Reasons for the Act Inspired by the financial meltdown of 2007-2010 Home market collapsed: total home equity in US dropped from $13 trillion in 2006 to $8.8 trillion by mid-2008, foreclosures Over 100 mortgage lenders went bankrupt in 2007-08 Money market funds experience mass withdrawals ($144.5 billion in a week, compared to $7.1 prior week) […]
The Three Most Common Wall Street Defenses
There are between 3,000 and 9,000 arbitration claims filed with FINRA against brokerage firms every year. The most frequently filed complaints allege that a broker breached his/her fiduciary duty, made misrepresentations, or sold investments that were not suitable for the client’s needs or investment objectives. For every case that actually gets filed in arbitration there […]
Nuveen Investments Fined $3 Million by FINRA
FINRA announced it fined Nuveen Investments $3 million for misleading marketing materials used to push its auction-rate preferred securities. Nuveen did not directly sell the securities to its customers, but it did create marketing brochures used by the brokers who sold the ARPS to retail customers. According to the FINRA news release, “The brochures were […]
Auction Rate Securities
For a number of years, stockbrokers told individual and institutional clients with significant cash holdings that there was a safe way to earn a better return than money market funds, without risking a loss of principal. The place to get these returns was in Auction Rate Securities (ARS). It turns out the ARS were not […]
Auction Rate Securities
Smiley Bishop & Porter LLP has represented clients with significant losses resulting from investments in Auction Rate Securities (ARS). These securities were sold by virtually every major Wall Street firm and were marketed as a highly liquid, safe investment equivalent to CDs or money markets, but with a higher interest rate. In reality, the auction market was […]
Arbitration Tilting More Against Investors
Bloomberg quotes Brian Smiley about ‘institutional misconduct’ on Wall Street. Let’s say you had $50,000 in auction- rate securities that your broker said were as safe as money- market funds. The market collapsed and you sold at an 80 percent haircut. At your arbitration hearing, one of the three panel members works at a firm that also […]
