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) […]
State of Georgia Investigating Sales of Reverse Convertible Notes
It has been reported that the Secretary of State of Georgia, who regulates stockbrokers, is investigating whether securities laws were violated by the sale of reverse convertible notes to Georgia investors. According to a July 21, 2011 report in Bloomberg, the Secretary has issued subpoenas to UBS AG, Morgan Stanley, and Ameriprise Financial Inc. in order […]
Fraudulent Stock Tips and The Japanese Disaster
It takes a cold, cold heart to exploit a natural disaster as a hook to defraud stock market investors. But according to a recent FINRA Alert, that is exactly what is happening in the wake of the Japanese earthquake, tsunami, and nuclear meltdown. FINRA reports that “con-artists” are engaging in “pump-and-dump” schemes to inflate the […]
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 […]
Initial Impressions: What Do Financial Planning Designations Mean?
If there is one thing that is not in short supply in the financial planning profession it’s initials. Professional designations in the financial planning business include CFPs, CFAs, ChFCs, RIAs, RRs, and CSAs to list only a few. To make things even more confusing, many people carry multiple designations. While no professional designation guarantees wisdom […]
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 […]
Wells Fargo Settles SEC Claims that Wachovia Sold CDOs to Indian Tribe at Inflated Prices in 2007
The SEC announced on April 5, 2011 that Wells Fargo Securities agreed to a multi-million dollar settlement of charges that one of its units, Wachovia Capital Markets (which is now a part of Wells Fargo), committed securities fraud when it sold the Zuni Indian tribe complex securities known as collateralized debt obligations (CDOs) which are […]
Reverse Convertible Notes Sold By Brokers Under Regulatory Investigation
According to Bloomberg, the SEC is investigating to see if investors were defrauded into buying complex bonds known as reverse convertible notes. Reverse convertibles are securities that promise to pay investors a comparatively high fixed rate of interest and repay the investor’s principal , unless a stock to which the product is linked falls below […]
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 […]
Securities America/Medical Capital and Provident Royalties
Smiley Bishop & Porter LLP is investigating Securities America’s Medical Capital, Inc. promissory notes and Provident Royalties preferred stock. Clients have brought claims against the firm alleging that it failed to adequately investigate these products, that the investments were unsuitable, and that the firm did not disclose the products’ risks, which were substantial. The Securities […]
