Archive for April, 2009:

Avoiding Investment Fraud

Written on April 29th, 2009 by Jason M. Kueserno shouts

Darren Barbee of the Fort Worth Star-Telegram has written a good article that outlines various ways investors can reduce the risk of being defrauded by a financial or investment adviser.  

This is a “must read” article that anyone who is dealing with an investment adviser.  In addition, The Kueser Law Firm’s website contains an Investor Resource Center that provides helpful links to several sources that investors can utilize to do a background check on their financial or investment adviser (Investment Adviser Public Disclosure) and stock broker (BrokerCheck), as well as insurance agents that are registered to sell variable insurance products (BrokerCheck).  In these uncertain times, it is imperative that investors know everything they can about the professionals they entrust with their future.

Share

CALPERS Opposes Re-election of Each Member of Bank of America’s Board

Written on April 28th, 2009 by Jason M. Kueserno shouts

As reported by multiple sources including CNBC.com, the California Public Employees Retirement System stated publicly that it opposes the reelection of each of the 18 members of Bank of America‘s board, including Chairman Ken Lewis.  

This should come as welcome news to Bank of America shareholders following a year in which the company (1) suffered a decline in market value of more than 80%; (2) its questionable purchase of Merrill Lynch; and, (3) possible breaches of fiduciary duty by the board to company shareholders in connection with the Merrill Lynch acquisition.

Share
Filed under Investor Education Tags:

Track the Federal Bailout Money

Written on April 27th, 2009 by Jason M. Kueserno shouts

A number of sites have provided summaries of the various federal bailout programs.  This post includes links to a few of these.

Share
Filed under Investor Education Tags:

Wall Street Compensation Returns, Investors Portfolios Have Not

Written on April 27th, 2009 by Jason M. Kueserno shouts

On April 26, The New York Times reported that in 2009, “workers at the largest financial institutions are on track to earn as much money this year as they did before the financial crisis began.”  (See article here).  In fact, the article reports that six of the largest banks have “set aside over $36 billion in the first quarter to pay their employees.”   At Goldman Sachs, the average compensation per employee could equal as much as $569,220.  At J.P. Morgan Chase, the average employee in the company’s trading and investment banking unit is on pace to earn $509,524.  Yes, the average compensation would exceed one-half of a million dollars.

In 2008, the stock market experienced losses of $30.1 trillion in market value.  So far this year, the S&P 500 has declined by approximately 8% more.  Meanwhile, the federal government has committed $12.1 trillion to financial bailout programs, and specifically, $10 billion and $25 billion, respectively, to Goldman Sachs and J.P. Morgan.  

This begs the question, why are taxpayers footing the bill for the failure of the financial markets and continuing to lose money in the process while the compensation of the very people who contributed to the need for a bailout is returning to record high levels?

Share

Federal Government Pressured Bank of America to Purchase Merrill Lynch

Written on April 23rd, 2009 by Jason M. Kueserno shouts

Earlier today, it was reported through several media outlets (i.e., Reuters, FT.com, CNBC.com) that the federal government pressured Bank of America to acquire Merrill Lynch in late 2008.  

To make matters worse, it appears that the government’s threats may have occurred after Bank of America realized that Merrill Lynch was not a good acquisition.  Based upon the reports, Bank of America’s CEO Ken “Lewis testified in February that former Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke threatened to oust Bank of America’s management if the bank tried to back out of buying Merrill Lynch.”  Lewis also testified that Paulson wanted to avoid calamity in the financial markets.  

This is a great example of company officers breaching their fiduciary duties to shareholders.  Despite the fact that it appears Bank of America recognized that Merrill Lynch’s losses were significantly greater than originally expected (and continuing to grow), the officers chose job security over shareholders’ interests.  

Bank of America announced its planned acquisition of Merrill Lynch on September 15, 2008.  That day, the price of Bank of America stock closed at $26.55 per share ($25.89 adjusted for subsequent dividend payments).  Today, Bank of America stock closed at $8.82 per share.  This represents a loss of $17.07 (after dividends), or approximately 66% following the announcement.  This equates to more than $100 billion in lost market value.  Unfortunately, Bank of America’s officers (and the federal government) chose to make Bank of America’s shareholders shoulder the responsibility for avoiding disaster in the financial markets.  Compounding matters, the government then forced taxpayers to shoulder the costs of TARP, including payments of at least $45 billion to Bank of America.

Share

California AG Sues Wells Fargo For Sales of Auction Rate Securities

Written on April 23rd, 2009 by Jason M. Kueserno shouts

As reported in the New York Times, California’s Attorney General filed a lawsuit today against three Wells Fargo companies, including Wells Fargo Investments.  The suit stems from Wells Fargo’s “false and deceptive advice” to its customers that Auction Rate Securities were safe and liquid as cash.  

As has been reported significantly, a number of firms have faced class actions, individual lawsuits, arbitration claims, and regulatory action as a result of marketing Auction Rate Securities as “cash equivalents.”  In fact, Auction Rate Securities are long-term investments that had interest rates that reset periodically at auctions.  Prior to February 14, 2008, the largest investment banks and broker-dealers supported the auction markets.  However, when these firms ran into liquidity problems, they became unable to continue their support.  As a result, there was not enough money in the auctions to keep them running.  This caused the auctions to fail and resulted in owners owning billions of long-term bonds and perpetual preferred securities that generally paid interest rates equivalent to rates paid on short-term investments.  

While the majority of the prospectuses for Auction Rate Securities disclosed potential risks related to auction failures, most customers never received a copy of the prospectus at the time of sale.  In fact, many investors were not provided a prospectus until after the auctions failed.  Unfortunately, by that time, it was too late as the risks had become self-evident.  

If you own Auction Rate Securities that have not been redeemed, you may want to contact an attorney to discuss your rights.  The Kueser Law Firm is a boutique legal practice that focuses its practice on protecting the rights of investors and recovering investment losses for companies and individuals.  You may contact us by completing the form to the right, or by visiting our website.

Share

Stifel Nicolaus Agrees to Repurchase Auction Rate Securities — In 3 Years

Written on April 22nd, 2009 by Jason M. Kueserno shouts

On April 9, 2009, Stifel Nicolaus & Co. announced that they had planned to repurchase their clients’ auction rate securities (ARS).  Unfortunately, for their customers, the repurchase will not be completed for more than three years. Furthermore, the settlement does not require Stifel to repurchase any ARS for more than 14 months.  The terms of the settlement, if accepted, provides that Stifel will repurchase its customers’ ARS on the following schedule:

  • The greater of 10% or $25,000 to be completed by June 30, 2010;
  • The greater of 10% or $25,000 to be completed by June 30, 2011;
  • The balance of outstanding ARS to be repurchased by June 30, 2012.

Stifel Nicolaus is a defendant in a class action lawsuit related to its sale of ARS to customers.  In addition, the Missouri Secretary of State and Attorney General filed a civil action against Stifel for its sale of ARS to customers.  

If you were sold ARS by Stifel Nicolaus, you should contact an attorney to discuss how this settlement, and the pending lawsuits impact your rights.  The Kueser Law Firm represents investors who have been defrauded by financial advisors, stockbrokers, banks, and other investment professionals.  

Because of the significant impact this settlement may have on your financial situation, if you do not contact The Kueser Law Firm, you should contact an attorney to discuss your rights.

Share

Welcome to InvestmentFraudBlog.com

Written on April 19th, 2009 by Jason M. Kueserno shouts

Thank you for visitng the InvestmentFraudBlog.  This blog is maintained by the Kueser Law Firm, a boutique law practice in Lee’s Summit, Missouri.  The firm focuses its practice on representing individuals, groups, and companies whose investments have been mismanaged.  The firm also represents financial advisors, stockbrokers, and other financial professionals in employment related disputes and regulatory investigations.  

This blog will serve to provide commentary and links to current issues related to investments, and, as the title of the blog suggests, investment fraud.  The firm’s website also contains an Investor Resource Center that has links to a variety of useful sources for investors and financial professionals.

If you need to speak to an attorney about your investments, please feel free to contact The Kueser Law Firm.  We hope you enjoy the future content of this blog.

Share