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 […]
If You Want More Fraud, Try Cutting The SEC’S Budget
The SEC’s budget is the topic of hot debate, with SEC Chair Mary Schapiro begging Congress not to make further cuts to the agency that is charged with policing our securities laws. It is distressing to contemplate that this is even up for discussion at a time when investors are still climbing out of the […]
An Overview of FINRA Arbitration
When clients open a brokerage account they usually sign a contract requiring them to resolve any disputes with the firm or their broker through arbitration rather than in court. The Financial Industry Regulatory Authority (FINRA) is normally the forum where these cases are heard. There are pros and cons to FINRA arbitration, but the basic […]
An Outline of the FINRA Arbitration Process For Customer-Broker Disputes
I. General A. Nearly all brokerage firms require retail clients to sign an agreement to have all disputes between them decided in arbitration rather than court. B. About 25 years ago, in Shearson/Am. Express, Inc. v. McMahon, 402 U.S. 220 (1987), the U.S. Supreme Court upheld the validity of arbitration clauses which require clients to […]
FINRA Arbitrators Order Citigroup To Pay $54 Million for MAT/ASTA Funds Claim
A FINRA arbitration panel has ordered Citigroup Global Markets to pay a combined $54 million in awards to clients who were sold the MAT/ASTA funds (FINRA Arbitration 09-03297). The claimants, who were former clients of Citigroup, alleged that they were the victims of securities fraud, unsuitability, and a failure to supervise arising from multiple investments […]
Reverse Convertible Notes
Reverse convertible notes are short-term bonds peddled to investors by Wall Street firms. Throughout their term, they pay comparatively high interest rates, but whether they pay back the investor’s principal is the big question. The reason for that question is because a reverse convertible’s principal repayment is linked to the performance of a specific stock […]
Lehman Brothers Principal Protected Notes
Anyone who was sold one of these notes learned the hard way: in broker-speak the terms “principal protected” and even “100% principal protected” does not really mean your principal is protected. After Lehman Brothers filed for bankruptcy on September 15, 2008, holders of the notes learned that they are just unsecured creditors of the insolvent […]
Fraudulent and Unsuitable Private Placements
Under the federal and state securities laws, most securities must be registered with the SEC before they can be solicited or sold to the investing public. In the issuer’s registration statement and in periodic reports filed after a company goes public, the issuer of securities provides detailed financial information which reasonable investors can use to […]
Private Placement Securities
Smiley Bishop & Porter LLP is investigating the fraudulent or unsuitable sales of private placement securities to brokerage firm clients. Click here for a detailed examination of private placements. The lack of transparency in the private placement market has allowed it to become a fertile breeding ground for fraud that has generated regulatory investigations and […]
Nothing to Sneeze At: US Supreme Court Rules In Favor of Investors in Matrixx Securities Fraud Case
Unanimous decisions by the U.S. Supreme Court are rare. Even rarer are those upholding class action claims under the federal securities laws. Because of this, there is reason to be pleased with yesterday’s opinion, Matrixx Initiatives, Inc. v. Siracusano (No. 09-1156) (Mar. 22, 2011). In the case, the Court ruled that the plaintiffs stated a […]
