Claimants Continue to File Arbitration Claims Involving Financial Preferreds

InvestorLawyers.net’s founder Christopher J. Gray is presently handling or has handeld cases against various brokerage firms on behalf of investors who sustained losses various preferred stocks of brokerage firms.

In one such case involving a retiree, UBS accumulated large positions in preferred stocks and similar Instruments. Of note, UBS substantially concentrated these investments in preferred stocks in the financial sector. The Statement of Claim filed with FINRA alleged that a reasonable investor would not have realized that the Account was heavily invested in preferred stocks and similar securities exposed to massive losses in the event of dislocation in the U.S. financial sector. The monthly statements for the Account at relevant times did not call attention to this fact, and instead reflected that a significant portion of the Accounts assets were invested in Afixed income@ (which an ordinary customer justifiably understands to mean investments that were significantly safer than stocks).

As of early 2008 the preferred securities in the Account were worth a total of

approximately $140,000. As the tumultuous year 2008 progressed, however, these securities rapidly lost value. As the broader financial system entered into a period of extreme volatility in the September through November 2008 time frame and following, the Account=s substantial investment in Lehman Brothers preferred stock lost almost all of its value. These losses occurred after Lehman Brothers= decline and eventual epic bankruptcy filing, even as UBS itself allegedly continued to sell Lehman securities to its customers, underwrite such securities, and conceal the true risks of insolvency that threatened the existence of Lehman Brothers.

The sale of these instruments was reportedly rife at the beginning of the financial crisis in 2007 and 2008. Merrill Lynch, Morgan Stanley and other brokerage firms sold billions of dollars of preferred stock issued by Freddie Mac and Fannie Mae. Many investors were lead to believe that these were conservative investments watched over by the U.S. Government and they were never informed about the deteriorating financial condition of Freddie Mac and Fannie Mae. During the sub-prime mortgage crisis, the federal government took over Fannie Mae and Freddie Mac placing them into conservatorship. This left preferred shares investors with essentially worthless investments.

Investors who believe that may have been the victim of a sales practice violation involving preferred stocks may contact InvestorLawyers.net attorneys by filling out the form below or e-mailing newcases@investorlawyers.net.