Colling, Gilbert, Wright & Carter Securites Fraud

According to an article in yesterday's (Aug. 30, 2011) In Audit magazine, the Securities and Exchange Commission (SEC)has charged two Florida men with fraud for bilking retirees, many of whom were teachers, out of their life savings. In all, approximately $22 million was taken from over 100 unsuspecting investors in what turned out to be a Ponzi Scheme ala Bernie Madoff on a smaller scale. The SEC news release can be seen here:

The In Audit article can be found here:

One of the men, Daniel Joseph Sebastian, was a registered representative of Invest Financial Corporation, located in Tampa Florida, between late 2003 and early 2004. If any of the investors were clients of the firm, the activity would be considered "selling away" and strictly prohibited under Financial Industry Regulatory Authority (FINRA) rules and guidelines. I you believe you have been a victim of a selling away scheme, please contact our office for a free case evaluation. Thank you.

Labels: breach fiduciary duty, broker misconduct, fraud, lack of due dilligance, misrepresentation/omission, selling away, unauthorized investment

In February 2011, the Securities and Exchange Commission (SEC) fined TD Ameritrade $10 million for failing to properly supervise its reps while the Reserve Primary Fund was losing value and eventually "broke the buck." Even with that historical collapse, the brokerage firm would rather see advisors regulated by the commission and not the Financial Industry Regulatory Authority (FINRA) or some self-regulatory body. They went so far as to propose advisors pay the SEC to help cover the cost of continued commission oversight.

As of late February, TD Ameritrade clients still held a majority of the outstanding Reserve Primary shares after the fund has liquidated. Under the terms of its agreement with the SEC, the firm distributed the $10 million to its clients. However, the payment will still not make investors whole but will reduce their losses by approximately 10%. According to sources, it would have taken about a $40 million fine to fully replace all the money that Reserve Primary lost its shareholders.

The attorneys at Colling Gilbert Wright & Carter are investigating and filing arbitration claims on behalf of investors who lost money in the Reserve Primary Fund. If you lost shares in this fund, please contact our office for a free case evaluation.

Labels: breach fiduciary duty, fraud, misrepresentation/omission

Colling Gilbert Wright & Carter is advising all Oppenheimer Champion Income Fund (”Champion Fund”) investors the deadline for opting out of the settlement is August 31, 2011. According to notices from the class action administrator, the proposed class action settlement will be approximately $52.5 million or approximately three ($.03) cents on the dollar. Investors who don't opt-out and choose to remain in the class will be forever barred from pursuing an individual claim for compensation in arbitration or court.

Allegedly the Champion Fund took a massive bet in high risk derivatives in the form of mortgage backed securities and credit default swaps. The full risks of the Fund’s illiquid, speculative derivatives were not meaningfully disclosed to investors. The Champion Income Fund was portrayed as a garden variety high income fund.

Unfortunately, starting in late 2006, Angelo Manioudakis, the head of Oppenheimer’s Core Plus team responsible for managing the Fund, concentrated the Fund in high-risk total-return swaps that were grossly inappropriate for the thousands of conservative retirees investing in the Fund.

Total-return swaps are highly illiquid, speculative and complex agreements between parties to exchange cash flows in the future based on how a set of securities performs. Specifically, the Fund was betting that top-rated commercial mortgage-backed securities would rally in 2008. The Fund gambled, and lost, with money from investors that was not supposed to be gambled with.

The Champion Fund was also concentrated in credit-default swaps (“CDSs”). CDSs are similar to insurance contracts that protect investors against bond and loan defaults (or other specified credit events like bankruptcy or restructuring). In exchange for being on the hook to pay out for such issues, CDS sellers receive a stream of interest payments from the CDS buyers. It is not necessary for the buyer to own the underlying credit instrument to buy these CDSs. The CDSs in the Champion Fund declined $238 million through September 2008 alone, adversely impacting thousands of retirees who had invested in the Fund not knowing the extent of the high-risk, inappropriate gamble taken by Oppenheimer. This massive gamble by the Champion Income Fund led to a Fund implosion much worse than even the NASDAQ. As the market for office buildings and other commercial properties deteriorated amid the slowing economy, the Fund’s value cratered.

The attorney's at Colling Gilbert Wright and Carter are advising their Clients who held the Champion Income fund to opt-out of the class action and pursue their claims for damages in arbitration or court when available. If you have questions regarding the options available for recovering Champion Income fund losses, please contact our offices. Thank you.