Bank of America Merrill Lynch’s (“Merrill Lynch”) brokerage unit offered Strategic Return Notes (“SRNs”) to customers, resulting in losses of as much as 95% of the principal invested. First issued in November 2010 and maturing November 27, 2015, the SRNs were designed to be linked to Merrill Lynch’s own proprietary volatility index (the “VOL”) which was designed to calculate the volatility of the S&P 500 Index. The SRNs, which were issued at $10 per share, ultimately matured at just $0.50 per share. Thus, investors in Merrill Lynch’s proprietary SRN’s were subjected to an enormous 95% loss on their principal investment.

In recent years, many investors have been solicited by their financial advisor to purchase so-called structured notes, which are often presented to customers as a higher-yielding, but still relatively safe alternative to fixed-income investments such as bonds. Structured notes are issued and backed by financial institutions. As hybrid products containing both a bond component and an embedded derivative, structured notes are designed to provide an investor with a return based on an equity index (or some other benchmark), as opposed to an interest rate typically associated with a traditional bond investment.

In theory, a structured note is supposed to provide an investor with an opportunity to earn enhanced income (in excess of the very low interest rates offered in the current environment on most bond investments), while also providing some downside cushion. In practice, however, many structured notes engineered by various investment banks and sold by their brokers have proved to be horrendous investments.

With respect to their pricing, Merrill Lynch accurately disclosed two of the fees surrounding the SRNs: a 2% upfront fee on the initial investment and a 0.75% annual internal fee. Significantly, however, Merrill Lynch allegedly failed to disclose the “execution factor” associated with its SRNs. In fact, in June 2016, the Securities and Exchange Commission (“SEC”) levied a $10 million fine against Merrill Lynch in connection with what the SEC alleged to be Merrill’s failure to “… adequately disclose a third cost included in the volatility index… that imposed a cost of 1.5 percent of the index value each quarter.”

Investments in structured products including Merrill Lynch’s SRNs have increased drastically in recent years, with hundreds of billions in structured product sales occurring in the past decade, alone. These investments are extremely complex and difficult to understand, and accordingly, are likely unsuitable for the average retail investor.

When a financial advisor recommends an investment to a customer, the broker and his or her firm has a duty to first conduct due diligence on the investment. In addition, pursuant to the rules and regulations set forth by the Financial Industry Regulatory Authority (“FINRA”), the financial advisor, and by extension his or her firm, must seek to ensure that they conduct a suitability analysis in order to determine if the investment being recommended is suitable for the investor in light of certain factors, including the customer’s age, risk tolerance and stated objectives, net worth and income, and degree of sophistication with investing.

Investors who suffered losses as a result of advisor-recommended purchases of structured notes may be able to recover losses sustained in FINRA arbitration if the recommendation lacked a reasonable basis. Investors may contact Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

On October 31, 2017, Carmel, Indiana financial advisor Thomas J. Buck, 63, was charged under federal securities laws with one count of securities fraud. The unsealed criminal charges brought in the U.S. District Court for the Southern District of Indiana allege that Mr. Buck defrauded his clients by charging excessive commissions. Mr. Buck has agreed to plead guilty to the charge.

From 1981-2015, Mr. Buck was a registered financial advisor with Merrill Lynch, Pierce, Fenner & Smith (“Merrill Lynch”), which since January 2009 has operated as a division of Bank of America. The unsealed criminal charges allege, that in recent years, Mr. Buck defrauded some clients by charging excessive commissions, while intentionally failing to advise them of cheaper options for services rendered. Specifically, it is alleged that Mr. Buck took discretion over certain accounts, and in these accounts placed trades without client authorization, resulting in clients paying commissions on these trades. It is further alleged that Mr. Buck informed clients that they were paying less in commissions than were actually charged, and that he also allegedly failed to inform certain clients that a fee-based payment structure was available which could result in financial savings to the client(s).

As a result of the alleged fraudulent enterprise, it is estimated that Mr. Buck’s activities caused clients to incur aggregate losses of approximately $2 million. According to Assistant U.S. Attorneys Cynthia J. Ridgeway and Nick Linder, who are handling prosecution of the case, Mr. Buck has agreed to plead guilty and could face up to 25 years in prison. Contemporaneous with the unsealing of the criminal charges, Mr. Buck has also agreed to a monetary settlement with the Securities and Exchange Commission (“SEC”) in the amount of approximately $5 million.

FINRA BrokerCheck indicates that Mr. Buck has been barred from the securities industry. As disclosed by FINRA, on March 4, 2015, Mr. Buck was discharged from his employment with Merrill Lynch in connection with “allegations including failing to discuss service level and pricing alternatives with a customer, providing inaccurate information to firm management during account reviews regarding this issue, mismarking bond cross trade order tickets as unsolicited, and providing information to a client during an active account review that did not correspond to the firm’s records.”

Since May 2006, Mr. Buck has been involved in a total of 39 customer complaints; currently 36 of these complaints resulted in a settlement. The majority of these complaints reportedly concern allegations including unauthorized trading, misrepresentations and/or omissions of material fact in connection with commissions charged, as well as excessive trading.

Brokerage firms like Merrill Lynch have a duty to ensure that their registered representatives are adequately supervised. Brokerage firms must also take reasonable steps to ensure that their financial advisors follow all applicable securities rules and regulations, in addition to internal policies and procedures. In instances when brokerage firms fail to adequately supervise their registered representatives, they may be liable for losses sustained by investors.

At Law Office of Christopher J. Gray, P.C., our securities attorneys have successfully resolved a number of disputes on behalf of aggrieved investors, including losses sustained due to instances of excessive trading or churning, and related broker misconduct. Investors may be able to recover their losses in FINRA arbitration. Investors who wish to discuss a possible claim may contact a securities arbitration attorney via the contact form on this website, by telephone at (866) 966-9598, or by e-mail at newcases@investorlawyers.net for a no-cost, confidential consultation.

The Puerto Rico Urgent Interest Fund Corporation, also known as the Puerto Rico Sales Tax Financing Corporation (or Corporacion del Fondo de Interes Apremiante – COFINA in Spanish) issues bonds that are attached to Puerto Rico’s sales tax revenue. Specifically, Puerto Rico’s ‘Sales and Use Tax’, charges a 7% fee on many different transactions occurring on the Island. The revenue raised through COFINA is allocated in the following manner: • 21.4% of the COFINA tax revenue is allocated to local municipal government; • 39.2% of the COFINA tax revenue is allocated to state government; and • 39.2% of the COFINA tax revenue goes to COFINA bondholders.

In light of Judge Taylor Swain’s recent order to stay further payments on COFINAS, bondholders are now left in the lurch, holding Puerto Rico debt instruments that have suffered severe price deterioration and that no longer provide the coupon payments sought by fixed income investors. If you have invested in COFINAS, or other Puerto Rico bonds including bonds issued by the Puerto Rico Electric Power Authority (known as PREPAs) and you have suffered significant losses as a result, you may be able to recover your losses in FINRA arbitration.

Arbitration cases filed with the Financial Industry Regulatory Authority (FINRA) have charged that certain stockbrokers and investment advisors in Puerto Rico have over-concentrated customer accounts in Puerto Rico bonds and other securities including closed-end funds (CEFs), leading to unnecessary losses. Firms named in some of these arbitration cases include UBS, Merrill Lynch, and Popular Securities, among others.

If you believe that you may have a claim relating to recommendations of Puerto Rico COFINA or PREPA bonds, or other securities, you 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. The attorneys at Law Office of Christopher J. Gray, P.C. are admitted in New York and Wisconsin but will also accept cases in other jurisdictions, including Puerto Rico, often working with co-counsel who are admitted in those jurisdictions.

Lawrence’s most recent history as a broker was with Southwest Securities, where he was registered from August 2011 through December 2013. Prior to that, he worked for Oppenheimer & Co. from June 2008 through July 2011, and Merrill Lynch from April 2003 through June 2008. During his time at both Southwest Securities and Oppenheimer & Co., there were several complaints issued against Lawrence by customers who claimed to have received unsuitable recommendations. One client even alleged that Lawrence borrowed $850,000 and failed to return the funds. This alleged borrowing occurred while Lawrence was with Oppenheimer & Co. and the FINRA report states that he intended to “…pay for the losses. I [Lawrence] then voluntary resigned and left the appropriate funds in my personal account to be used to cover the losses.” Despite this response, Lawrence failed to appear for testimony with FINRA regarding this, or any of the other complaints, which included additional allegations of misappropriated funds and failure to provide appropriate investment recommendations.

If you suffered significant losses as a result of doing business with Wade James Lawrence or believe that another stockbroker or financial advisor led you to inappropriately use investment 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 fraud attorney at the Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

Prior to starting with Merrill Lynch in 2009, Zeng worked for UBS Financial Services and before that for Morgan Stanley.

If you suffered significant losses as a result of doing business with David Zeng or received an unsuitable recommendation in any of the mentioned investment categories from another stockbroker or financial advisor, you may be able to recover your losses through securities arbitration. To find out more about your legal rights and options, contact a stock fraud lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

Lawrence is also the defendant in two lawsuits filed in November. According to the allegations in these lawsuits, Lawrence failed to repay $1 million in loans made by private individuals. Reportedly, Lawrence stated in November 2013 that he would turn himself over to regulators “regarding allegations of illegal securities trading practices.”

According to FINRA reports, Lawrence has been accused of causing $140,000 in customer losses because of inappropriate trades during the time he worked with Southwest Securities and $71,000 in customer losses because of unauthorized trading when he was with Oppenheimer.

Under FINRA rules, firms have an obligation to fully disclose all the risks of a given investment when making recommendations, and those recommendations must be suitable for the individual investor receiving the recommendation given their age, investment objectives and risk tolerance. Furthermore, firms have an obligation to properly supervise brokers’ activities while they are registered with the firm. According to securities fraud attorneys, Lawrence reportedly worked for Southwest Securities since August 2011. Prior to that he reportedly worked for Oppenheimer until he resigned, following these allegations, in July 2011.

If you suffered significant losses because of unsuitable or unauthorized trades executed by Wade James Lawrence, you may be able to recover your losses through securities arbitration. To find out more about their legal rights and options, contact a stock fraud 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 particular, these stock fraud lawyers are looking into the sales practices of Merrill Lynch and its brokers in regards to the Coast Access II LLC hedge fund. Coast Access II LLC is a “feeder fund,” investing substantially all of its assets in Coast Diversified Fund LLC, a multi-manager, multi-strategy “fund of funds” which invests through the market neutral or relative value trading of several securities and commodities trading advisors, according to Coast Access’ SEC Form D filing. Coast Access II LLC’s place of principal business operations and executive offices are listed as Merrill Lynch Alternative Investments and the investment was offered through Merrill Lynch. However, securities fraud attorneys now believe that the hedge fund was recommended to certain Merrill Lynch clients, despite its unsuitability for those clients.

A recent FINRA arbitration proceeding concluded with an order for Merrill Lynch to pay two of its investors $1.34 million in connection with their Fannie Mae preferred shares investments. Allegedly, Merrill Lynch misrepresented the risks involved in this investment, marketing them as “safe.” As a result, the investors, clients of broker Miles Pure, suffered significant losses. Their claim included allegations that the firm was negligent in its supervision of Pure and had committed civil fraud. Pure now works for Morgan Keegan.

If you are a customer of Merrill Lynch and purchased the Coast Access II LLC hedge fund or Fannie Mae preferred stock and suffered significant losses as a result of the unsuitability of the investment, or because the risks associated with the investment were misrepresented to you, you may be able to recover your losses. To find out more about your legal rights and options, contact a stock fraud lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

According to the allegations listed in the 65-count indictment against Lanier, while he was working for Merrill Lynch as a financial advisor between 2008 and 2010, Lanier forged client signatures on fraudulent letters of authorization to Merrill Lynch client associates. These client associates were responsible for processing client funds through wire transfers. Purportedly, these letters also contained misleading and false statements that were intended to persuade the client associates to transfer funds from the investment accounts of clients to bank accounts under Lanier’s control.

According to the indictment, stock fraud lawyers say that Lanier deliberately sought out assistance from client associates who were not familiar with his clients to direct funds transfers. Lanier allegedly claimed Merrill Lynch clients had given voice approval on a recorded telephone conversation, though no such approval was given. Choosing client associates who were unfamiliar with his clients aided Lanier in his scheme.

If it can be proven that Merrill Lynch failed to adequately supervise Lanier, the firm may be held liable for investor losses. Therefore, clients who were defrauded by Lanier may be able to recover losses through FINRA arbitration, regardless of Lanier’s ability to pay as a result of his imprisonment and/or the charges against him.

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

The now infamous class action suit against Lehman Brothers has its roots in the claim that the risks associated with PPNs were not disclosed to investors. When Lehman Brothers filed for bankruptcy, the principal on the PPNs — for which Lehman was the borrower — became unprotected and investors were left with unexpected losses. According to claimants in the case, they were led to believe that as long as they held them to maturity, their PPNs were 100 percent principal protected. Claimants also say they were told that as long as their underlying indices maintained their worth, the PPNs were principal protected. Furthermore, the risks associated with PPNs were not disclosed and customers were not notified of the decline of Lehman Brothers which could affect the value of the investments.

The case against Lehman Brothers deals primarily with broker misconduct in misleading investors about the safety of their investments. However, if other allegations are true and firms truly pushed PPNs at the same time that they were reducing their own PPN holdings, it is a question outright broker fraud as opposed to failure to disclose.

If you’ve invested in PPNs and believe your losses were a result of broker misconduct, contact an investment attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

The outside advisers handling Lehman Brothers’ bankruptcy – mostly bankers and lawyers – have made over $1.4 billion for their services since Lehman Brothers went bankrupt three years ago. If you’re a Wall Street insider, Lehman Brothers, which is bankrupt and out-of-business, is a fantastic place to work.

Meanwhile, investors holding Lehman Brothers structured notes are slated to get back only about one fifth of the money they invested in the notes when the Lehman Brothers bankruptcy litigation finally winds up. Financial advisers at UBS and other brokerage firms peddled Lehman Brothers structured notes with great-sounding names like “100% principal protected” notes and “Return Optimization” notes. But for investors getting back only twenty cents on the dollar, their principal wasn’t protected and their returns weren’t optimized.

Of course, if you’re a Wall Street insider working on the Lehman Brothers bankruptcy, your principal is well-protected and your returns are fully-optimized.

If UBS sold you one of these notes, or if you’ve lost money in any Lehman Brothers note, give us a call. We may be able to help.

Here’s a list of some of the names of Lehman Brothers notes sold by UBS – –

*100% Principal Protection Absolute Return Notes Linked to the Euro/U.S. Dollar Exchange Rate

*100% Principal Protection Notes with Interest Linked to the Year-Over-Year Change in the Consumer Price Index

*Aussie Bull Notes 100% Principal Protected at Maturity

*Principal Protected Note with Enhanced Participation Linked to a Basket of Commodities

*Principal Protected Note with Enhanced Participation linked to a Global Currency Basket

*Annual Review Notes with Contingent Principal Protection Linked to the S&P 500® Index

*Partial Protection Participation Notes Linked to a Basket of Global Index Funds

*Return Optimization Securities Linked to an International Index Basket

*Return-Enhanced Notes Linked to a Basket of Ten Commodities

*Reverse Exchangeable Notes Linked to Common Stock

*FX Basket-Linked Notes

Though it may appear that the most recent UBS incident and Lehman Brothers’ collapse are different events, according to Forbes’ article, “The players may be different but the rules are the same.” The “Delta One” trading desk used by the UBS trader and ETFs he was trading have a similar concept to the Lehman Brothers Principled Protected Notes sold by Lehman and UBS and both were excessively risky. Furthermore, UBS and Lehman worked cooperatively to dump the PPNs on investors, causing them significant losses.

Since the fiasco began, claimants been victorious in almost all securities arbitration cases against UBS and recovered their losses that resulted from the Lehman Structured Product Notes. However, criminal charges have not been brought against any Lehman executives, a measure of justice that is yet to be realized. According to an article in The New York Times, this is a case in which “brokers selling complex securities that they once contended were safe and sound have saddled individual investors with billions in losses since the credit bubble burst. Remember auction-rate securities? Those were peddled to investors as just as good as cash — until they no longer were after that market seized up in 2008.”

According to the Forbes article, “The legacy of Lehman is that Wall Street’s greed trumps any sense of obligation the banks might have to their own customer.” If this is true and nothing is done to prevent situations like this in the future, an already risky investment world will continue to be a perilous one for the average investor.

The Financial Industry Regulatory Authority (“FINRA”), which oversees the U.S. brokerage industry, found that the brokerage failed to have an adequate supervisory system to monitor employee accounts for potential misconduct.

The wayward broker, Bruce Hammonds, has been sentenced to 57 months in federal prison for convincing 11 people to invest more than $1 million in a Ponzi scheme he ran as a Merrill branch representative in San Antonio, Texas.

Hammonds ran his scheme for 10 months out of the Merrill Lynch, Pierce, Fenner & Smith Inc unit in Texas. He has been barred since December 2009, FINRA said.

Merrill Lynch supervisors reportedly approved Hammonds’ request to open a business account as B&J Partnership, the name under which he also ran the Ponzi scheme. He told Merrill supervisors that he was funding the account through proceeds from a house-flipping business, according to the settlement.

Hammonds told investors that B&J was affiliated with Merrill and promised returns between 30 percent and 100 percent, according to the settlement. In reality, B&J was reportedly nothing more than a Ponzi scheme. A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors and to use for personal expenses, instead of engaging in any legitimate investment activity.

Investors who believe they may have been a victim of “selling away” or a Ponzi scheme may contact the Law Office of Christopher J. Gray, P.C. for a confidential, no-cost consultation.