Merrill Lynch customers who purchased Bernoulli High Grade Collateralized Debt Obligations could recover their losses through securities arbitration. Bernoulli High Grade CDO-II was sold to institutional and high-net-worth customers of Merrill Lynch. The Bernoulli High Grade CDO-II was underwritten by Merrill Lynch in 2007. However, all 30 of the CDOs underwritten by Merrill Lynch in 2007 were either in technical default, had their best-rated portion cut to junk, were in danger of being liquidated or were in the process of being liquidated by the summer of 2008. Stock fraud lawyers are now investigating how Bernoulli High Grade CDO-II was marketed and sold by Merrill Lynch.

Securities that are backed by underlying pools of loans or bonds are CDOs, or collateralized debt obligations. While these investments are inherently risky, they are relatively common among “qualified investors.” Currently, stock fraud lawyers are also investigating if Merrill Lynch properly disclosed the CDO risks to investors in the sale of Bernoulli High Grade CDO-II. Furthermore, the value of Bernoulli High Grade CDO-II may have been inflated and overstated by Merrill Lynch. Many investment attorneys believe that Merrill Lynch either knew or should have known the 2007 CDO deals were bad in the existing mortgage market conditions, given the poor performance of the CDOs.

On January 31, 2012, a Financial Industry Regulatory Authority Arbitration Panel awarded $1.38 million to Bobby Hayes, an investor who purchased Collateralized Debt Obligations from Merrill Lynch in 2007. For more on this case, see the previous blog post, “After Securities Arbitration, Merrill Lynch Must Pay $1.4 Million to Investor Over CDO Loss.”

Numerous securities arbitrations have already been filed on behalf of CDO investors who suffered significant losses. If you believe you have a valid claim, find out more about your legal rights and options by contacting an investment attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

Merrill Lynch customers who purchased Lexington Capital Funding III Collateralized Debt Obligations could potentially recover their losses through securities arbitration. Lexington Capital was sold to institutional and high-net-worth customers of Merrill Lynch. The Lexington Capital CDO was underwritten by Merrill Lynch in 2007. However, all 30 of the CDOs underwritten by Merrill Lynch in 2007 were either in technical default, had its best-rated portion cut to junk, was in danger of being liquidated or was in the process of being liquidated by the summer of 2008. Stock fraud lawyers are now investigating how Lexington Capital was marketed and sold by Merrill Lynch.

Securities that are backed by underlying pools of loans or bonds are called CDOs, or collateralized debt obligations. While these investments are inherently risky, they are relatively common among “qualified investors.” Currently, stock fraud lawyers are also investigating if Merrill Lynch properly disclosed the CDO risks to investors in the sale of Lexington Capital. Furthermore, the value of Lexington Capital may have been inflated and over-stated by Merrill Lynch. Many investment attorneys believe that Merrill Lynch either knew or should have known the 2007 CDO deals were bad in the existing mortgage market conditions, given the poor performance of the CDOs.

On January 31, 2012, a Financial Industry Regulatory Authority Arbitration Panel awarded $1.38 million to Bobby Hayes, an investor who purchased Collateralized Debt Obligations from Merrill Lynch in 2007. For more on this case, see the previous blog post, “After Securities Arbitration, Merrill Lynch Must Pay $1.4 Million to Investor Over CDO Loss.”

Numerous securities arbitrations have already been filed on behalf of CDO investors who suffered significant losses. If you believe you have a valid claim, find out more about your legal rights and options by contacting an investment attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

Investment attorneys continue to seek investors who suffered significant losses in Lehman Brothers 100 Percent Principal Protection Notes and who wish to pursue securities arbitration claims in order to recover losses. Lehman Brothers 100 Percent Principal Protection Notes, also known as Principal Protected Notes, were issued by UBS Financial Services and have resulted in significant losses for many investors.

Many claims have been filed on behalf of Lehman note holders in the Lehman bankruptcy proceedings, but there are many more investors who must take action if they wish to recover these losses. Though many investors hope to recover losses through the class action that has been filed, individual securities arbitration claims may prove to return a larger percentage of losses to investors. Based on the Third Amended Joint Chapter 11 Plan of Lehman Brothers, it appears that investors will only receive about 21 cents on the dollar through the class action lawsuit. Therefore, investors should attempt to recover losses by any means available to them, including securities arbitration. Furthermore, investors should act immediately due to potential statutes of limitations.

Customers of UBS Financial Services who suffered losses as a result of their investments in Lehman Brothers 100 Percent Principal Protection Notes are encouraged to contact a stock fraud lawyer immediately for more information about filing a securities arbitration claim with the Financial Industry Regulatory Authority’s Office of Dispute Resolution. One way to do this is to look for an attorney who is experienced at representing clients with these kinds of claims. You will want someone who knows the history of rulings relative to these claims, as well as someone who understands how to recover as much money as possible for his or her clients.

To find out more about your legal rights and options, contact an investment attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

Investment attorneys are seeking Banc of America Securities customers who purchased Lyon Capital Management VII Collateralized Loan Obligations. Banc of America sold Lyon Capital to its institutional and high-net-worth customers. The CLOs were issued in July 2007. However, at this time, the value of investment, which was created by pooling loans together, was already declining. Lyon Capital’s value quickly declined and, eventually, was liquidated. The poor performance of Lyon Capital indicates that Banc of America either knew, or should have known, the existing market conditions made the deal a bad one. Investment attorneys are also questioning the valuation procedures that were used in pricing the loans.

A Financial Industry Regulatory Authority Arbitration Panel last week awarded $1.38 million to a Lyon Capital CLO investor. The award includes attorney’s fees, hearing session fees, interest and the entirety of the claimant’s investment losses. Allegations heard by the panel stated that Lyon Capital was worthless at the time of purchase. Only one month after closing the allegedly worthless deal, the disclosures about potential losses in similar loan pools was changed by Banc of America. August 2007’s prospectus stated that, because of the declining market values of loans, it was likely that “on the closing date [the value of the portfolio] will be substantially less than the principal amount.” The claimant further alleged that the investment was sold as a low-risk investment and Lyon Capital CLO was, in actuality, artificially inflated at the time of closing.

In light of the conduct of Banc of America in the sales of Lyon Capital and the recent related FINRA award, investment attorneys believe there may be other Lyon Capital investors who can seek to recover losses through securities arbitration. To find out more about your legal rights and options, contact an investment attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

On February 1, 2012, the Financial Industry Regulatory Authority (FINRA) announced that it had filed a complaint against Charles Schwab & Company. FINRA charged the firm with violating FINRA rules when it required the waiving of rights of customers to bring class actions against the firm. It is the belief of many investment attorneys, investors and others in the securities industry that investors should retain the right to file class actions against the firm in the event that broker misconduct occurs.

According to the complaint issued by FINRA, Charles Schwab is charged with amending its customer agreement in October 2011 to include a provision that required customers to waive their rights that allowed them to bring or participate in class actions against the firm. The amended agreements were sent to nearly 7 million customers.

Furthermore, the agreement included a provision that required customers to agree that, in arbitration proceedings, arbitrators would not be able to consolidate the claims of multiple parties. According to FINRA, both provisions are in violation of FINRA rules of language or conditions that may be placed in customer agreements by firms.

Because Charles Schwab’s conduct is ongoing, FINRA is seeking an expedited hearing. Since October 2011, the account agreements that contain these provisions have continued to be in use by the firm in opening over 50,000 customer accounts.

According to the FINRA press release, “The issuance of a disciplinary complaint represents the initiation of a formal proceeding by FINRA in which findings in the complaint have not been made, and does not represent a decision.”

Charles Schwab will have the opportunity to file a response and request a FINRA disciplinary panel hearing. Possible remedies for this complaint include payment of restitution, disgorgement of associated gains, censure, fine and suspension or bar from the securities industry. Charles Schwab investors should keep a close eye on developments relating to this complaint because it could make a significant impact on their rights related to securities arbitration.

On January 27, 2012, the Financial Industry Regulatory Authority (FINRA) issued an Investor Alert warning investors of fraudsters compromising investor email accounts to send trading instructions as a way to commit fraud. According to FINRA, fraudsters will use the email account to gain access to information that they can then use to request wire transfers to overseas accounts. Because this form of fraud can be committed by stock brokers and traders, stock broker fraud attorneys are encouraging defrauded investors to come forward with potential claims.

In some cases, firms failed to verify the instructions via telephone but released the funds anyway. This violation in procedure may entitle defrauded investors to a recovery of losses through securities arbitration. According to the SEC, four brokerage firms have been charged for allowing traders to trade in the U.S. securities market, despite the fact that they were unregistered. In the same case, Igors Nagaicevs, a trader, was charged with making $874,896 through unauthorized purchases and sales. He also broke into accounts 159 times from 2009 to August 2010. According to the SEC, he cost investors possibly over $2 million.

“Nagaicevs engaged in a brazen and systematic securities fraud, repeatedly raiding brokerage accounts and causing massive damages to innocent investors,” says the director of the SEC’s San Francisco regional office, Marc J. Fagel.

According to the FBI’s figures, this type of financial fraud totals around $23 million, with actual victim losses amounting to about $6 million.

If investors notice any signs that their account has been compromised, such as bounced email messages, unexplained password changes, reports of spam, or unauthorized transactions on their investment accounts, they should contact an investment attorney immediately. If you believe you have been the victim of fraud, find out more about your legal rights and options by contacting an investment attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

Stock broker fraud lawyers are on the lookout for investors who have been the victim of cold-calling fraud. Even though the number of sales calls has been reduced by the National Do Not Call Registry, securities firms still commonly use cold-calling as a tool for generating investments. Because not all cold-calls indicate fraud, cold-call scams remain a dangerous possibility for investors.

Individuals who have made investments based on a cold-call may have been the victim of fraud. Here are several indicators that a cold-call may have been a scam:

• The caller used high-pressure sales tactics. Cold-calling fraudsters often use scripts that contain a list of retorts for every possible objection and will continue to attempt a sale as long as the investor remains on the line.
• You can’t get a word in edgewise. Because these scam artists have a response to every objection, they will often try to talk over the investor in the process of convincing them that they should invest.
• The caller offers a “once-in-a-lifetime” opportunity. A “once-in-a-lifetime” opportunity that the caller claims to have received through “confidential” or “inside” information is a red flag that the investor is being scammed.
• The caller claims the investment is based on a company’s “breakthrough technologies.” These are especially dangerous because said technologies play off legitimate technologies. However, they often sound too good to be true.
• The caller refuses to send written information on the investment. Investors should always be able to receive written investment information and take their time to review it and make a decision. However, cold-call fraudsters want to push a quick decision so they will avoid sending any information. Bear in mind that fraudsters are crafty and will often agree to send information but then steer away from doing so.
• The caller is an unregistered broker. Many cold-calling fraudsters are not properly registered to sell securities, and frequently are not properly supervised. Be sure to look up the name of the broker using FINRA’s BrokerCheck to find out if they are registered.

If you have made investments based on a cold-call and suffered significant losses as a result, find out more about your legal rights and options by contacting an investment attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

On January 31, 2012, the Financial Industry Regulatory Authority (FINRA) posted a letter on its website outlining its 2012 priorities for regulation and examination. According to the letter, “FINRA is informing its examination priorities against the economic environment that investors have faced since 2008, as these circumstances have steadily contributed to conditions that foster an increased risk of aggressive yield chasing, inappropriate sales practices, unsuitable product offerings, and misappropriation and fraud.” The letter goes on to state FINRA’s concerns that investors “may be inadvertently taking risks they do not understand or that are inadequately disclosed.”

This is a concern that is shared by investment attorneys as they are faced with client after client that have suffered significant losses as a result of insufficient disclosure or lack of understanding.

Top products on FINRA’s watch list for suitability problems include non-traded real estate investment trusts (REITs), residential and commercial mortgage-backed securities, municipal securities, variable annuities, structured products, exchange-traded funds using synthetic derivatives and significant leverage, life settlements and private placements.

Another concern stated in FINRA’s letter is that of fees. FINRA states, “We remain concerned about firms’ charging retail investors hidden, mislabeled or excessive fees.” In fact, FINRA brought several cases related to excessive fees against broker-dealers in 2011.

Other priorities listed by the agency are oversight of the creation and redemption of exchange-traded funds and high-frequency trading.

In the letter, FINRA also stated that it is targeting high-risk firms with its enforcement efforts and undertaking a “broader data collection effort.” Red flags for FINRA monitoring are inadequate cash flow in investment and lack of liquidity.

Investors who believe they have been the victim of stock broker fraud can seek the recovery of their losses through FINRA securities arbitration. If you believe you have a valid claim, contact an investment attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

Bobby Hayes, a Nevada retiree and wealthy investor, has been awarded $1.4 million in damages in securities arbitration against Merrill Lynch. According to Hayes’ allegations, Bank of America Corp.’s Merrill Lynch sold him collateralized debt obligations which were worthless at the time he purchased them.

The case was filed in 2011, and Hayes’ allegations included consumer fraud and breach of contract, among other misdeeds. The collateralized debt obligations, or CDOs, were purchased in 2008 from former Bank of America Securities LLC, which is now part of Merrill Lynch. The Financial Industry Regulatory Authority’s (FINRA) ruling, dated for January 31, 2012, was in favor of the claimant.

CDOs are securities that are backed by underlying pools of loans or bonds. While these investments are inherently risky, they are relatively common among qualified investors.” However, Hayes was unaware of the fact that at the time of purchase, the securities were already under water. The loans backing the securities were purchased by Merrill between November 2006 and June 2007. According to Hayes’ allegations, while in the company’s inventory, the securities lost a significant amount of their value. Regardless, Merrill sold the loans to investors like Hayes for the purchase price rather than what they were worth.

The FINRA panel awarded Hayes rescessionary damages; this allows for the return of the securities in exchange for the investor’s money per state securities laws. The rescessionary damages totaled $883,122. Hayes also received interest totaling $251,668, legal feels totaling $218,344 and costs totaling $23,500.

William Haldin, a Merrill Lynch spokesman, denied the securities’ worthlessness at the time of sale and stated that “Following the purchase of this investment, the market experienced extreme volatility.” Merrill Lynch disagrees with the FINRA panel’s decision.

If you believe you have been the victim of stock broker fraud connected with collateralized debt obligations, find out more about your legal rights and options by contacting an investment attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

Investors who were customers of Bradford H. Blazar and RIM Securities who have suffered significant investment losses should contact an investment attorney immediately concerning the recovery of their losses. RIM Securities and Blazar are currently being investigated and customers may have potential claims that could lead to loss recovery through securities arbitration.

Allegations made against Blazar have stated that he solicited the investment of clients’ retirement assets into fractional interests of life settlement contracts. These contracts were acquired through a subsidiary of Life Partners Holdings Inc. Blazar’s sales practices in connection with these products are questionable and, as a result, are being investigated. Furthermore, investigations are underway that will determine if due diligence and adequate supervision were performed by RIM Securities for life settlement contract sales. In addition, Blazar may have played a part in the sale of life settlement contracts to customers since leaving RIM Securities, with several other Financial Industry Regulatory Authority brokerage firms. These firms include KCD Financial, Allied Beacon Partners and Cambridge Legacy Securities.

FINRA notices have specifically addressed life settlements sales and have reminded brokerage firms of the following guidelines:

• Applications for approval of material change in business must be filed when seeking to enter the business of variable life settlements, under NASD Rule 107.
• Balanced and fair information must be presented to customers and the public in advertising and other communications about variable life settlements, and be in compliance of all aspects of NASD Rule 2210.
• Variable life settlements, as securities transactions, are subject to federal securities laws and any and all applicable FINRA rules.
• Firms must adhere to obligations of suitability under NASD Rule 2310, NASD Rule 2330 and related guidance, disclosure of fees and fair fees under NASD Rule 2430, and fair and reasonable commissions under FINRA Rule 2010.

Account holders of Bradford Blazar and RIM Securities, Allied Beacon Partners, Cambridge Legacy Securities, or KCD Financial may have a valid securities arbitration claim. To find out more about your legal rights and options, contact an investment attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.