From Investment Fraud Blawg, Securities Fraud Blawg, and Stockbroker Fraud Blawg:
On September 21, 2009, Missouri Secretary of State Robin Carnahan announced that her office had finalized a consent order with JP Morgan Chase & Co. related to the firm’s marketing and sale of auction rate securities (ARS) to Missouri investors.
According to the press release, Missouri investors will receive more than $28 million. In addition, JP Morgan will pay $86,000 to the Missouri Investor Education and Protection Fund, which is used …

From Investment Fraud Blawg, Securities Fraud Blawg, and Stockbroker Fraud Blawg:
Earlier this week, the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) issued a joint warning cautioning investors on the dangers in investing in leveraged ETFs and inverse ETFs. The two regulators issued the warning because they “believe individual investors may be confused about the performance objectives of leveraged and inverse exchange-traded funds (ETFs).”
The warning also notes that leveraged ETFs are designed to achieve their investment performance …

From Investment Fraud Blawg, Securities Fraud Blawg, and Stockbroker Fraud Blawg:
Yesterday, August 17, 2009, the Attorney General of the state of New York announced that it had filed a lawsuit against Charles Schwab & Co. for its sales of auction rate securities. According to the press release, the Complaint charges Schwab with violations of the Martin Act for:
falsely representing auction rate securities as liquid, short-term investments without discussing the risks. These representations gave investors a false sense of security that …

From Investment Fraud Blawg, Securities Fraud Blawg, and Stockbroker Fraud Blawg:
According to a recent article on InvestmentNews.com, a study commissioned by Charles Schwab revealed that a significant percentage of investors are unaware of the losses sustained in their accounts. To make matters worse, more than one-third of the investors surveyed did not know which mutual funds they owned and less than one-third spoke with their financial advisor or stockbroker on a regular basis.
In the article, a Charles Schwab executive was …

From Investment Fraud Blawg, Securities Fraud Blawg, and Stockbroker Fraud Blawg:
In a July 31, 2009 article, Sam Mamundi of Marketwatch.com discussed the hidden sales fees charged by mutual funds. As noted in the article, “[t]he majority of retail funds are sold through brokerages, and each brokerage firm levies a range of charges to the fund for every sale. The cost of these agreements is passed on to investors.” These charges come in a variety of forms, including “revenue sharing agreements” …

From Investment Fraud Blawg, Securities Fraud Blawg, and Stockbroker Fraud Blawg:
On August 4, 2009, the Wall Street Journal reported that Fidelity Investments had joined other broker-dealers in warning its customers about the risks of investing in Leveraged ETFs (see other blawg posts on this topic here and here). The article, written by Daisy Maxey, states that Fidelity’s website warned investors that “Leveraged products are complex, carry substantial risks and are intended for short-term trading,” and that “[m]ost reset daily and …

From Investment Fraud Blawg, Securities Fraud Blawg, and Stockbroker Fraud Blawg:
Only weeks after Edward D. Jones, Ameriprise, Linsco Private Ledger (LPL) and UBS announced that they were restricting the sale of leveraged ETFs (see here), two more broker-dealers have decided to take action related to their sales of these risky, and often misunderstood investments.
As reported by the Wall Street Journal, Morgan Stanley Smith Barney announced that it is reviewing its sales procedures related to leveraged ETFs. In addition, Charles Schwab …

From Investment Fraud Blawg, Securities Fraud Blawg, and Stockbroker Fraud Blawg:
According to an article on InvestmentNews, Massachusetts securities regulators have subpoenaed four brokerage firms for information related to their sales practices of leveraged ETFs. The subpoenas come only a few weeks after Edward D. Jones, Ameriprise, Linsco Private Ledger (LPL) and UBS restricted the sale of the products or stopped selling leveraged ETFs altogether. This also comes approximately three weeks after FINRA advised firms that leveraged ETFs “typically are unsuitable …

From Investment Fraud Blawg, Securities Fraud Blawg, and Stockbroker Fraud Blawg:
Earlier this week, The Wall Street Journal reported that while the four major Wall Street brokerage firms experienced an outflow of $8 billion of assets in 2008, Registered Investment Advisers brought in more than $108 billion in new assets during the same period. This activity likely reflects a shift in investor preference from transaction-based broker relationships to fiduciary relationships.
Investors generally choose to have their financial affairs handled by someone they …

From the Stockbroker Fraud Blawg
On June 11, 2009, the Securities and Exchange Commission filed two fraud actions against different financial/investment advisers.
Morgan European Holdings ApS, et al.
On June 11, the SEC obtained an emergency court order and asset freeze to shut down a fraudulent prime bank scheme. The action was filed in the United States District Court for the Middle District of Flordia against Morgan European Holdings ApS, a/k/a Money Talks, Inc. ApS, John Morgan, Marian Morgan, Bowman Marketing Group, Inc., …