According to Bloomberg, the $45,000 loss suffered by Jeff Steckbeck in TVIX, a Credit Suisse Group AG note, has set off a probe by the Securities and Exchange Commission. Reportedly, ETNs became more popular with the TVIX in February 2012. That month, Credit Suisse stopped selling the ETN and rising demand caused the investment to veer up to 89 percent from the index. When Credit Suisse began issuing the notes again in March of that year, a FINRA warning cautioned investors that ETNs could trade at a price that was higher than their underlying index.

Bloomberg data indicates that the estimated initial value of the securities is typically 2 to 4 percent less than the price investors paid. Exchange-traded notes like TVIX mimic assets through the use of derivatives and their value is based on volatility shifts in the market. However, the ETN market is small beans compared to the ETF market, which has around $2.4 trillion in assets.

In addition, the Securities and Exchange Commission recently announced that it will reconsider a 2008 rule proposal regarding ETFs. Reportedly the proposal will address the underlying and direct instrument transparency, differences between active and index funds, creative flexibility and inverse leverage. Reportedly, unauthorized trading and the unsuitable sale of inverse and leveraged ETFs increased following the 2008 economic downturn. As a result, securities arbitration lawyers have filed numerous arbitration claims on behalf of investors who suffered significant losses in inverse and leveraged ETFs.

If you purchased unsuitable ETFs or ETNs from Credit Suisse or another full-service brokerage firm, you may be able to recover your losses through securities arbitration. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

In one case, the investors’ trust interviewed multiple money managers and investment firms including Credit Sussie, CitiGroup, Deutsche Bank, LaSalle Bank and Goldman Sachs. All of these firms recommended diversification across traditional asset classes, such as bonds and equities, as well as selective investments in alternative products for special situations.

However, the claim asserts that GenSpring stood out because of its unique approach which would provide better downside protection and better returns through the use of Multi-Strategy Hedge Funds, such as Silver Creek Funds, instead of the bond or fixed income portion of client portfolios. Allegedly, GenSpring officials claimed that their approach, which had been tested thoroughly, would behave like traditional bonds in terms of asset class correlation and volatility while providing returns across all market cycles that were superior to traditional bonds. The trust invested approximately $10 million and stated its primary goal as capital preservation.

In another case, trustees stated that they would need access to the funds within 6 to 18 months for business opportunities and, thus, needed safe, liquid investments. They invested $25 million with GenSpring, using primarily Multi-Strategy Hedge Funds.

In both cases, the Multi-Strategy Hedge Fund investments plummeted with the stock market in late 2008 and early 2009. Traditional bonds, however, rose more than 5 percent. According to stock fraud lawyers, the firm’s clients are at a continued risk of liquidity damage because they are unable to liquidate their very large investments.

Securities fraud attorneys say that there was no reasonable basis for GenSpring to believe that the Multi-Strategy Hedge Funds would provide adequate diversification or perform like bonds.

If you are an ultra-high-net-worth investor who suffered significant losses because of GenSpring’s recommendation of Multi-Strategy Hedge Funds, you may be able to recover your losses through securities arbitration. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray., P.C. at (866) 966-9598 for a no-cost, confidential consultation.

Allegedly, Credit Suisse may have recommended the Yield Enhancement Strategy to some investors without properly explaining the risks to customers or considering their investment objectives and risk tolerances.

According to a recent statement of claim regarding this investment, advisors for Credit Suisse allegedly used literature that stated the goals would be achieved by the strategy by “selling short-term out-of-the-money puts and calls on the S&P 500 index.” Furthermore, the literature allegedly claimed that in order to “manage downside and upside market exposure, short term below-market put and above-market call options are purchased with the same duration as the puts and calls sold.” Securities arbitration lawyers say the allegations in the suit are that the strategy to “provide an additional source of income to portfolios when markets are flat, trending higher or trending lower” failed and, in a little over two years, more than $500,000 in losses and $200,000 in investor fees resulted.

According to stock fraud lawyers, the unsuitable recommendation of the Yield Enhancement Strategy may have resulted in significant losses for some investors. Financial Industry Regulatory Authority rules have established that brokers and firms have an obligation to fully disclose all the risks of a given investment when making recommendations, and that those recommendations must be suitable for the investment profile of the customer receiving the recommendation. FINRA Rule 2111 states that a “customer’s investment profile includes, but is not limited to, the customer’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance, and any other information the customer may disclose to the member or associated person in connection with such recommendation.”

If a Credit Suisse advisor recommended the Yield Enhancement Strategy to you and the investment was unsuitable or the advisor failed to disclose the risks, you may be able to recover your losses through securities arbitration. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 for a no-cost, confidential consultation.

Currently, Credit Suisse Securities and affiliates are being sued by the state of New York based on claims that the firm misled investors about the evaluation of residential mortgage-backed securities.

“We need real accountability for the illegal and deceptive conduct in the creation of the housing bubble in order to bring justice for New York’s homeowners and investors,” says Eric Schneiderman, the state’s attorney general.

However, in these cases brought by governments and other regulators, investment fraud lawyers note that the focus is often on punishing the investment banks, not acquiring restitution for the individual investor.

In a settlement earlier this year, Wells Fargo agreed to pay $6.58 million in response to allegations that it did not adequately inform investors of mortgage securities risks. However, some securities arbitration lawyers say many Wells Fargo investors have still not been fully compensated for fraud losses. While Wells Fargo has agreed to pay $6.58 million to settle the charges, a meager $81,571 of that amount will go to restitution, plus interest. The rest, $6.5 million, will go toward a civil fine. According to the Securities and Exchange Commission, Wells Fargo Brokerage Services, based in Minneapolis, sold the high-risk mortgage securities improperly in 2007. Now, the firm is based in Charlotte, N.C., and is called Wells Fargo Securities.

A task force has been established by President Barack Obama, the goal of which is to investigate misconduct in the sales and pooling of securities.

“Our investigations and legal actions demonstrate that there must be one set of rules for all — no matter how big or powerful the institution may be — and that those rules will be enforced vigorously,” Schneiderman adds.

If you purchased mortgage-related securities from Wells Fargo, Credit Suisse or another large investment bank, you may be able to recover losses sustained in the 2008 financial crisis. To find out more about your legal rights and options, contact an investment fraud lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

Securities fraud attorneys say that leveraged and inverse ETFs amplify short-term returns. They do so by using derivatives and debt. These investments are more suitable for professional traders and are usually unsuitable for long-term retail investors. These investments only make up $29.3 billion of the $1.15 trillion United States ETF market. FINRA has raised concerns that these products are being sold to long-term retail investors, despite the risk involved when holding leveraged and inverse ETFs for more than one day.

“We don’t have a qualm with the product,” Bennett says. “We just want to make sure that people who are selling them understand them.”

Bennett opted not to name the firms involved in the upcoming enforcement cases. While leveraged and inverse ETFs have been investigated for years by FINRA and the SEC, there has been little enforcement action in the past. A Massachusetts securities regulator sued RBC Capital Markets LLC for selling leveraged ETFs to investors who did not properly understand them in July 2011. In addition, FINRA barred a former Morgan Keegan & Co. broker in March for making inappropriate and excessive trades in leveraged and inverse ETFs on behalf of clients.

Securities fraud attorneys say FINRA is also looking into the marketing and selling practices of firms who sell exchange-traded notes as a result of the significant loss of value of the VelocityShares Daily 2x Short-Term ETN, which was managed by Credit Suisse.

If you have suffered losses as a result of your investments in ETFs, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact an investment fraud lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

A short sale occurs when a security is sold that is not owned by the seller. Upon delivery, the security is either purchased or borrowed by the short seller to make the delivery. A broker or dealer must have reasonable grounds to believe the security can be available for delivery in order to perform a short sale order, according to Reg SHO. The “locate” requirement effectively reduces potential failures to deliver, protecting the investment. Furthermore, a broker or dealer must mark the sales as long or short. Failure to do so results in broker misconduct that is potentially dangerous for clients.

FINRA Executive Vice President and Chief of Enforcement Brad Bennett stated that “Credit Suisse’s Reg SHO supervisory and compliance monitoring system was seriously flawed. Millions of short sale orders were being entered in its systems without locates for over four years because the firm did not have adequate Reg SHO technology and procedures in place.”

In addition, tens of thousands of sales orders were mismarked, including short sale orders that were incorrectly labeled “long.” Credit Suisse’s violations occurred from June 2006 through December 2010.

Because of the flawed supervisory systems, many violations went undetected until after FINRA’s investigation. Credit Suisse consented to FINRA’s findings but did not admit nor deny the charges.

The stock fraud lawyers at The Law Office of Christopher J. Gray are dedicated to helping the victims of securities fraud recover their losses. If you believe you have been the victim of securities fraud, find out more about your legal rights and options by calling (866) 966-9598 for a no-cost, confidential consultation.

The FHFA is seeking civil penalties as well as damages. Allegedly, the financial institutions violated fiduciary duty by providing misleading loan descriptions as a part of their sales and marketing materials. The marketing materials did not reveal the true risk factors associated with the loans. According to the FHFA’s press release, “Based on our review, FHFA alleges that the loans had different and more risky characteristics than the descriptions contained in the marketing and sales materials provided to the Enterprises for those securities.”

Congress and regulators have put forth a continuing effort to deal with the practices of institutions that led to the financial crisis of 2008 and this lawsuit is part of that goal. It is similar to the one filed on July 27, 2011 against UBS Americas Inc. The Housing and Economic Recovery Act of 2008 gives the FHFA the authority to file complaints such as this one.

As conservator of Freddie Mac and Fannie Mae, the FHFA is responsible for preserving the assets of these companies, but if — as an individual investor — you have suffered investment losses that you believe to be the result of misleading marketing materials or a breach of fiduciary duty, 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.

Citigroup is the third major bank to settle with the SEC for failing to disclose betting against a collateralized debt obligation, or CDO, and then marketing it to customers. JPMorgan settled for $153.6 million in June and Goldman Sachs settled for $550 million in July 2010.

In November 2007, the CDO defaulted and, while investors faced losses, Citigroup made $160 million. This contributed to the 2007-2009 financial crisis and is, therefore, a part of the mission to reduce broker fraud and hold Wall Street figures accountable for triggering the recession. According to the SEC, the Citigroup employee who was primarily responsible for structuring the transaction was Brian Stoker. In response to the files charged against him by the SEC, one of his lawyers said the allegations had “no basis.”

Credit Suisse Group AG, the collateral manager of the CDO, as well as Samir Bhatt, Credit Suisse’s portfolio manager who was primarily responsible, have settled separate charges with the SEC. Bhatt is suspended for associating with an investment advisor for six months and Suisse will pay $2.5 million. Citigroup represented Credit Sussie in marketing materials outlining the deal, according to the SEC.

Citigroup will forfeit $160 million in “alleged improper fees and profits,” $30 million in interest and will also pay a fine of $95 million. The settlement, according to Citigroup, “resolves all outstanding SEC inquiries into those activities.” Citigroup neither admitted nor denied wrongdoing.