Investment Fraud Blog | Dimond Kaplan & Rothstein, P.A.

Court Revives SEC Fraud Lawsuit Against Morgan Keegan

2012-05-16T13:08:23Z

Morgan Keegan & Company must answer again in a lawsuit filed by the Securities and Exchange Commission for fraud after a federal appeals court ruled this week that the state court wrongly dismissed the lawsuit against the investment company.

The 11th U.S. Circuit Court of Appeals returned the case to an Atlanta state court to be heard again, ruling that the local district judge erred in the prior ruling that Morgan Keegan gave sufficient warning and insight into the risks involved with auction-rate securities in 2008.

As financial markets began to crumble, Morgan Keegan allegedly led investors to believe that auction-rate securities were the same as cash. The securities lost value as the mortgage industry collapsed in 2008. The U.S. Securities and Exchange Commission filed a lawsuit against the Memphis investment company in 2009.

]]> The decision to continue the lawsuit against the investment firm also continues to link Regions Financial Corp. to Morgan Keegan. The bank sold the investment company for more than $1 billion earlier this year. Regions Financial Corp. must continue to pay legal costs related to the securities lawsuit. The bank paid a $210 million SEC fine in 2011, but admitted to no wrongdoing.

At the core of the lawsuit will be the decision of whether Morgan Keegan failed to tell investors of certain risks when the investment firm sold more than $647 million in auction-rate securities to 1,145 customers. The judge will likely weigh in on the influence and wording by the company through e-mails, brochures and the spoken word used by brokers.

In the lawsuit, the SEC will likely continue to argue that Morgan Keegan realized the auction market was drying up in 2007 and 2008, but continued to broker the securities.

Source: Chicago Tribune, "Federal appeals court overturns ruling, revives SEC suit against Morgan Keegan," Ted Evanoff, May 3, 2012

Sokol's Shadow Continues to Hang Over Berkshire

2012-05-09T16:47:02Z

According to recent reports, Berkshire Hathaway is continuing to pay for David Sokol's securities fraud lawyers to the tune of $150,000-$200,000 per month for his alleged insider trading activities.

Berkshire Hathaway's David Sokol was more than a securities trading star. Highly expected to inherit Warren Buffett's throne, he lost it all amid allegations that he violated the company's own ethics policies regarding insider trading. The fact that the company policies set a higher standard of conduct than the legal standard for insider trading means that Sokol faces no criminal charges right now, despite an ongoing Securities Exchage Commission (SEC) investigation.

]]> Insider trading legality depends on use of private knowledge, the investor's relationship to the company, and the timing of the purchase. Sokol resigned following disclosure that he had purchased 100,000 shares in a company he later brought to Buffett's attention. Subsequently Berkshire Hathaway purchased the company, and this increased the value of Sokol's investment.

Timing counts in this case. When Sokol purchased the stock, the buyout was not even under consideration. He had not yet told Buffett about it. Sokol denies even internal ethics violations, claiming to have considered the investment for a long time. However, he did not actually invest until just before talking to Buffett. This creates an impression of intent to manipulate the market, even if he had no such intent. Hence the lengthy SEC investigation of Sokol. Intent can be difficult to prove.

While the timing of insider trading weighs heavily on its legality, so does the nature of the purchase. Had Sokol waited to invest until after Berkshire announced intent to purchase, that would not likely have been illegal, as it would make it public knowledge. Investing in one's own company is also not illegal under securities laws, but passing private knowledge on for others to invest is.

Source: New York Times, "On Eve of Berkshire Meeting, Sokol's Legacy Lingers," Ben Protess, May 4, 2012

Morgan Keegan Fined for Pension Investment Kickbacks

2012-05-07T21:52:52Z

The Department of Labor's Employee Benefits Security Administration (EBSA) recently fined Morgan Keegan for violating its fiduciary obligations in recommending certain hedge funds of funds to ERISA pension plans in return for improper revenue sharing payments. Morgan Keegan, which has been the subject of numerous FINRA arbitrations and regulatory proceedings over the past several years recently was acquired by Raymond James. In our view, this type of wide-scale brokerage firm misconduct is reflective of the type of high-level wrongdoing that has hurt investors nationwide.

]]> The alleged violations occurred between April 2001 and November 2008, EBSA says. According to EBSA, Morgan Keegan agreed to pay $633,715.46 to 10 pension plans as a fine.

The EBSA said that "The law is very clear: If you accept a fee to give investment advice to a retirement plan, you are a fiduciary and must therefore act solely in the best interests of the participants in that plan." Third-party payments, she said, "should never be the motivating factor behind which investments brokers and advisors steer retirement clients into."

SEC Charges Former Morgan Stanley Executive with FCPA Violations and Investment Adviser Fraud

2012-05-07T21:43:16Z

On April 25, 2012, the Securities and Exchange Commission ("SEC") charged a former Morgan Stanley executive with violating the Foreign Corrupt Practices Act (FCPA) as well as securities laws. The SEC has alleged that the Morgan Stanley executive secretly acquired millions of dollars worth of real estate investments an influential Chinese official who in turn steered business to Morgan Stanley's funds.

]]> The SEC alleged that Garth R. Peterson, a former Morgan Stanley managing director, had a secret business relationship with the former Chairman of Yongye Enterprise (Group) Co. - a Chinese state-owned entity with influence over the success of Morgan Stanley's real estate business in Shanghai. According to the SEC, Peterson secretly arranged to have at least $1.8 million paid to the Chinese official and to himself that he disguised as finder's fees that Morgan Stanley's funds owed to third parties. Peterson also secretly arranged for the Chinese official, an attorney, and himself to acquire valuable Shanghai real estate from a Morgan Stanley fund. In exchange for offers and payments from Peterson, the Chinese official helped Peterson and Morgan Stanley obtain business while personally benefitting from some of these same investments. The SEC has taken the position that Peterson's deception, self-dealing, and misappropriation breached the fiduciary duties he owed to Morgan Stanley's funds as their representative.

Peterson agreed to settle the SEC's charges, including permanent disbarment from the securities industry, $250,000 in disgorgement, and giving up his interest in the Shanghai real estate that he secretly acquired. The U.S. Department of Justice has filed a related criminal case against Peterson.

"Peterson crossed the line not once, but twice. He secretly bribed a government official to illegally win business for his employer and enriched himself in violation of his fiduciary duty to Morgan Stanley's clients," said Robert Khuzami, Director of the SEC's Division of Enforcement.

Kara Novaco Brockmeyer, Chief of the SEC Enforcement Division's FCPA Unit, added, "As a rogue employee who took advantage of his firm and its investment advisory clients, Peterson orchestrated a scheme to illegally win business while lining his own pockets and those of an influential Chinese official."

According to the SEC's complaint filed in U.S. District Court for the Eastern District of New York, Peterson's violations occurred from at least 2004 to 2007. Morgan Stanley terminated Peterson in 2008 due as a result of Peterson's FCPA misconduct.

According to the SEC's complaint, Peterson's internal e-mails credited the Chinese official with helping obtain approvals required from other Chinese government entities for a deal to close. Peterson wrote in an e-mail that, "...YY gave us this deal. ... So we owe them a favor relating to this deal. ..." In another e-mail, with regard to the Chinese company, Peterson wrote, "...WE OWE THEM A FAVOR."

Morgan Stanley's compliance department apparently sent Peterson at least 35 FCPA compliance reminders, but Peterson nonetheless committed the FCPA violations. The SEC's complaint charges Peterson with violations of the anti-bribery, books and records and internal control provisions of the FCPA, and with aiding and abetting violations of the anti-fraud provisions of the Investment Advisers Act of 1940.

FINRA Sanctions Brokerage Firms$9.1 Million For Leveraged ETF Sales

2012-05-07T19:36:43Z

The Financial Industry Regulatory Authority ("FINRA") announced on May 1, 2012 that it ordered brokerage firms Citigroup Inc. (C), Morgan Stanley (MS), UBS AG (UBS) and Wells Fargo & Co. (WFC) to pay a combined $9.1 million for allegedly improper sales of leveraged and inverse exchange-traded funds ("ETFs"). FINRA fined the brokerage firms a total of more than $7.3 million and also ordered them to pay $1.8 million in restitution to investors who bought the ETFs. This could be the tip of the iceberg in holding brokerage firms responsible for ETF investment losses.

]]> FINRA said the brokerage firms failed to reasonably supervise sales of leveraged and inverse ETFs. Leveraged and inverse ETFs are designed for short-term trading, rather than for long-term investors. Unfortunately, many stockbrokers do not fully understand the products and improperly recommended them to investors as long-term, buy-and-hold investments, similar to mutual funds.

Leveraged ETFs use futures or derivatives in an effort to double or triple the return of an index. Inverse leveraged ETFs seek to return double or triple the opposite of the return of the index. For example, a 3X inverse leveraged ETF would seek to achieve growth of 30% when an index declines by 10%. Over periods longer than a day, the compounding effect of leveraged ETFs can lead to results that vary significantly from the one-day outcome, making them unpredictable and highly risky to hold for more than one day. Again, however, many stockbrokers did not appreciate the nature of leveraged ETFs or the risks associated with them. In turn, many stockbrokers failed to adequately explain leveraged ETFs to investors, resulting in misrepresentations and omissions about the risks and nature of ETFs.

FINRA said that each of the four brokerage firms sold billions of dollars of leveraged ETFs to investors. FINRA found that the brokerage firms did not have adequate supervisory systems to monitor the sales of the ETFs and did not conduct adequate due diligence on ETFs' risks and features. Because of this, the brokerage firms did not have a reasonable basis to recommend the ETFs to their retail customers, FINRA said. In addition, the stockbrokers made unsuitable recommendations of leveraged and inverse ETFs to some customers who had conservative investment objectives and risk profiles, FINRA said.

As a result of the improper way in which leveraged ETFs were recommended and sold to investors, many brokerage firms have increased their oversight over their brokers' sales of these products or have prohibited their sale altogether.

As is typical in settlements with FINRA, the brokerage firms consented to FINRA's findings, but neither admitted nor denied the charges. Notwithstanding that the brokerage firms did not admit to any wrongdoing, we believe that there likely will be numerous FINRA arbitration claims filed against brokerage firms by investors who lost money in leveraged and inverse leveraged ETFs.

Well Known Investment Advisor Indicted for Stealing from Pension Plans

2012-05-02T20:00:01Z

In 2010, Matthew Hutcheson testified to congress that investment professionals should be held to a fiduciary standard. He now faces 31 counts of theft and wire fraud after being indicted on federal charges that he used retirement plan funds for home renovations and to buy an interest in a ski and golf resort. He was arrested in Idaho and indicted on 17 counts of wire fraud and 14 counts of theft. This is yet another in a long line of apparent investment frauds that have harmed investors.

]]> Mr. Hutcheson hosted a radio show called "The Retirement Hour with Matt Hutcheson" and authored a course called "Retirement Plan Management: Compliance, Reporting and Ethics."

According to the U.S. Attorney's Office, Mr. Hutcheson was a fiduciary and trustee to three multiple-employer plans: the G Fiduciary Retirement Income Security Plan, the National Retirement Security Plan 401(k), and the Retirement Security Plan & Trust.

Mr. Hutcheson allegedly improperly withdrew $2,031,688 via 12 wire transfers from the plan's account to accounts that he controlled or for his personal benefit. According to the complaint filed against Mr. Hutcheson, one of those personal expenses was $892,000 to renovate of Mr. Hutcheson's home in Eagle, Idaho - including adding a swimming pool and hot tub and the construction of a 4,100-square-foot barn with a loft apartment and office. He also allegedly used pension plan money to buy two motorcycles and luxury cars. Federal authorities also claim that in 2010 Mr. Hutcheson set up an entity called Green Valley Holdings to acquire a golf course and ski lodge at the Tamarack Resort in Idaho, using pension plan money.

Mr. Hutcheson allegedly funneled $3 million in plan assets out of the Retirement Security Plan & Trust to help buy an interest in Tamarack, telling the plan's record keeper that he had planned to purchase a fixed-income bank note with the money. During an audit of the retirement plan, Mr. Hutcheson allegedly admitted that there was no such investment. He told the auditor that about $3.2 million in plan assets had been loaned instead to Green Valley Holdings - which Mr. Hutcheson also allegedly acknowledged was a prohibited transaction under the Employee Retirement Income Security Act of 1974.

Federal authorities are seeking about $5.3 million in forfeitures from Mr. Hutcheson, and each count of wire fraud is punishable by up to 20 years in prison, while each count of theft from an employee pension benefit plan is punishable by up to five years.

Dimond Kaplan & Rothstein, P.A. Wins Arbitration Award Against Wedbush Securities

2012-04-26T19:05:02Z

Dimond Kaplan & Rothstein, P.A. recently prevailed in a FINRA securities arbitration against Los Angeles-based brokerage firm Wedbush Securities. The arbitration hearing, which took place in Los Angeles, California, involved claims that the brokerage firm recommended and sold a fraudulent investment, Provident/Shale Royalties 8, to our client. More specifically, we argued that Wedbush: (a) negligently approved the fraudulent product for sale to customers; (b) failed to disclose numerous material risks about Provident/Shale Royalties; and (c) negligently supervised its broker, who began recommending and selling the fraudulent investment even before Wedbush negligently approved the product.

]]> Wedbush's broker who recommended the fraudulent investment, Bambi Holzer, has a deplorable disciplinary record, having been the subject of more than 50 prior customer complaints involving stockbroker misconduct. She also previously was placed under heightened supervision by California securities regulators as a result of her terrible disciplinary record. Notwithstanding Ms. Holzer's dubious past, Wedbush hired her and permitted her to recommend and sell the fraudulent Provident/Shale Royalties securities before Wedbush even had completed its review of the investment.

Provident/Shale Royalties, which purported to invest in interests in oil and gas, raised $485 million through the sale of private placements to about 7,700 investors. Unfortunately, Provident was a Ponzi scheme and now is subject to an SEC receivership. As a result, Provident/Shale Royalties investors lost their money.

Wedbush ultimately approved of Ms. Holzer's sales of the fraudulent securities despite the facts that there were no audited financial statements and Wedbush took no meaningful steps to verify Provident/Shale Royalties' internal financial statements or business operations. The SEC receiver has determined that Provident/Shale Royalties' records reflect that the company never had any significant business, and that the company routinely used new investors' money to pay "investment returns" to earlier investors, in classic Ponzi-scheme fashion.

Importantly, our client is a multi-millionaire with a Harvard MBA. Brokerage firms typically argue that they should not be held liable in cases where the investor is educated and financially well off. Of course, the fact that a customer is educated and of significant means does not give a brokerage firm the right to mislead the customer, commit securities fraud, or otherwise fail to abide by the law or industry standards.

Although theFINRA arbitrators did not provide an explanation for their award, they apparently were not moved by Wedbush's plea for leniency. The arbitrators ordered Wedbush to pay our client approximately 90% of his net losses. The arbitrators also ordered Wedbush to pay our attorneys' fees, something that arbitrators rarely do.

Barclays Gas ETN Plummets as Credit Suisse VIX Note Crashes

2012-04-16T21:28:32Z

A Barclays Plc exchange-traded note ("ETN") that traded more than 130% above the value of the natural-gas index to which it is linked, lost 42% of the premium in only 3 days. The iPath Dow Jones-UBS Natural Gas Total Return Sub-Index ETN, which traded in excess of a 100% premium for nearly three weeks beginning March 5, began dropping on March 20, the day after its price ascended to 134% more than its affiliated index.

]]> ETNs are unsecured bank debt backed by their issuer's credit. By contrast, exchange-traded funds actually hold assets. Banks issue and redeem ETN shares based on the demand level for the securities. That demand typically does not affect the price, since the ETNs are supposed to track the performance of an index. But, as shown by the Barclays ETN, exchange-traded products sometimes become unhinged from their target index, resulting in large spikes or drops, which can be devastating to investors.

Unfortunately, more and more of these highly complex, high-risk exchange-traded products are being sold in an unsuitable manner to retail investors, who typically will not fully appreciate the risk of loss. Moreover, many brokers do not understand the products and misrepresent them to investors.

ETN Investment Losses - Credit Suisse VIX Note Crashes

2012-04-16T21:22:14Z

The crash of an exchange-traded note ("ETN") backed by Credit Suisse Group shows the increasing risks for investors in Wall Street's highly complex exchange-traded products. The VelocityShares Daily 2x VIX Short-Terms ETN (TVIX), which is supposed to provide twice the daily return of the VIX volatility index, fell 30 percent on March 23 after Credit Suisse said it would be issuing new shares. Credit Suisse had stopped creating shares a month ago, unhinging the fund's price from the index and leading to a premium over the indicative value that reached as high as 89% on March 21 before plunging to roughly 7% two days later.

]]> As investors have sought to track the performance of indexes with lower fees than active funds, exchange-traded products have grown into a $1.7 trillion industry. More than one-half of all U.S. fund deposits over the past five years have been placed in exchange-traded products. The exchange-traded funds have generated scrutiny over whether they bring undue risks to financial markets, and whether investors understand how these funds work in employing derivatives to produce returns. These complicated, high-risk products are being sold not only to institutional investors, but also increasingly to unsophisticated retail investors.

The majority of exchange-traded products are exchange-traded funds, which track an index by holding the underlying securities. ETFs issue shares that trade on an exchange like stocks, and can issue new shares or redeem existing ones. By comparison, exchange-traded notes, or ETNs, like the one backed by Credit Suisse, issue unsecured securities that are supposed to deliver the return of an index. The issuer typically uses derivatives linked to the index to cover its obligations to shareholders. If the issuer cannot repay the notes, investors lose money. Issuers also may stop issuing or redeeming shares, separating the ETN from the security or index it was intended to track.

Investors in Credit Suisse's VelocityShares Daily 2x VIX Short-Terms ETN lost approximately $340 million when the ETN dropped more than 50% over two days.

Exchange-traded products have come under regulatory scrutiny since 2009. The SEC examined whether they contributed to market volatility in 2010 and the infamous May 6, 2010 "flash crash." But, we all are aware of the sluggish pace at which the SEC proceeds, so we don't expect the regulators to take meaningful action any time soon. Investors who lost money in this ETN and other exchange-traded products may have been misled about the nature of the products. Investors should contact a lawyer who is well-versed in securities arbitration to discuss whether a claim exists to recover ETF or ETN investment losses from the brokerage firm that recommended the investment.

FINRA Expels Stockbroker Over Leveraged ETFs Sales

2012-04-16T19:16:04Z

Former Morgan Keegan stockbroker Michael Venable of Tyler, Texas has been barred permanently from the securities industry for recommending and selling risky, leveraged exchange traded funds ("ETFs") to clients with conservative investment objectives and risk profiles.

]]> FINRA determined that Venable put his clients at great risk by selling them leveraged Direxion ETFs. Venable also used margin borrowing in some of his clients' accounts to purchase the risky products. Using margin to purchase the ETFs exacerbated the already high risk associated with the speculative investments. Venables' clients at issue ranged in age from 40 to 91, with incomes from $25,000 to $50,000. Leveraged ETFs generally are considered to be unsuitable for conservative investors with limited incomes.

Leveraged ETFs are risky and highly volatile. Although the products are designed for short-term trading, many brokers do not understand the investments and recommend leveraged ETFs as long-term, buy-and-hold investments.

We expect the trend of brokers improperly recommending these risky ETFs to continue unless and until brokerage firms properly educate their brokers and adequately monitor their brokers' recommendations of the investments.

Former Edward Jones Administrator Permanently Barred for Stealing Money

2012-03-21T14:44:08Z

A former administrator for brokerage firm Edward Jones has been permanently barred from the securities industry after stealing $63,000 from 21 customers. According to the Financial Industry Regulatory Authority (FINRA), Carolyn Avia Harmon took $63,000 in customer funds between November 2006 and September 2009.

]]> Ms. Harmon was an unregistered branch office administrator at an Edward Jones office in North Carolina. Edward Jones fired Ms. Harmon when it learned that she took customers' money. FINRA then started an investigation into the matter. Ms. Harmon failed to respond to FINRA's requests for information and she did not appear at the disciplinary proceeding, and FINRA ultimately entered a default against Ms. Harmon, which including permanently barring Ms. Harmon from the securities industry.

While working for Edward Jones, Ms. Harmon processed account transfers and opened and closed accounts. According to FINRA, Harmon's conduct cast doubt on her ability to comply with FINRA's regulatory requirements and on her capacity to fulfill her fiduciary duties. So, while Edward Jones offered to pay restitution to all 21 of the affected customers, we question how Edward Jones permitted such conduct to take place over such a long period of time without catching and stopping Ms. Harmon sooner.

Ms. Harmon deposited funds intended for a number of customer accounts into her husband's account, eventually transferring the majority of the funds into her own account. According to FINRA, she then used that stolen money to pay personal bills. She apparently forged her husband's signature on several letters in order to transfer the funds without her husband's knowledge or authorization.

Edward Jones learned that Ms. Harmon was stealing customers' money in November 2009 when a Field Supervisor discovered that certain checks that were supposed to be deposited into customer accounts never were deposited. The firm then tracked the missing deposits to Ms. Harmon's husband's account. Upon being questioned, Ms. Harmon said she didn't know why the funds had been deposited in her husband's account, suggesting that it was an administrative error. After further questioning, Ms. Harmon admitted that she diverted the customers' funds to her husband's account in order to help out a relative.

Investidores do Lehman Brothers ainda tem tempo para apresentar queixa com FINRA

2012-03-15T14:43:06Z

Lehman Brothers saiu da concordata em 6 de março de 2012 e é esperado para começar a fazer distribuições aos credores em 17 de abril de 2012. Esses credores incluem investidores de Lehman Brothers com "100% de proteção principal," "Proteção Parcial," "Step Up Resgatável," Otimização de Retorno," e notas de "Retorno Absoluto." Muitos destes investidores compraram produtos do Lehman estruturados deUBS. Infelizmente, as distribuições de falência provavelmente irá retornar apenas cerca de 20% das perdas dos investidores de investimento. Para muitos investidores, a única maneira de recuperar os 80% restante das perdas de seus investimentos é através de um pedido de arbitragem FINRA.

]]> A distribuição da falência do Lehman Brothers não eliminaria o direito de registrar uma reclamação de arbitragem com FINRA para recuperar os 80% restante dos prejuízos dos investidores. Até à data, muitos investidores já recuperaram dinheiro através de reclamações de arbitragem com FINRA contra UBS e outros bancos e corretoras que venderam produtos do Lehman estruturados.

É importante ressaltar que os investidores tem um tempo limitado para apresentar um pedido de arbitragem com FINRA. Se o tempo vencer, os investidores que não conseguem registrar uma reclamação com tempo poderiam ser proibido de exercer a pretensão derecuperar o restante de suas perdas do Lehman.

Dimond Kaplan & Rothstein, P.A. representou com sucesso numerosos investidores que perderam dinheiro em Lehman Principal Protection Notes e outros produtos estruturados da Lehman. Se você gostaria de discutir os seus direitos legais e como você poderia ser capaz de recuperar suas perdas do Lehman Brothers, não hesite em contactar-nos no telefone (305) 374-1920 ou envie um e-mail para info@dkrpa.com. Temos escritórios em Miami, Los Angeles, Nova York, e West Palm Beach e nós representamos os investidores nos Estados Unidos e América Latina, bem como por toda a Europa.

Los Inversores de Lehman Brothers Todavía Tienen Tiempo para Presentar Reclamaciones FINRA

2012-03-15T14:35:10Z

Lehman Brothers salió de la bancarrota el 6 de marzo de 2012 y se espera que comience a hacer pagos a los acreedores el 17 de abril de 2012. Entre los acreedores se encuentran los inversores en Lehman Brothers con "Protección al 100% del Capital", "Protección Parcial", "Incrementos Exigibles", "Optimización de Retorno," y pagarés con "Banda de Retorno Absoluto." Muchos de estos inversionistas compraron los productos estructurados de Lehman a UBS. Por desgracia, los pagos apenas cubrirán el 20% de las pérdidas de los inversores; para muchos de ellos, la única manera de recuperar el 80% restante de sus pérdidas es a través de una demanda de arbitraje FINRA.

]]> Los pagos por la quiebra de Lehman Brothers no eliminan el derecho a presentar una demanda de arbitraje FINRA para recuperar el restante 80% de las pérdidas de los inversores. Hasta la fecha, muchos inversionistas ya han recuperado dinero a través de las demandas de arbitraje FINRA contra UBS y otros bancos y firmas de corretaje que vendieron productos estructurados de Lehman.

Es importante destacar que los inversores sólo tienen un tiempo limitado para presentar sus demandas de arbitraje FINRA. Si ese tiempo expira, a los inversionistas que no cumplan con presentar una reclamación oportuna se les podría prohibir que lleven acabo una reclamación para recuperar sus pérdidas restantes.

Dimond Kaplan & Rothstein, P.A. ha representado con éxito a numerosos inversores que perdieron dinero con los Pagarés Lehman de Protección al Capital y otros productos estructurados de Lehman. Si quiere analizar sus derechos legales y cómo podría recuperar sus pérdidas en Lehman, no dude en contactarnos al (305) 374-1920 o envíenos un correo electrónico a info@dkrpa.com. Tenemos oficinas en Miami, Los Ángeles, Nueva York y West Palm Beach; asimismo, representamos a los inversores de los Estados Unidos, América Latina, y toda Europa.

Lehman Brothers Investors Still Have Time to Pursue FINRA Claims

2012-03-14T16:20:46Z

Lehman Brothers emerged from bankruptcy on March 6, 2012 and is expected to begin making distributions to creditors on April 17, 2012. Those creditors include investors in Lehman Brothers "100% Principal Protection," "Partial Protection," "Step-Up Callable," "Return Optimization," and "Absolute Return Barrier" notes. Many of these investors purchased the Lehman structured products from UBS. Unfortunately, bankruptcy distributions likely will return only about 20% of investors' investment losses. For many investors, the only way to recover the remaining 80% of their investments losses is through a FINRA arbitration claim.

]]> A distribution from the Lehman Brothers bankruptcy would not eliminate the right to file a FINRA arbitration claim to recover the remaining 80% of investors' losses. To date, many investors already have recovered money through FINRA arbitration claims against UBS and other banks and brokerage firms that sold Lehman structured products.

Importantly, investors only have a limited amount of time to file a FINRA arbitration claim. If that time expires, investors who fail to file a timely claim could be prohibited from pursuing a claim to recover their remaining Lehman losses.

Dimond Kaplan & Rothstein, P.A. has successfully represented numerous investors who lost money in Lehman Principal Protection Notes and other Lehman structured products. If you would like to discuss your legal rights and how you may be able to recover your Lehman losses, feel free to contact us at (888) 578-6255 or email us at info@dkrpa.com. We maintain offices in Miami, Los Angeles, New York, and West Palm Beach and we represent investors throughout the United States and Latin America, as well as throughout Europe.

FINRA Fines Have Increased, But Don't Get Too Excited

2012-03-13T21:41:06Z

It recently has been reported that enforcement actions and fines by the Financial Industry Regulatory Authority (FINRA) increased sharply in 2011, rising to $68 million from $45 million in 2010. While certainly a positive development, in our opinion, investors should gain little comfort in learning this information. While the increase in FINRA fines reflects regulators' attempt to curtail abuses against investors, many of the fines often are too little and too late. We believe that the timing involved in FINRA fines does little to deter stockbroker negligence and investment fraud.

]]> All too often FINRA (and other securities regulators) do not even begin to investigate investment fraud, let alone issue fines, until long after the investment fraud has taken place and investors have been fleeced. Moreover, by the time many of the fines are imposed, some of the brokerage firms are out of business and many of the individual brokers do not even have the money to pay the fines. As such, many of the fines do not get paid. Finally, the fines often are substantially less than the financial damage that investors have suffered and much, if not all, of the fine money is not used to pay investors for their investment losses.

While we are pleased that FINRA has been issuing fines in increasing amounts, we believe that regulators should make a greater effort to monitor stockbrokers' and brokerage firms' conduct and stop improper sales practices before investors lose their money. Such monitoring should include increased scrutiny on sales of complex structured investments, leveraged exchange-traded funds (ETFs), and risky and illiquid Reg D private placements. Until FINRA and other securities regulators become more proactive in stopping investment fraud before investors are damaged, after-the-fact fines offer little more than publicity material for securities regulators.