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.