Corporate & Securities Law

Reverse Convertibles Can Spell Financial Disaster For Investors

Posted on June 25, 2010
Reverse convertibles, also known as reverse exchangeable securities, are complex structured investment products linked to the performance of an unrelated asset. The asset can be a single stock or a basket of stocks, an index or some other asset. When investors purchase a reverse convertible, they are getting a yield-enhanced bond...

Regulators Take Aim At Reverse Convertibles

Posted on June 25, 2010
Complex investments known as reverse convertibles face growing scrutiny from regulators for their hidden risks, lack of transparency and, in some instances, because of the manner in which they are represented to investors by certain brokers. As reported in a June 24 story by Bloomberg, brokers for JPMorgan Chase & Co...

Magnetar Warrants A Closer By The SEC

Posted on June 23, 2010
Investment deals involving Magnetar Capital are garnering renewed interest from the Securities and Exchange Commission (SEC), as the regulator steps up its investigation into how hedge funds like Magnetar made huge profits on instruments that produced billions of dollars in losses for investors...

?Stranger-Originated Life Insurance? (STOLI) Policies: Buyer Beware

Posted on June 22, 2010
Stranger-Originated Life Insurance (STOLI) policies may be the new mortgage-related investment debacle of the year, creating havoc for unsuspecting investors and a financial bonanza for brokers and insurance agents who unload them. Stranger-Originated Life Insurance policies, also known as stranger-initiated life insurance or STOLI for short, are controversial investment arrangements in which a stranger initiates an [...

To access this complete feed in the blog feed reader login or register for free.

Steven Caruso Joins SIPC Taskforce

Posted on June 18, 2010
The Securities Investor Protection Corporation (SIPC) has announced the appointment of Steven Caruso of Maddox, Hargett, & Caruso to its SIPC Modernization Task Force. A total of 13 individuals - including representatives from the securities industry, investors, government regulators and academia - will serve on the task force...

LPL Faces Class Action Lawsuit Over Broker?s Annuities Sales

Posted on June 18, 2010
Two Nebraska investors have filed a class-action lawsuit against LPL Financial, alleging that one of the company?s brokers - Bob Bennie - misrepresented the costs and benefits of variable annuities. As reported in a June 17 article by the Associated Press, more than $365,000 of the products had been sold to investors Richard and Carol [...

FINRA Proposes Changes To Broker/Dealers? Back-Office Operations

Posted on June 14, 2010
The Financial Industry Regulatory Authority (FINRA) has issued a Regulatory Notice on a proposed rule to improve oversight of broker/dealers? back-office operations. Specifically, the new rule would expand registration requirements to individuals who engage or supervise activities related to sales, trading support and/or handling of customer assets...

Merrill Lynch & The ?Sophisticated Investor? Defense

Posted on June 14, 2010
A June 11 blog by the Wall Street Journal illustrates a growing trend on Wall Street - the sophisticated investor defense. The premise is simple: If the complex financial products that Wall Street markets and sells go south, it?s the investor?s problem...

Goldman Sachs Faces New Lawsuit Over CDO Deals

Posted on June 11, 2010
Goldman Sachs is facing yet another lawsuit involving toxic synthetic collateralized debt obligations (CDOs). Australian hedge fund manager Basis Capital?s Yield Alpha Fund claims it was defrauded by Goldman when it purchased $78 million of the Timberwolf CDOs in June 2007 and that Goldman knew at the time of the sale the securities were destined [...

Merrill Lynch CDO Deals Under Fire

Posted on June 11, 2010
Merrill Lynch?s sales of risky collateralized debt obligations (CDOs) have come back to haunt Main Street, with many investors alleging they didn?t thoroughly understand the dangers that the complicated products present. ?We were just lambs being led to the slaughter,? said investor Michael Slomak in a June 11 story in the Wall Street Journal...

Goldman Sachs Accused Of Dodging Congressional Panel

Posted on June 08, 2010
Goldman Sachs is accused of trying to hide key information and bypassing a congressional investigation into the causes of the financial crisis, according to the Financial Crisis Inquiry Commission (FCIC). On June 4, the FCIC issued a subpoena to Goldman for failing to comply with the panel?s request back in January for documents and interviews [...

Private Placements, Non-Traded REITs To Become More Transparent?

Posted on June 07, 2010
Non-traded REITs such as Behringer Harvard REIT I, Behringer Harvard Opportunity, Wells Real Estate Investment Trust II, Inland America Real Estate Trust and Inland Western Retail Real Estate Trust may become more transparent thanks to a new platform under development by the Depository Trust and Clearing Corporation (DTCC)...

Okoboji Financial Closes Doors; Sold Provident Royalties Private Placements

Posted on June 05, 2010
Sales of private placements in Provident Royalties LLC have come back to haunt broker/dealer Okoboji Financial Services. On May 28, the Iowa-based company filed notice with the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) of its intent to withdraw as a broker/dealer...

Investors Win MAT Three Municipal Arbitrage Fund Complaint

Posted on June 03, 2010
A Los Angeles Financial Industry Regulatory Authority (FINRA) arbitration panel has awarded investors more than $550,000 in damages for their complaint involving a fixed-income municipal arbitrage investment known as MAT Three. Created and launched by Citigroup Global Markets and sold through Smith Barney in February 2006, MAT Three was represented as a fixed-income alternative product [...

Medical Capital Investor Wins $400,000

Posted on June 02, 2010
A recent Medical Capital win by an investor over soured private placement deals is an encouraging sign for other investors with similar losses. The $400,000 award, which was issued May 10 and reported June 1 by Investment News, appears to be the first successful claim against a broker/dealer for selling Medical Capital investments...

Behringer Harvard, Other Non-Traded REITs Warrant Closer Look By FINRA

Posted on May 30, 2010
Behringer Harvard REIT I, Inland America Real Estate Trust, Inland Western Retail Real Estate Trust, Wells Real Estate Investment Trust II and Piedmont Office Realty Trust are non-traded real estate investment trusts, or REITs - an industry that has garnered new interest from the Financial Industry Regulatory Authority (FINRA)...

100% Principal Protected Notes Fail To Live Up To Their Hype

Posted on May 26, 2010
Complex securities sold as 100% principal protected notes have failed to live up to their billing. In recent months, untold numbers of investors have witnessed billions of dollars in losses because of so-called investments that were touted by brokers as good as cash investments...

Piper Jaffray Fined By FINRA

Posted on May 25, 2010
Investment firm Piper Jaffray & Co. has been fined $700,000 by the Financial Industry Regulatory Authority (FINRA) for email retention violations, related disclosure issues and supervisory and reporting violations. According to a statement issued by FINRA, Piper Jaffray failed to retain approximately 4...

Citigroup, Morgan Stanley & Jackson Segregated CDO

Posted on May 22, 2010
Citigroup and Morgan Stanley appear to be taking a lead from Goldman Sachs when it comes to collateralized debt obligations (CDOs). As reported in a May 21 article by Bloomberg, Citigroup is the focus of several inquiries for allegedly selling a series of mortgage-linked securities - known as the Jackson Segregated Portfolio - to investors [...

Morgan Stanley, CDO Deals Face Scrutiny

Posted on May 17, 2010
Investments deals involving CDOs have come back to haunt Morgan Stanley. Federal prosecutors apparently are investigating whether the investment bank intentionally misled investors about various synthetic collateralized debt obligations that it helped design and sometimes bet against...

Margin Calls, Human Error To Blame For May 6 Crash?

Posted on May 17, 2010
Margins calls? Human error? Whatever the reason, billions and billions of dollars in capital vanished in the blink of an eye on May 6, the day the Dow Jones Industrial Average witnessed nearly a 1,000-point drop. Individual and institutional investors alike felt the pain - and will for some time to come...

Goldman Sachs Expects More CDO Lawsuits In Its Future

Posted on May 10, 2010
Already facing a fraud lawsuit by the Securities and Exchange Commission (SEC) related to collateralized debt obligations (CDOs), Goldman Sachs says additional CDO lawsuits over its mortgage-trading activities are likely in the coming months. ?We anticipate that additional putative shareholder derivative actions and other litigation may be filed, and regulatory and other investigations and actions commenced [...

Medical Capital Fraud: How Did It Happen?

Posted on May 08, 2010
Medical Capital fraud is on the minds of many investors. The shuttered lender, based in Tustin, California, has left thousands of investors in financial straits, with many still asking how it happened and why regulators didn?t do a better job of scrutinizing sales of private placements...

Goldman Sachs Annual Meeting: A Showdown With Shareholders

Posted on May 07, 2010
Embattled investment bank Goldman Sachs hosted its annual shareholder meeting this morning in downtown Manhattan. As expected, Lloyd Blankfein, Goldman Sachs? chairman and chief executive officer, faced a litany of questions from shareholders. Prior to the meeting, dozens of protesters lined up outside of Goldman?s office building, holding signs that spelled the words, ?Greed? and [...

Goldman Sachs Fined Over Short Sales Deals

Posted on May 05, 2010
Embattled investment bank Goldman Sachs has been fined $450,000 by the Securities and Exchange Commission (SEC) and the New York Stock Exchange over what regulators say are hundreds of violations involving short sales. According to the SEC?s complaint, Goldman continued to write naked short sale orders following a ban by regulators two days after Lehman [...

Goldman Sachs Probe Shows Impact Of CDOs

Posted on May 03, 2010
The Senate investigation into Goldman Sachs unveils undeniable evidence about the risks of collateralized debt obligations (CDOs) and how Wall Street?s repackaging of the products produced not only billions of dollars in losses for investors, but also fueled a financial tsunami across the globe...

Goldman Sachs Faces Wrath Of Senators

Posted on April 29, 2010
Goldman Sachs, looking to unload toxic securities connected to the U.S. housing market, stepped up its efforts to sell those products to clients in 2006 and 2007, according to newly disclosed internal emails. The emails, some of which were from Goldman Sachs CEO Lloyd Blankfein, show that Goldman?s employees discussed how to ?arm? its salespeople [...

Non-Traded REITs: Look Before You Leap

Posted on April 23, 2010
Non-traded REITs have become popular investment vehicles in a relatively short time span, due in part to aggressive marketing tactics by some brokers who, in turn, reap the benefits via big commissions and/or fees. For many retail investors, however, non-traded REITs are not all that they may seem...

Medical Capital Holdings, Private Placement Sales Warrant New FINRA Guidelines

Posted on April 22, 2010
Investor complaints regarding private placements - including those linked to Medical Capital Holdings - have prompted several state and federal investigations into the private placement sales practices of broker/dealers across the country. In many instances, the investigations have revealed a significant lack of regulatory compliance...

FINRA Cites Broker Francisco P. Esparza

Posted on April 22, 2010
Francisco P. Esparza, a broker whose employment history include stints with J.P. Turner & Company, LPL Financial, UBS, Citicorp Investment Services and Morgan Stanley, has been fined $10,000 and suspended from association with any member of the Financial Industry Regulatory Authority (FINRA) for 15 business days...

Bloggers, promote your law blog by nominating your blog for inclusion in USLaw.com's Law Blog Directory and RSS Reader. Benefits described.