Colling, Gilbert, Wright & Carter Securites Fraud

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Monday, January 24, 2011

Fannie Mae & Freddie Mac Leave Taxpayers Holding the Bag for Legal Fees

According to a New York Times article by Gretchen Morgenson, since Fannie Mae and Freddie Mac failed in the summer of 2008, during the height of the credit crisis, taxpayers have spent approximately $160 million defending suits against the two entities and their former executives.

The bulk of the cost has been spent defending Fannie Mae and its officials in securities suits and government investigations regarding alleged accounting irregularities that occurred several years before the subprime lending crisis erupted. Worse for the taxpayers, the legal costs related to this actions has shown little sign of easing up. Also, while it is typical for corporations to cover legal fees for top executives.... unless an executive is found to be at fault, in this instance, if the former executives are found liable, the government can try to recoup the costs.

Well before the credit crisis forced the government to rescue Fannie and Freddie, accounting irregularities had surrounded both companies. Shareholders of Fannie and Freddie sued to recover stock losses incurred after the accounting irregularities were discovered and the stock prices plummeted. Also, Fannie Mae also settled a fraud suit brought by the Securities and Exchange Commission without admitting or denying the allegations; the company paid $400 million in penalties.

After the government moved to back Fannie and Freddie, the Federal Housing Finance Agency agreed to continue paying to defend the executives, with the taxpayers covering the costs. If the former executives are found liable, they would be asked to repay the government for the costs. However this may prove difficult as the executives likely don't have the money to repay the taxpayers.

Meanwhile, individual investors who were sold Fannie Mae and Freddie Mac preferred stock and other securities have filed arbitration claims against their brokers to recoup their losses. The investors and their attorneys allege their was sufficient news surrounding these entities well before they failed which should have prompted the brokerage firms to not recommend the securities for purchase or warn their clients that already held them in their accounts.

The attorneys at Colling Gilbert Wright & Carter are currently investigating and filing claims in FINRA arbitration seeking to recover losses associated with Fannie Mae and Freddie Mac investments. If you lost money in a the securities of one of these Government-sponsored Enterprises (GSE), please contact our offices for a free case evaluation.

Labels: broker misconduct, fraud, lack of due dilligance, misrepresentation/omission

posted by William B. Young Jr. Esq. at 7:32 AM

Tuesday, January 11, 2011

SEC Passes FINRA "Know Your Customer" and "Suitability" Rule

The SEC recently passed a new rule that takes the place of prior NYSE and FINRA rules regarding a broker's obligation to know his customer and only recommend investments which are suitable for him/her.

The obligation stems from a customers new account form which set forth stated goals and objectives for the money as well as risk tolerances. Should the broker recommend securities that are inconsistent with these stated goals, a violation occurs and provides a basis for filing a FINRA arbitration claims.

The new FINRA rule may be found at: http://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p122778.pdf

The attorneys at Colling Gilbert Wright & Carter are currently investigating and filing arbitration claims on behalf of customers who lost money during the 2007-2008 market crash due to investments that were not suitable for them. If you believe you lost money due to broker negligence or fraud, please contact our office for a free case evaluation. Thank you.

posted by William B. Young Jr. Esq. at 6:43 AM

Wednesday, January 5, 2011

UBS hit with $2.2 Million FINRA Arbitration Award

On December 16, 2010, a three member FINRA arbitration panel awarded Thomas and Christine Motamed $2.2 million plus interest from date of purchase (Case #09-02087). According to the award, this amount represented rescissionary damages for the purchase of the structured products. The request for attorney's fees, costs and punitive damages was denied.

UBS has been hit with hundreds of FINRA arbitration claims related to the sale of Lehman Brothers related structured notes, including 100% Principal Protected Notes (PPN), Partially Principal Protected Notes (PPPN), Return Optimization Notes (RON) and Barrier Notes.

The attorney's at Colling Gilbert Wright & Carter are currently investigating and litigating numerous arbitration cases to recover damages for individual investors who were sold the proprietary structured products as being safe investments, suitable for retirees and offering various level of principal protection. If you believe a UBS representative misrepresented a Lehman Brothers structured note(s) during the soliciation and sale, please contact our offices for a complimentary case evaluation.

Labels: breach fiduciary duty, broker misconduct, misrepresentation/omission

posted by William B. Young Jr. Esq. at 11:11 AM

Medical Capital Receiver Publishes 17th Report - Outlook is Grim

On December 10, 2010, Thomas Seaman, the Court Appointed Receiver published his 17th and most recent report as to the status of asset gathering. The outlook is less then encouraging for Medical Capital note holders. To date the receiver has recovered approximately $120 million in assets (through November 30,2010) most of which were obtained shortly after a restraining order was issued and the company was placed in receivership.

Given that Medical Capital and its related entities raised some $2.2 billion from investors and over $1 billion in principal is still owed, it is clear there will be little money left for investors after attorney and accounting fees are paid. The report, confirms the allegations brought in the original SEC complaint: much of the receivables financed by the note offering proceeds were overvalued, no longer exist or may not have ever existed. Also, much of the funds that were to be used for financing the medical receivable were instead diverted to medical capital in in the form of administrative fees...in violation of the terms of the offering memorandums. All receivership filings may be found here.

The attorneys at Colling Gilbert Wright & Carter are currently investigating and litigating FINRA arbitration claims against broker dealers seeking compensation for investors for failure to adequately investigate Medical Capital and the note offerings. If you are a Medical Capital note holder, please contact our office for a free case evaluation. Thank you.

Labels: breach fiduciary duty, broker misconduct, lack of due dilligance

posted by William B. Young Jr. Esq. at 10:42 AM

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