBS's 2009 results "have shown that the firm still has not been able to regained the trust of its wealthy clients and that its competitors continue to take significant market share from the firm."
A UBS spokeswoman declined to comment on the statement. However, she referred to comments made by UBS Chief Executive Oswald Gruebel and Chairman Kaspar Villiger in a letter to shareholders Tuesday.
"In the coming quarters, we expect to see the effects of the progress we have made in improving operating efficiency, reducing risk, and rebuilding and re-focusing our businesses," the executives said.
"We are confident that the measures we are taking to address the causes of client asset outflows will be effective, but in the immediate future still expects to report outflows, with some pressure on margins," Villiger and Gruebel said.
-By Brett Philbin, Dow Jones Newswires; 212-416-2173; brett.philbin@dowjones.com
(END) Dow Jones Newswires
The attorneys at Colling Gilbert Wright & Carter are currently investigating and filing individual arbitration claims on behalf of former UBS cliens who were sold UBS structured notes. If you have lost money due to an investment in a UBS structured product, please contact our office for a free case evaluation. Thank you.
posted by
William B. Young Jr. Esq.
at
7:22 AM
Friday, January 22, 2010
Report Shows Individual Securities Case Filings Rose Sharply in 2009
According to Advisen Ltd. Report Securities class action filings were flat, but regulator suits rose sharply.
The press release appears below:
Economic turmoil drove a surge in securities lawsuit filings in 2009, according to a new report from Advisen Ltd. The year saw securities lawsuit filings grow at a robust 13 percent rate to 910 suits, eclipsing an already-elevated 2008 at 804 suits. The number of securities class action suits filed was essentially unchanged, with 234 suits filed in 2009 compared to 239 the prior year, while the number of securities fraud suits filed by regulators grew sharply, with a 22 percent increase over 2008.
³Litigators and regulators stayed busy in 2009,² noted John W. Molka III, the author of the report. ³The first half of the year was dominated by credit crisis- and Madoff-related lawsuits. Those types of suits fell off sharply in the second half, but plaintiffs¹ attorneys had a backlog of other cases waiting to be filed.² Although securities class action filings were essentially flat as compared to 2008, they decreased as a percentage of all securities suit filed, coming in at about a quarter of the total. That represents a continuation of a downward trend that began in 2005, when securities class action suits represented about half of all securities suits filed.
³Securities class action suits filed in federal courts account for many of the largest settlements, but every year they represent a smaller percentage of the total number of securities suits filed,² explained Dave Bradford, Advisen¹s executive vice president. ³A growing threat to companies and their directors is escalating enforcement actions and lawsuits by regulators.
Also, breach of fiduciary duty suits and other securities suits filed in state courts are on the rise. ² Advisen¹s report, Securities Suits Abound in a Harsh 2009, also reviews trends in awards and settlements, and analyzes the factors likely to influence settlement values in the coming years. Sharply higher losses to shareholders in securities class action suits, as measured by Advisen¹s Market Cap Impact Metric , suggest that settlements may be larger for suits filed in 2009, but it is likely that a higher than average percentage of 2009 suits will be dismissed.
Click here for the full report.
A number of banks and brokerage firms have been targets of regulatory inquiries in cluding Regions Bank for their marketing and sale of the RMK Bond Funds; UBS for the sale of their proprietary Principal Protected Notes (PPNs), Partially Principal Protected Notes (PPPNs), Return Optimation Notes (RONs); OppenheimerFunds for the marketing and sale of the Champion Income Fund; Wachovia Bank for the sale of the Evergreen High Income Fund; and Regional firms for the sale of DBSI Notes and direct Investments and the subequent bankruptcy filings.
IF you have lost money related to these or any other security that is the subject of regulatory inquiry, please contact our office for a free case evaluation. Thank you.
The press release appears below:
Economic turmoil drove a surge in securities lawsuit filings in 2009, according to a new report from Advisen Ltd. The year saw securities lawsuit filings grow at a robust 13 percent rate to 910 suits, eclipsing an already-elevated 2008 at 804 suits. The number of securities class action suits filed was essentially unchanged, with 234 suits filed in 2009 compared to 239 the prior year, while the number of securities fraud suits filed by regulators grew sharply, with a 22 percent increase over 2008.
³Litigators and regulators stayed busy in 2009,² noted John W. Molka III, the author of the report. ³The first half of the year was dominated by credit crisis- and Madoff-related lawsuits. Those types of suits fell off sharply in the second half, but plaintiffs¹ attorneys had a backlog of other cases waiting to be filed.² Although securities class action filings were essentially flat as compared to 2008, they decreased as a percentage of all securities suit filed, coming in at about a quarter of the total. That represents a continuation of a downward trend that began in 2005, when securities class action suits represented about half of all securities suits filed.
³Securities class action suits filed in federal courts account for many of the largest settlements, but every year they represent a smaller percentage of the total number of securities suits filed,² explained Dave Bradford, Advisen¹s executive vice president. ³A growing threat to companies and their directors is escalating enforcement actions and lawsuits by regulators.
Also, breach of fiduciary duty suits and other securities suits filed in state courts are on the rise. ² Advisen¹s report, Securities Suits Abound in a Harsh 2009, also reviews trends in awards and settlements, and analyzes the factors likely to influence settlement values in the coming years. Sharply higher losses to shareholders in securities class action suits, as measured by Advisen¹s Market Cap Impact Metric , suggest that settlements may be larger for suits filed in 2009, but it is likely that a higher than average percentage of 2009 suits will be dismissed.
Click here for the full report.
A number of banks and brokerage firms have been targets of regulatory inquiries in cluding Regions Bank for their marketing and sale of the RMK Bond Funds; UBS for the sale of their proprietary Principal Protected Notes (PPNs), Partially Principal Protected Notes (PPPNs), Return Optimation Notes (RONs); OppenheimerFunds for the marketing and sale of the Champion Income Fund; Wachovia Bank for the sale of the Evergreen High Income Fund; and Regional firms for the sale of DBSI Notes and direct Investments and the subequent bankruptcy filings.
IF you have lost money related to these or any other security that is the subject of regulatory inquiry, please contact our office for a free case evaluation. Thank you.
posted by
William B. Young Jr. Esq.
at
8:23 AM
Tuesday, January 5, 2010
SunTrust Securities Slapped with $4.1 Million Dollar Damage Award
A FINRA arbitration panel found Suntrust Securities (now known as SunTrust Robinson Humphry), the securities brokerage arm of SunTrust Banks, Inc., guilty of defaming one of its former brokers. The award included $1.2 million dollars in compensatory damages, $2.5 million in punitive damages plus attorney's fees and cost. Punitive damages are typically used to punish the wrong doer and dissuade similar conduct in the future. The punitive damage award was the arbitration Panel way of sending a message that such conduct will not be tolerated. The full Wall Street journal article appears below.
A Financial Industry Regulatory Authority arbitration panel has ordered SunTrust Robinson Humphrey, Inc. to pay a
total of $4.1 million to a former institutional salesman who alleged the
company defamed him in a regulatory filing.
Lance B. Beck, a former broker in the Atlanta branch of Suntrust
Robinson Humphrey, the corporate and investment banking services arm of
SunTrust Banks, Inc. (STI), was awarded $1.2 million in compensatory
damages, an additional $2.5 million in punitive damages and $419,000 in
attorney's fees, according to an arbitration order dated Dec. 29.
A statement of claim filed in the case by Beck accused the firm of
including a "devastating" disclosure on his Form U5, which brokerages
must file with regulators when a broker leaves, related to a $2.9
million auction-rate securities transaction. The Finra panel recommended
the language, which included the designation "permitted to resign" as a
reason for Beck's termination and the phrase "failure to follow firm
sales-practice policy," be expunged.
A spokesman for SunTrust Banks didn't immediately return a call
requesting comment.
The attorneys at Colling, Gilbert, Wright and Carter represent brokers and financial advisers in employment related disputes.
A Financial Industry Regulatory Authority arbitration panel has ordered SunTrust Robinson Humphrey, Inc. to pay a
total of $4.1 million to a former institutional salesman who alleged the
company defamed him in a regulatory filing.
Lance B. Beck, a former broker in the Atlanta branch of Suntrust
Robinson Humphrey, the corporate and investment banking services arm of
SunTrust Banks, Inc. (STI), was awarded $1.2 million in compensatory
damages, an additional $2.5 million in punitive damages and $419,000 in
attorney's fees, according to an arbitration order dated Dec. 29.
A statement of claim filed in the case by Beck accused the firm of
including a "devastating" disclosure on his Form U5, which brokerages
must file with regulators when a broker leaves, related to a $2.9
million auction-rate securities transaction. The Finra panel recommended
the language, which included the designation "permitted to resign" as a
reason for Beck's termination and the phrase "failure to follow firm
sales-practice policy," be expunged.
A spokesman for SunTrust Banks didn't immediately return a call
requesting comment.
The attorneys at Colling, Gilbert, Wright and Carter represent brokers and financial advisers in employment related disputes.
posted by
William B. Young Jr. Esq.
at
1:37 PM
Elderly Investor Receives $1.6 Million Including Treble Damages from FINRA Arbitration Panel
In what is believed to be one of the first rulings of its kind, a 95-year old California man received $1.6 million dollar award from a Financial Industry Regulatory Authority arbitration Panel against an on-line brokerage firm finding, among the offenses, elder abuse. The California elder abuse statue, like many similar state statutes (including Florida), allows for treble damages in instances where there is a finding of elder abuse. However, the courts have normally applied this statute in the caretaker relationship wherein a caregiver takes advantage of an elderly and doe not apply in the financial investor/investment advisor relationship. This ruling could send chills throughout the brokerage community as so many claims of negligence and fraud stem from losses suffered by elders and retirees.
Excerpts from the January 5, 2010 Investment News article appear below:
In a rarity, an arbitrator last month cited elder abuse in tripling the damages a discount securities firm must pay a 95-year-old client.
A Financial Industry Regulatory Authority panel awarded the elderly investor, David Wolfson, $1.6 million in a case involving StockCross Financial Services Inc. of Beverley Hills, Calif. Mr. Wolfson accused StockCross, along with two of its brokers, of misconduct and self dealing. He claimed the brokers recommended and solicited unsuitable and overly risky investments that were actively traded on margin.
The claim, which was filed in March, also alleged that StockCross and the two brokers, Thomas B. Cooper and Peter L. Boorn, put Mr. Wolfson's home at risk. According to the complaint, they “encouraged and invited Mr. Wolfson to leverage the equity in his home with a reverse-mortgage transaction to utilize as investment capital.”
While many arbitration claims charge elder abuse, it is extremely rare for Finra panel to cite such abuse in an award, said David Liebrader, an attorney that represents both investors and brokers against securities firm. Under California law, elder abuse entitles plaintiffs triple the damages.
According to the complaint, Mr. Wolfson was a client of Mr. Cooper for almost 20 years, when Mr. Cooper dropped the account in 2008.
A footnote to the lawsuit alleged that Mr. Cooper “quit because he had bilked nearly all of Mr. Wolfson's assets—including the equity in his home, all his cash reserves, all his emergency/medical cash reserves and even the insurance money Mr. Wolfson received to replace his automobile—and there was nothing left to churn.”
The arbitrators awarded Mr. Wolfson $320,000 in compensatory damages and $960,000 in damages for elder abuse. They also awarded the 95-year-old $234,000 in legal fees, expert witness fees of $62,000, various costs of $21,000 and $10,000 as sanctions for failing to follow discovery orders.
StockCross and the brokers will fight the decision and file a motion to vacate, said Martin H. Kaplan, the attorney filing the motion. Such motions to vacate are essentially court appeals of Finra arbitration awards, which are very difficult to overturn.
The attorneys at Colling, Gilbert, Wright & Carter are currently representing numerous retirees in actions against their former brokerage firms and insurance providers and have recovered losses for elders and retirees throughout the United States. If you believe you or someone you know has been taken advantage of by their investment advisor, please contact our firm for a free consultation.
Excerpts from the January 5, 2010 Investment News article appear below:
In a rarity, an arbitrator last month cited elder abuse in tripling the damages a discount securities firm must pay a 95-year-old client.
A Financial Industry Regulatory Authority panel awarded the elderly investor, David Wolfson, $1.6 million in a case involving StockCross Financial Services Inc. of Beverley Hills, Calif. Mr. Wolfson accused StockCross, along with two of its brokers, of misconduct and self dealing. He claimed the brokers recommended and solicited unsuitable and overly risky investments that were actively traded on margin.
The claim, which was filed in March, also alleged that StockCross and the two brokers, Thomas B. Cooper and Peter L. Boorn, put Mr. Wolfson's home at risk. According to the complaint, they “encouraged and invited Mr. Wolfson to leverage the equity in his home with a reverse-mortgage transaction to utilize as investment capital.”
While many arbitration claims charge elder abuse, it is extremely rare for Finra panel to cite such abuse in an award, said David Liebrader, an attorney that represents both investors and brokers against securities firm. Under California law, elder abuse entitles plaintiffs triple the damages.
According to the complaint, Mr. Wolfson was a client of Mr. Cooper for almost 20 years, when Mr. Cooper dropped the account in 2008.
A footnote to the lawsuit alleged that Mr. Cooper “quit because he had bilked nearly all of Mr. Wolfson's assets—including the equity in his home, all his cash reserves, all his emergency/medical cash reserves and even the insurance money Mr. Wolfson received to replace his automobile—and there was nothing left to churn.”
The arbitrators awarded Mr. Wolfson $320,000 in compensatory damages and $960,000 in damages for elder abuse. They also awarded the 95-year-old $234,000 in legal fees, expert witness fees of $62,000, various costs of $21,000 and $10,000 as sanctions for failing to follow discovery orders.
StockCross and the brokers will fight the decision and file a motion to vacate, said Martin H. Kaplan, the attorney filing the motion. Such motions to vacate are essentially court appeals of Finra arbitration awards, which are very difficult to overturn.
The attorneys at Colling, Gilbert, Wright & Carter are currently representing numerous retirees in actions against their former brokerage firms and insurance providers and have recovered losses for elders and retirees throughout the United States. If you believe you or someone you know has been taken advantage of by their investment advisor, please contact our firm for a free consultation.
posted by
William B. Young Jr. Esq.
at
12:07 PM
Wednesday, December 9, 2009
Investor Awarded Damages against UBS in Lehman Structured Note Arbitration Case
In late 2007 and early 2008, UBS packaged and underwrote nearly 2 billion dollars in Lehman Brother backe Principal Protected Notes (PPNs), Partially Principal Protected Notes (PPPNs) and Return Optimization Notes (RONs).
Although the products were allegedly presented to UBS retail clients as conservative, income producing investments suitable for almost any client, in reality, the clients were buying senior unsecured Lehman debt. Worse, the debt was sold at a time when Lehman Brothers was in severe financial difficulty and finding it hard to obtain conventional financing from Wall Street at a reasonable cost.
Thousands of investors were sold these supposedly safe notes only to find them to be nearly worthless after Lehman declared bankruptcy on September 15, 2008. Hundreds of FINRA arbitration cases have been filed on behalf of UBS customers hoping to recoup their losses and these cases are just beginning to be heard by arbitration panels. An excerpt of the Wall Street Journal article appears below and documents one of the first such cases being brought and the award obtained by the investor who filed it.
In what will likely be a closely studied ruling, a small investor was awarded $200,000 after an arbitration panel decided her UBS AG broker inappropriately sold her risky Lehman Brothers Holdings Inc. principal-protected notes.
The case is one of the first involving the Lehman notes to be heard by a Financial Industry Regulation Authority arbitration panel. While the arbitration ruling won't set a precedent, it could indicate how rulings on similar cases will play out.
As in most arbitration awards, the three-person arbitration panel didn't give reasons for its findings. Other panels don't have to follow precedent, so they could rule in different ways on nearly identical cases. Still, the case will likely be cited by other plaintiff lawyers.
The case, submitted for arbitration a year ago, was brought against UBS Financial Services, a unit of UBS, which also is being investigated by numerous regulators for alleged issues around its selling of these notes. The client was seeking $300,000 in compensatory damages because the broker recommended structured products. The attorney for the Claimant argued that the notes were "speculative derivative securities" and were "unsuitable" for unsophisticated investors, according to the Finra claim statement.
The broker bought two notes for his client: a $225,000 guaranteed principal protection note and a $75,000 return optimization note. The panel ruled the client should be compensated $150,000 plus interest and attorney fees on the principal protected note; there was no compensation for the $75,000 note.
UBS said it "is disappointed the arbitration panel in this case awarded the claimant any damages, even if it was only half the compensatory losses she was seeking. UBS maintains that any client losses were the direct result of the unexpected and unprecedented failure of Lehman Brothers, which affected all Lehman bondholders."
The attorneys at Colling Gilbert Wright & Carter are currently representing clients in arbitration claims against UBS for losses stemming from the sale of Lehman Brothers Structure Notes. If you have experienced losses from the purchase of a Lehman backed structured product, please contact our office for a free case evaluation. Thank you.
Although the products were allegedly presented to UBS retail clients as conservative, income producing investments suitable for almost any client, in reality, the clients were buying senior unsecured Lehman debt. Worse, the debt was sold at a time when Lehman Brothers was in severe financial difficulty and finding it hard to obtain conventional financing from Wall Street at a reasonable cost.
Thousands of investors were sold these supposedly safe notes only to find them to be nearly worthless after Lehman declared bankruptcy on September 15, 2008. Hundreds of FINRA arbitration cases have been filed on behalf of UBS customers hoping to recoup their losses and these cases are just beginning to be heard by arbitration panels. An excerpt of the Wall Street Journal article appears below and documents one of the first such cases being brought and the award obtained by the investor who filed it.
In what will likely be a closely studied ruling, a small investor was awarded $200,000 after an arbitration panel decided her UBS AG broker inappropriately sold her risky Lehman Brothers Holdings Inc. principal-protected notes.
The case is one of the first involving the Lehman notes to be heard by a Financial Industry Regulation Authority arbitration panel. While the arbitration ruling won't set a precedent, it could indicate how rulings on similar cases will play out.
As in most arbitration awards, the three-person arbitration panel didn't give reasons for its findings. Other panels don't have to follow precedent, so they could rule in different ways on nearly identical cases. Still, the case will likely be cited by other plaintiff lawyers.
The case, submitted for arbitration a year ago, was brought against UBS Financial Services, a unit of UBS, which also is being investigated by numerous regulators for alleged issues around its selling of these notes. The client was seeking $300,000 in compensatory damages because the broker recommended structured products. The attorney for the Claimant argued that the notes were "speculative derivative securities" and were "unsuitable" for unsophisticated investors, according to the Finra claim statement.
The broker bought two notes for his client: a $225,000 guaranteed principal protection note and a $75,000 return optimization note. The panel ruled the client should be compensated $150,000 plus interest and attorney fees on the principal protected note; there was no compensation for the $75,000 note.
UBS said it "is disappointed the arbitration panel in this case awarded the claimant any damages, even if it was only half the compensatory losses she was seeking. UBS maintains that any client losses were the direct result of the unexpected and unprecedented failure of Lehman Brothers, which affected all Lehman bondholders."
The attorneys at Colling Gilbert Wright & Carter are currently representing clients in arbitration claims against UBS for losses stemming from the sale of Lehman Brothers Structure Notes. If you have experienced losses from the purchase of a Lehman backed structured product, please contact our office for a free case evaluation. Thank you.
posted by
William B. Young Jr. Esq.
at
11:34 AM
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.
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
Have you been
a victim of fraud?
We Can Help
Previous Posts
- FINRA Proposes New Reporting Rules for Customer Co...
- UBS Continues to Lose Clients and Brokers over Rec...
- Report Shows Individual Securities Case Filings Ro...
- 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...
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
- February 2010
