Securities Law Blog

Continue reading "SEC CHARGES JP MORGAN & CREDIT SUISSE FOR MISLEADING INVESTORS" »

The jury has been selected for the trial of Anthony Chiasson and Todd Newman according to an article in the Dealbook section of the New York Times. Chiasson co-founded Level Global Investors and Newman was a portfolio manager at Diamondback Capital Management. Their charge- being part of a $68 million conspiracy that traded massive amounts of Dell and computer chip maker Nvidia shares based off an insider tip, right before an announcement of the negative value of the shares was released.

The article discusses a greater conspiracy than just Chiasson and Newman. Six other traders have already pleaded guilty.One of the other traders worked for SAC Capital Advisors; Level Global and Diamondback were both started by former employees of SAC Capital Advisors. Prosecutors and investors alike are interested to see what information this trial will bring regarding the trading strategies and practices of SAC Capital Advisors.

So far, the investigation into the Wall Street insider trading has lead to sixty-nine convictions. The majority of the defendants have pleaded guilty; of the eight defendants that have gone to trial, all were found guilty. The conspiracy spanned throughout SAC Capital, Level Global and Diamondback; however, the investigation is not limited to those three companies. Rajat Gupta of Golman Sachs and Sandeep Goyal of Dell have been sentenced to jail time due to their active roles in this conspiracy.

An earlier article in the Dealbook explains more about the actual conspiracy. The men charged passed insider information through a "circle of friends" that were mainly hedge fund managers, the article explained. These men then shorted shares of Dell and Nvidia before a negative earnings announcement was due to be released. The hedge fund and portfolio managers involved in this conspiracy had a duty to their investors as well as to their employers to not use insider information. The negative value of the shares of Dell and Nvidia had not yet been made to the public when they acted upon the tip, thus making their trades illegal insider trading. The many of the ties between the insider trading and the participants of the conspiracy, which produced great gains for the managers and great losses for the individual investors, have been traced to SAC Capital Advisors.

Continue reading "TRIAL STARTS IN $68 MILLION INSIDER TRADING CASE" »

The Basel Committee on Banking Supervision is posed to review how securitization is regulated globally in response to concerns that current regulations are not reducing excessive risk tasking, according to a recent Bloomberg.com article.

The Basel Committee is associated with the Bank for International Settlements and is a forum for regular cooperation on banking supervisory matters. The Committee consists of members from 27 different countries and is best known for its international standards on capital adequacy- the core principle for effective banking operations.

The article discussed a few of the main focuses of the Basel Committee. One is a review of the liquidity coverage ratio (LCR), which was last tweaked two years ago. The ratio relates to the amount of easy to sell assets a bank has on hand and the ratio relates to how much the bank should have in order to weather a 30 day credit squeeze. Responding to calls from the Euro Central Bank and the Bank of France, the Basel Committee will explore a possible expansion of the list of assets banks can use to meet the LCR. The LCR ratio currently has many asset backed securities, which are financial products whose value derives from assets such as loans or credit card debts rather than mortgages.

Another focus for the Basel Committee during their review is to come to a decision whether to allow banks to use more contingent-convertible bonds (CoCos) to meet their capital requirements. CoCos are a fixed income security that automatically converts into ordinary shares is a bank's capital falls through a predetermined floor. The CoCos have two prices, unlike a traditional convertible bond that just has a strike price. After the strike price, which is the cost of the stock when the bond converts into stock, there is another price. This price is even higher than the strike price and it is what the company's stock price must reach before an investor has the right to make the conversion.

The Basel Committee has set their 2013 priorities, which includes the above issues as well as reviewing a separate liquidity rule for lenders, a net stable funding ratio and studying possible changes to capital rules banks face on assets they intend to trade.

Continue reading "Basel May Provide Tougher Rules for Asset Backed Securities" »

Dynamic Securities Analytics, Inc. released their nationwide rankings for the first two quarters of 2012. The law firm of Burke, Harvey & Frankowski topped the list at second in the country. For the rankings, Dynamic compiled the number of cases each firm had in the first two quarters. Those firms that obtained the most wins for their clients, combining the most arbitration award announcements and stipulated settlements, in the areas of Customer-Member and Small Claim disputes made the cut. For the rest of the rankings, see the list here.

Continue reading "BH&F RANKED 2ND IN THE COUNTRY IN SECURITIES ARBITRATION" »

In the first suit to be filed under RMBS Working Group, JP Morgan has been served civilly over the mortgage backed securities sold by Bear Stearns, according to an article in the New York Daily News. The RMBS Working Group, created by the Obama Administration, investigates and prosecutes misconduct that contributed to the financial crisis.

In 2006 and 2007, investors lost around 22.5 billion dollars in the subprime funds issued by Bear Stearns. The Attorney General alleged in his suit that Bear Stearns held these RMBS funds out as being "carefully evaluated" and that the investors were given a false sense of security. The article goes on to state that the AG alleged the executives of Bear Stearns knew of the shortcomings of the funds and yet did nothing to protect their investors. JP Morgan has responded that the actions relied upon for the civil suit filed occurred before JP Morgan acquired Bear Stearns in 2008.

Continue reading "JP MORGAN SUED BY NY ATTORNEY GENERAL" »

Burke, Harvey & Frankowski, LLC ("BHF") announces the commencement of an investigation into Ancestry.com Inc., ("Ancestry.com" or the "Company") to determine whether it has violated securities laws by issuing false and misleading statements to its shareholders in connection with its public offering of securities in May of 2011.

On May 11, 2011, Ancestry.com filed a Prospectus in connection with its Secondary Public Offering of approximately 4.35 million shares of its common stock at $42 per share. In the months following the Secondary Offering, however, the company's stock declined precipitously after revelations were made about the Company's subscriber base and the costs to stem the declines in subscriber growth. We are investigating whether the Company issued false and misleading statements to the investing public in connection with its Secondary Public Offering of securities.

What You Can Do

If you are an Ancestry.com shareholder, you may have legal claims under the securities laws. If you wish to discuss this investigation, or have questions about this notice or your legal rights, please contact attorney Richard Frankowski via email at rfrankowski@bhlegal.com or via toll-free telephone at (888) 930-9091. There is no cost to you.

About Burke, Harvey & Frankowski LLC

Burke Harvey & Frankowski, LLC, is a Birmingham, Alabama law firm that among other things dedicates its practice to the representation of shareholders and investors in litigation, including shareholder class actions, derivative litigation and FINRA arbitrations. More information about the firm is available through its website, www.bhflegal.com and upon request from the firm. Burke Harvey & Frankowski, LLC has paid for the dissemination of this promotional communication and is responsible for its content.

No representation is made that the quality of legal services to be performed is greater than the quality of legal services to be performed by other lawyers.

Continue reading "Burke Harvey & Frankowski LLC Announces Investigation of Ancestry.com Inc. " »

Burke, Harvey & Frankowski, LLC ("BHF") announces the commencement of an investigation into Duke Energy Corporation, ("Duke" or the "Company") to determine whether it has violated securities laws by issuing false and misleading statements to its shareholders in light of recent disclosures made about the Company's $32 billion merger with Progress Energy.

On July 2, 2012, Duke closed it $32 billion merger with Progress Energy.  Shortly after the merger closed, Duke fired its CEO, prompting a former Progress Energy director to announce that the Progress Energy board of directors had been mislead prior to the merger.  The North Carolina Utilities Commission has also announced that it was revisiting whether it was mislead as to the terms of the merger.  When the true nature of the merger was revealed to investors, the share price of Duke's stock dropped significantly on high trading volume.  We are investigating whether the Company issued false and misleading statements to the investing public in connection with the merger.

What You Can Do

If you are a Duke shareholder, you may have legal claims under the securities laws.  If you wish to discuss this investigation, or have questions about this notice or your legal rights, please contact attorney Richard Frankowski via email at rfrankowski@bhlegal.com or via toll-free telephone at (888) 930-9091.  There is no cost to you.

About Burke, Harvey & Frankowski LLC

Burke Harvey & Frankowski, LLC, is a Birmingham, Alabama law firm that among other things dedicates its practice to the representation of shareholders and investors in litigation, including shareholder class actions, derivative litigation and FINRA arbitrations. More information about the firm is available through its website, www.bhflegal.com and upon request from the firm.  Burke Harvey & Frankowski, LLC has paid for the dissemination of this promotional communication and is responsible for its content.

No representation is made that the quality of legal services to be performed is greater than the quality of legal services to be performed by other lawyers.

Continue reading "BURKE HARVEY & FRANKOWSKI INVESTIGATE DUKE ENERGY CORPORATION" »

A day after the chairman and CEO of Peregrine Financial Group attempted to commit suicide outside of their office, the Commodities Futures Trading Commission filed a request in Federal Court to have the company's assets frozen, according to a New York Times article. The CFTC also requested a restraining order against Peregrine Financial Group, keeping them from destroying any pertinent information or documents.

The article reported that Peregrine Financial Group was to be holding $225 million dollars of customer funds. However, Peregrine only had $5 million of the customers' money. It is unknown at this time how the money was diverted or where the money is being kept. It is believed that the US Bank documents that showed the monies location were fraudulent.

Continue reading "FUTURES BROKERAGE FIRM MISSING $200 MILLION" »

Brokers at JPMorgan were encouraged to sell customers JPMorgan's own funds, even if there were more suitable or cheaper options for the customers, a Dealbook.com article reported. This is not the first time there has been issue with the company favoring its own funds. JPMorgan was ordered to pay $373 million for favoring its own funds in a 2011 arbitration, the article revealed. The Chase Strategic Portfolio is one of the funds at issue. According to the article, investors may not have "a clear sense" of what they are buying when they are being put into JPMorgan created funds.

Continue reading "JPMORGAN FAVORING OWN FUNDS OVER INVESTORS' NEEDS" »

The assets of Aubrey Lee Price, the missing Georgia investor charged with a $40 million dollar investment fraud scheme, have been frozen according to an SEC press release. Mr. Price was allegedly selling an unregistered investment fund PFG that he managed without telling investors that it was tied up in illiquid investments and South American real estate. The press release  stated that Price admitted to using fraudulent methods to cover with investors. According to the quote from Price's letter in the SEC press release, he "falsified statements with false returns" in order to conceal between $20 million and $23 million in investor losses. Aubrey Lee Price's whereabouts are currently unknown.

Continue reading "ASSETS OF MISSING GEORGIA INVESTOR FROZEN BY SEC" »

In the aftermath of the Barclays scandal, United States and British Lawmakers are cracking down on regulators that should have been more proactive and dedicated in preventing the years of illegal banking behaviors. The Dealbook.com article said that the Barclays $450 million settlement is but the first action from this broad and far-reaching investigation.

The article lists some of the many players in this cross-Atlantic investigation. They are including the House Financial Services Committee, the Senate Banking Committee, the Commodities Futures Trading Commission, the Justice Department and the New York Fed, to name a few of the American organizations. In the UK, the Parliamentary Committee as well as the Financial Services Authority of Britain are very active in the investigation.

Continue reading "AGENCIES ON BOTH SIDES OF THE ATLANTIC INVESTIGATE BANK SCANDALS" »

Goldman Sachs has been trying to overturn the $20.5 million arbitration award arising from the 2005 collapse of the hedge fund manager Bayou Group. The NY Times Dealbook article explains that the now defunct Bayou Group accused Goldman Sachs of helping to perpetrate a Ponzi scheme. The United States Court of Appeals for the Second Circuit upheld the award to the creditors of Bayou last Tuesday, according to the article. The Bayou Group's former chief executive is serving a 20 year sentence for his role in the fraud. He pleaded guilty to misrepresenting the value of Bayou's funds and defrauding clients of more than $400 million.

If this large arbitration award is upheld, it may have broader ramifications on Wall Street. The article stated that Goldman Sachs and firms similar to Goldman Sachs, who clear billions of dollars in trades a year and have long-held that their job is simply to clear those transactions, have held that they did not have a duty to police the clients.  This arbitration award and its symbolism to other Wall Street establishments has caused some experts to argue that the award could force a higher duty on Wall Street.

Continue reading "$20.5 MILLION AWARD AGAINST GOLDMAN SACHS UPHELD" »

Yet another agency is looking into the dealings of JPMorgan. The United States Federal Energy Regulatory Commission (FERC) is probing into the extremely high derivative losses of JPMorgan, according to this Bloomberg Businessweek article. The FERC formed a Division of Analytics last February, employing around 45 people, dedicated to watching, analyzing and policing the natural gas and energy markets. So far, the Division of Analytics has come to a $245 million settlement with Constellation Energy Group, Inc. and is currently performing 11 probes, according to the article.

Allegedly, JPMorgan made market bids that resulted in at least $73 million being improperly paid to generators. The FERC is currently seeking internal correspondence from JPMorgan while the company is fighting the request in court. The FERC sued JPMorgan on July 2, 2012. The article reported that this investigation was launched into JPMorgan's market actions after a power grid operator reported unusual trading offers.

Continue reading "FERC PROBES JPMORGAN AMIDST ALLEGATIONS OF MARKET MANIPULATION" »

The Los Angeles Times reported that Philip Falcone and his firm, Harbinger Capital Partners, are facing charges of civil fraud and bond price manipulation. The article stated that Falcone and his firm allegedly manipulated the market for high yield and high risk bonds. Falcone used Maxx Holdings to buy up a great portion of Harbinger Funds to shrink the availability in the market and drive up prices.

Falcone and his firm were also accused of letting only certain investors know when they should cash out their holdings, without giving any warning to their other investors. Three other firms were linked to the fraud and bond manipulation and paid $1 million dollar fines.

Continue reading "SEC SUES HEDGE FUND MANAGER" »

Bear Stearns has been ordered to pay $275 Million dollars to investors that lost money with Bear Stearns.  According to a recent CNBC.com article, Bear Stearns misled their investors about the true and deteriorating state of the company before JP Morgan purchased Bear Stearns.

Bear Stearns was one of the first prominent companies to fail after the housing bubble burst. The settlement discussed in the article comes after a failed criminal trial against two higher up Bear Stearns executives.

Continue reading "BEAR STEARNS $275 MILLION SETTLEMENT REACHED" »