Fight Investment Fraud
Greco & Greco's lawyers represent investors to recover losses caused by securities fraud, churning, lack of suitability, negligence, sales of unregistered securities, unauthorized trading, and other misconduct by stock brokers, investment advisors, financial planners and their firms.
For a Free Attorney Consultation, call us at 877-821-5550 or
Businesses left out of Auction Rate Securities Settlements?
As discussed in this Bloomberg article, the settlements reached by regulators regarding auction rate securities sales with many of the large brokerage firms fail to help medium to large businesses who were also sold ARS. Although the required buyouts in the settlements with UBS, JPMorgan Chase, Morgan Stanley, and Wachovia Corp. reached $35 billion, this amount only approximates 18% of the $200 billion estimated to be still outstanding.
Although the settlements call for the firms to use their best efforts to help institutional investors stuck with the frozen ARS, they fall short of requiring a buyback. This situation may force mid-sized to large companies to seek redress on their own through the arbitration or court system. Please contact Greco & Greco if your business is holding frozen ARS as a result of fraudulent sales practices of a brokerage firm.
Posted by W. Scott Greco on 08/22/08.
Arbitration • Auction Rate Securities (ARS) • Brokerage Firms • Citigroup • J.P. Morgan • Merrill Lynch • Morgan Keegan • UBS • Wachovia • State Regulators • Permalink
Auction Rate Securities Failures
Auction Rate Securities and Auction Rate Preferred Securities (ARS) are securities made up of long term bonds or preferred stock with variable interest rates and yields. The yields are periodically reset through Dutch auctions. ARS are often marketed and sold by a single dealer with the only resale market being through a successful auction. Problems have arisen in recent months as a result of the failures of the auctions, leaving investors in the lurch and unable to redeem the security. As set out in this SmartMoney article, ARS have been marketed as a safe, liquid alternative to money market funds. Investors believing they had their money in a safe liquid investment are understandably concerned by the failures in the marketplace for these securities, and our firm has been monitoring the situation closely and discussing the matter with concerned individuals and businesses. Misrepresentations and omissions in the sale of a security can form the basis for a claim for securities fraud as well as other legal claims for recovery of damages.
As recently as 2006, the SEC censured 15 of the largest brokerage firms for sales and auctions of Auction Rate Securities. As stated by the SEC in its press release, “since the firms were under no obligation to guarantee against a failed auction, investors may not have been aware of the liquidity and credit risks associated with certain securities.” The SEC further stated that “the firms violated Section 17(a)(2) of the Securities Act of 1933, which prohibits material misstatements and omissions in any offer or sale of securities.” The fifteen firms which were censured were Bear, Stearns & Co., Inc., Citigroup Global Markets, Inc., Goldman Sachs & Co., J.P. Morgan Securities, Inc., Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated/ Morgan Stanley DW Inc., RBC Dain Rauscher Inc., A.G. Edwards & Sons, Inc., Morgan Keegan & Company, Inc., Piper Jaffray & Co., SunTrust Capital Markets Inc., Wachovia Capital Markets, LLC, and Banc of America Securities LLC. Read the SEC Order here.
UBS appears to be the first firm to actually begin lowering the values of auction rate securities on its customers’ statements, as reported by many news sources on March 29 including this Reuters article. Citing a Wall Street Journal article, Reuters reported that the markdowns could exceed 20 percent for some customers. Additional concessions from other firms may be forthcoming as the first quarter of 2008 ends.
State Regulators, including Massachusetts, have also begun investigations of the auction rate securities market with Massachusetts reportedly issuing subpoenas to UBS, Merrill Lynch, and Bank of America.
The Financial Industry Regulatory Authority (FINRA) released an Investor Alert on March 31, 2008 regarding auction rate securities which purports to set out various options for investors stuck with these products. FINRA, which claims to be a “trusted advocate for investors,” notably fails to mention contacting an attorney or filing an arbitration claim as options. If you are an investor who was sold Auction Rate Securities, and you would like to discuss your legal options with an attorney, please Contact Greco & Greco.
Posted by W. Scott Greco on 03/03/08.
Auction Rate Securities (ARS) • Bonds • Brokerage Firms • A.G. Edwards • Banc of America • Bear Stearns • Citigroup • Deutsche Bank • Ferris Baker Watts • Lehman Brothers • Merrill Lynch • Morgan Keegan • Morgan Stanley • Piper Jaffray • RBC Dain Rauscher • Suntrust • UBS • Wachovia • FINRA • State Regulators • Massachusetts • Suitability • Permalink
New York subpoenas firms in mortgage fraud probe
Reuters has reported here that the state of New York has subpoenaed three large Wall Street banks (Merrill Lynch, Bear Stearns, and Deutsche Bank) pursuant to a probe related to the creation of mortgage-backed securities. The New York probe reportedly is looking into how mortgages were packaged together by Wall Street to create securities sold to investors and the banks’ relationship with credit-rating firms.
Merrill reduces value of assets linked to subprime mortgages
Merrill Lynch warned last week that it was reducing the value of certain securities linked to subprime mortgages, thereby reducing its third quarter profits. Reuters article.
Merrill Lynch Fine for Supervisory Practices
In the below release, the NASD announced that it had ?fined Merrill Lynch, Pierce, Fenner & Smith Inc. $5 million for supervisory failures, registration violations, impermissible sales contests and other violations in connection with the operation of its Financial Advisory Center (FAC) located in Hopewell, NJ and Jacksonville, FL.?
NASD Press Release
Most recent entries
- Prudential Fined for Failure to Supervise Fraudulent Withdrawals From Variable Annuity
- Washington DC Investment Advisor Dawn Bennett Barred by SEC
- Virginia Broker Andrew Corbman Suspended by FINRA
- Capitol Securities Censured and Fined for Reverse Convertible Notes and Other Conduct
- Investigation Regarding Randy Watts of Winchester, Virginia
- SEC and FINRA FINE UBS OVER PUERTO RICO BOND FUNDS
- Success of FINRA Arbitration Claims against UBS regarding Puerto Rico Bond Funds
- First FINRA Arbitration Award Against UBS of Puerto Rico Regarding Bond Funds
- H.D. Vest Charged With Failures Related to Supervision
- Norfolk Virginia Financial Advisor Charged with Fraud
- Vienna Virginia Financial Advisor Pleads Guilty to Defrauding Customers
- Virginia Regulators Require License Surrender and Fines over sale of 54 Freedom Products
- Brokers barred for stealing from elderly widow
- FINRA fines JP Turner for Leveraged and Inverse ETF sales
- State Securities Regulators release new list of top investor threats
- July 2016
- March 2016
- February 2016
- December 2015
- October 2015
- September 2015
- May 2015
- March 2015
- October 2014
- June 2014
- December 2013
- November 2013
- October 2013
- September 2013
- October 2012
- August 2012
- June 2012
- May 2012
- April 2012
- March 2012
- February 2012
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- January 2011
- August 2010
- July 2010
- March 2010
- November 2009
- November 2008
- August 2008
- July 2008
- June 2008
- May 2008
- March 2008
- January 2008
- November 2007
- September 2007
- August 2007
- July 2007