Corporate & Securities Law

Public Pension Funds Gamble With Risky Investments

Posted on March 11, 2010
While private companies are gradually withdrawing from their addiction to risky investments, public pension funds have been slow to follow suit. Following the market?s downturn - which produced about $1 trillion in losses - state and local governments faced a Catch 22 situation: Slash retirement benefits or try to boost returns with high-risk investments...

Target Date Funds Face New Regulatory Scrutiny

Posted on March 08, 2010
Popular retirement-plan products known as target date funds are facing regulatory scrutiny from both the Securities and Commission (SEC) and the Department of Labor. The criticism comes after target date funds, which entail a combination of stocks, bonds and other investments and are designed for people nearing retirement, suffered massive losses following the market collapse [...

First Allied Pays $2 Million In Harold Jaschke Case

Posted on March 08, 2010
First Allied Securities Firm will pay $2 million to settle allegations from the Securities and Exchange Commission (SEC) that it failed to properly supervise one of its independent contrators, Harold H. Jaschke. Jaschke, who worked for First Allied from 2005 to 2008, was accused of allegedly duping two institutional investors by making trades without their [...

Debate Over Fiduciary, Suitability Standards Heats Up

Posted on March 08, 2010
Financial reform is a hot topic on Capitol Hill, with legislation designed to rein in broker/dealers through new oversight measures currently being contested on the Senate floor. At the heart of the debate is a bill containing a provision to strengthen the protection of consumers by requiring stock brokers and insurance agents to act in [...

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Medical Capital Holdings: What MedCap Investors Can Do

Posted on March 07, 2010
Momentum continues to build over Medical Capital Holdings, as more MedCap investors file arbitration claims against the healthcare lender for the millions of dollars in losses suffered as a result of alleged questionable sales in Medical Capital private placement securities...

Were You Affected By Inland American, Inland Western REITs?

Posted on March 03, 2010
Unsuitable investments in Inland American Real Estate Trust and the Inland Western Retail Real Estate Trust have become a growing source of concern for more investors these days. In many cases, sales of Inland REITs were appropriate from the start for some investors...

Medical Capital Fraud Allegations Pick Up Steam

Posted on March 02, 2010
Investors are continuing to come forth with fraud allegations against various broker/dealers in the Medical Capital case. According to investors? complaints, certain brokerage firms allegedly marketed and sold private placement offerings in Medical Capital Holdings without first disclosing important facts about the company?s deteriorating financial health and the risks attached to the investments they were [...

Credit Default Swaps: Dangerous And Thriving

Posted on February 28, 2010
Credit default swaps are blamed for instigating the nation?s financial crisis, helping to bring companies like American International Group (AIG) to its knees after it could no longer pay the many claims it owed on the swaps contracts. Nearly three years after the fact, credit default swaps and other complex derivative instruments are still a [...

Two Virginia Insurance Agents Face Charges Over Promissory Notes

Posted on February 25, 2010
Two Virginia insurance agents - Julius Everett ?Bud? Johnson and Walter Ray Reinhardt - face accusations by the Virginia State Corporation Commission (SCC) of misleading investors regarding $1.7 million in sales of promissory notes. Last fall, the SCC ordered Johnson, Reinhardt and their companies to stop selling the notes for 120 days, alleging that they [...

Agents Illegally Selling Promissory Notes

Posted on February 24, 2010
Virginia Insurance Agents Violate Securities Laws Two insurance agents in Virginia recently had a temporary injunction issued against them and their business entities after being accused by Virginia?s securities regulatory body of illegally selling promissory notes in violation of securities laws...

Behringer Harvard REIT, Risky Investments for Investors

Posted on February 24, 2010
Investors turned to the Behringer Harvard REIT for safe investing, but are now stuck holding essentially worthless positions. In an attempt to avoid the risk of investing in the stock market, some investors chose real estate investment trusts (REITs)...

Pacific Cornerstone, Former CEO Latest To Face Disciplinary Actions Over Private Placements

Posted on February 18, 2010
News of private placement deals run amuck keeps coming. The latest concerns private placement offerings - also known as Regulation Ds - involving Pacific Cornerstone Capital and former CEO Terry Roussel. The two were fined $750,000 in December by the Financial Industry Regulatory Authority (FINRA) for making misleading statements and, in some instances, omitting facts [...

Securities America Up In Arms Over Medical Capital Allegations

Posted on February 18, 2010
Securities America has fired off an angry letter to the Massachusetts Securities Division over its lawsuit against the broker/dealer for allegedly misleading investors who bought high-risk private placements in Medical Capital Holdings. The story was first reported Feb...

Oren Eugene Sullivan: Keeping Track Of Bad Brokers

Posted on February 17, 2010
Oren Eugene Sullivan is the disgraced South Carolina broker who recently pled guilty to mail fraud in connection to a multimillion dollar, decades-long Ponzi scheme. In January, Sullivan admitted in federal court that from 1995 through 2008 he ran the Ponzi scheme, selling fake investments to individuals and groups of investors, according to the U...

Reverse Convertibles Demolish More Investors? Portfolios

Posted on February 17, 2010
Investments in reverse convertibles are proving disastrous for more investors, many of whom are retirees and were allegedly misinformed about the products from their broker/dealers. In January and February, the Financial Industry Regulatory Authority (FINRA) took action, issuing a regulatory notice to members about the ways in which reverse convertibles are marketed and sold to [...

Main Street Natural Gas Bonds: Did Brokerages Disclose Risks?

Posted on February 15, 2010
Main Street Natural Gas Bonds The September 2008 bankruptcy filing of Lehman Brothers Holdings is unlikely to fade from the memory of investors anytime soon. That?s because the bankruptcy had a ripple effect on other investments tied to Lehman, including investments in Main Street Natural Gas Bonds...

Leveraged And Inverse ETFs Not For The Uninformed

Posted on February 14, 2010
Leveraged and inverse ETFs have found themselves under the regulatory microscope recently, which makes it all the more interesting that ProShares has decided to launch eight new exchange-traded funds that aim to magnify their benchmark exposures by 300%...

Inland American REITs Unsuitable For Some Investors

Posted on February 13, 2010
Sales of Inland American REITs have produced a firestorm of financial headaches for investors, many of whom were sold on the products based on inappropriate recommendations from broker/dealers. Investments such as the Inland American Real Estate Trust and the Inland Western Retail Real Estate Trust are non-traded, or unlisted, REITs - financial products that have [...

Fair Finance Agrees To Receivership

Posted on February 12, 2010
Embattled businessman Tim Durham apparently will not oppose the appointment of an interim receiver for Fair Finance and its parent corporation, Fair Holdings. The story was first reported on Feb. 11 by the Akron Beacon Journal. The news comes one week after the law firms of Maddox Hargett & Caruso and David P...

Vermont Plan Sues Morgan Stanley For Fraud; ?Wrap Account? Woes

Posted on February 10, 2010
Investment firm Morgan Stanley is facing an arbitration claim by the city of Burlington, Vermont, which alleges breaches of fiduciary duty and fraud involving something known as a wrap account. According to the claim, Morgan Stanley?s actions resulted in damages of more than $21 million for the Burlington Employees? Retirement System - losses that [...

Albany CEO Christopher Bass Charged With Securities Fraud

Posted on February 10, 2010
Christopher Bass, an Albany investment broker and president and CEO of Swiss Capital Harbor/USA, was arrested Feb. 8 on federal criminal charges of securities fraud for an alleged scheme involving more than 200 investors and $5.5 million.  According to the criminal complaint, Bass allegedly deceived investors with promises of high returns via investments in his company, [...

Securities America Advisers Under Fire Over Medical Capital Investments

Posted on February 09, 2010
Securities America has a growing public relations problem. Last month, the broker/dealer was charged by Massachusetts regulators for allegedly failing to reveal key information to investors about high-risk notes issued by Medical Capital Holdings. Now, some of Securities America?s top producers are being sued by investors who say they were ill-informed about the risks of [...

Motion To Appoint Receiver Filed In Fair Finance Case

Posted on February 07, 2010
As investigations continue into the business dealings of Tim Durham and Fair Finance, a motion has been filed on behalf of some Fair Finance investors to appoint a receiver in the case. The motion was filed Feb. 4 by the law firms of Maddox Hargett & Caruso and David P...

Medical Capital Holdings: Lawsuits Against Broker/Dealers Growing

Posted on February 05, 2010
Investments in Medical Capital Holdings have resulted in millions of dollars in losses for investors across the country and, in turn, ignited a rash of lawsuits and arbitration claims. The focus of investors? complaints is on the broker/dealers that sold the investments - known as Medical Capital Notes - and the information they allegedly kept [...

Bank of America?s Ken Lewis Cited As Poster Child For Financial Excess

Posted on February 05, 2010
Former Bank of America CEO Ken Lewis is in a category all by himself. Following the Feb. 4 filing of civil fraud lawsuit by New York Attorney General Andrew Cuomo filed, Lewis became the highest ranking banking official to face charges of wrongdoing as part of the financial industry?s meltdown...

State Street Gave Some Investors Preferential Info About Limited Duration Bond

Posted on February 05, 2010
State Street Corporation gave some ?preferred? investors key information about its Limited Duration Bond Fund back in 2007, allowing them to jump ship and subsequently avoid millions of dollars in losses. As it turns out, the Limited Duration Bond Fund was almost entirely invested in mortgage-related securities...

Risky Investments Produce Steep Losses For College Endowments

Posted on February 05, 2010
College investments dropped 23% in 2009, with U.S. colleges and universities losing a total of $93 billion in endowment value in 2009. It was the most disastrous year since 1974, when the average college lost 11.4% of its endowment, according to a recent survey by the National Association of College and University Business Officers (NACUBO)...

Ex-Bank of America CEO, Ken Lewis Faces Fraud Charges Over Merrill Lynch Deal

Posted on February 04, 2010
Bank of America execs, including former CEO Ken Lewis, are gearing up for a heated legal battle with New York Attorney General Andrew Cuomo. On Feb. 4, Cuomo charged Lewis of defrauding investors and the U.S. government when he helped put the wheels into motion for Bank of America to buy financially troubled Merrill Lynch [...

Northern Trust Involved In Pension Fund Lawsuit

Posted on February 04, 2010
Botched financial planning is the accusation facing Northern Trust Company, which has been sued by the Chicago Teachers’ Pension Fund over claims that the investment company breached its fiduciary duty and made unsuitable investments in risky, long-term securities that ultimately plummeted in value...

David McFadden, Former Securities America Broker Sentenced To Five Years

Posted on February 03, 2010
David McFadden, a former broker for Securities America, has been sentenced to five years in prison for running a securities fraud scheme that cost at least 150 clients - many of whom were retired or living on a fixed income - tens of millions of dollars in losses...

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