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Mar 18, 2023

J.P. Morgan Sued For Edward Turley’s Alleged Misconduct: $55 Million!

The Law Offices of Robert Wayne Pearce, P.A. has filed another case against Ex-J.P. Morgan broker Ed Turley for alleged misrepresentations, misleading statements, unsuitable recommendations, and mismanagement of Claimants’ accounts. The Law Offices of Robert Wayne Pearce has filed another case against J.P. Morgan Securities for alleged misrepresentations, misleading statements, unsuitable recommendations, and mismanagement of Claimants’ accounts continuing in fall 2019 and thereafter by Edward Turley (“Turley”), a former “Vice-Chairman” of J.P. Morgan. At the outset, it is important for our readers to know that our clients’ allegations have not yet been proven. IMPORTANT: We are providing information about our clients’ allegations and seeking information from other investors who did business with J.P. Morgan and Mr. Turley and had similar investments, a similar investment strategy, and a similar bad experience to help us win our clients’ case. Please contact us online via our contact form or by giving us a ring at (800) 732-2889. Latest Updates on Ed Turley – November 18, 2022 The Advisor Hub reported today that the former star broker with J.P. Morgan Advisors in San Francisco Edward Turley agreed to an industry bar rather than cooperate with FINRA’s probe of numerous allegations of excessive and unauthorized trading that resulted in more than $100 million worth of customer complaints. FINRA had initiated its investigation of Edward Turley as it related to numerous customer complaints in 2020. The regulator noted in its Acceptance Waiver and Consent Agreement (AWC) that the investors had generally alleged “sales practice violations including improper exercise of discretion and unsuitable trading.” According to Edward Turley’s BrokerCheck report, he had been fired in August 2021 for “loss of confidence concerning adherence to firm policies and brokerage order handling requirements.” On October 28th, FINRA requested Turley provide on-the-record testimony related to his trading patterns, including the “use of foreign currency and margin, and the purchasing and selling of high-yield bonds and preferred stock,” but Edward Turley through counsel declined to do so. As a result, Edward Turley violated FINRA’s Rule 8210 requiring cooperation with enforcement probes, and its catch-all Rule 2010 requiring “high standards of commercial honor,” the regulator said and he was barred permanently from the securities industry. Related Read: Can You Sue a Financial Advisor or Stockbroker Over Losses? Turley Allegedly Misrepresented And Misled Claimants About His Investment Strategy The claims arise out of Turley’s “one-size-fits-all” fixed income credit spread investment strategy involving high-yield “junk” bonds, preferred stocks, exchange traded funds (“ETFs”), master limited partnerships (“MLPs”), and foreign bonds. Instead of purchasing those securities in ordinary margin accounts, Turley executed foreign currency transactions to raise capital and leverage clients’ accounts to earn undisclosed commissions. Turley over-leveraged and over-concentrated his best and biggest clients’ accounts, including Claimants’ accounts, in junk bonds, preferred stocks, and MLPs in the financial and energy sectors, which are notoriously illiquid and subject to sharp price declines when the financial markets become stressed as they did in March 2020. In the beginning and throughout the investment advisory relationship, Turley described his investment strategy to Claimants as one which would generate “equity returns with very low bond-type risk.” Turley and his partners also described the strategy to clients and prospects as one “which provided equity-like returns without equity-like risk.” J.P. Morgan supervisors even documented Turley’s description of the strategy as “creating portfolio with similar returns, but less volatility than an all-equity portfolio.” Note: It appears that no J.P. Morgan supervisor ever checked to see if the representations were true and if anybody did, they would have known Turley was lying and have directly participated in the scheme. The Claimants’ representative was also told Turley used leverage derived from selling foreign currencies, Yen and Euros, to get the “equity-like” returns he promised. Turley also told the investor not to be concerned because he “carefully” added leverage to enhance returns. According to Turley, the securities of the companies he invested in for clients “did not move up or down like the stock market,” so there was no need to worry about him using leverage in Claimants’ accounts and their cash would be available whenever it was needed. The Claimants’ representative was not the only client who heard this from Turley; that is, he did not own volatile stocks and not to worry about leverage. Turley did not discuss the amount of leverage he used in clients’ accounts, which ranged from 1:1 to 3:1, nor did Turley discuss the risks currency transactions added to the portfolio, margin calls or forced liquidations as a result of his investment strategy. After all, Turley knew he could get away without disclosing those risks. This was because J.P. Morgan suppressed any margin calls being sent to Turley’s clients and he liquidated securities on his own to meet those margin calls without alarming clients.  This “one-size-fits-all” strategy was a recipe for disaster. J.P. Morgan and Turley have both admitted that Turley’s investment strategy was not suitable for any investor whose liquid net worth was fully invested in the strategy. It was especially unsuitable for those customers like Claimants who had other plans for the funds in their J.P. Morgan accounts in fall 2019 and spring 2020. Unfortunately, Turley recommended and managed the “one-size-fits-all” strategy for his best clients and friends, including Claimants. Turley was Claimants’ investment advisor and portfolio manager and required under the law to serve them as a “fiduciary.” He breached his “fiduciary” duties in making misrepresentations, misleading statements, unsuitable recommendations, and mismanagement of Claimants’ accounts. The most egregious breach was his failure to take any action to protect his clients at the end of February 2020, when J.P. Morgan raised the red flags about COVID-19 and recommended defensive action be taken in clients’ accounts. Turley Allegedly Managed Claimants’ Accounts Without Written Discretionary Authority Claimants’ representative hired Turley to manage his “dry powder,” the cash in Claimants’ accounts at J.P. Morgan, which he would need on short notice when business opportunities arose. At one point, Claimants had over $100 million on deposit with J.P. Morgan. It was not...

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Sep 1, 2020

Investors With “Blown-Out” Securities-Backed Credit Line and Margin Accounts: How do You Recover Your Investment Losses?

If you are reading this article, we are guessing you had a bad experience recently in either a securities-backed line of credit (“SBL”) or margin account that suffered margin calls and was liquidated without notice, causing you to realize losses. Ordinarily, investors with margin calls receive 3 to 5 days to meet them; and if that happened, the value of the securities in your account might have increased within that period and the firm might have erased the margin call and might not have liquidated your account. If you are an investor who has experienced margin calls in the past, and that is your only complaint then, read no further because when you signed the account agreement with the brokerage firm you chose to do business with, you probably gave it the right to liquidate all of the securities in your account at any time without notice. On the other hand, if you are an investor with little experience or one with a modest financial condition who was talked into opening a securities-backed line of credit account without being advised of the true nature, mechanics, and/or risks of opening such an account, then you should call us now! Alternatively, if you are an investor who needed to withdraw money for a house or to pay for your taxes or child’s education but was talked into holding a risky or concentrated portfolio of stocks and/or junk bonds in a pledged collateral account for a credit-line or a margin account, then we can probably help you recover your investment losses as well. The key to a successful recovery of your investment loss is not to focus on the brokerage firm’s liquidation of the securities in your account without notice. Instead, the focus on your case should be on what you were told and whether the recommendation was suitable for you before you opened the account and suffered the liquidation.

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Jul 1, 2020

FINRA Arbitration: What To Expect And Why You Should Choose Our Law Firm

If you are reading this article, you are probably an investor who has lost a substantial amount of money, Googled “FINRA Arbitration Lawyer,” clicked on a number of attorney websites, and maybe even spoken with a so-called “Securities Arbitration Lawyer” who told you after a five minute telephone call that “you have a great case;” “you need to sign a retainer agreement on a ‘contingency fee’ basis;” and “you need to act now because the statute of limitations is going to run.”

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Mar 2, 2019

A Stockbroker’s Introduction to FINRA Examinations and Investigations

Brokers and financial advisors oftentimes do not understand what their responsibilities and obligations are and what may result from a Financial Industry Regulatory Authority (FINRA) examination or investigation. Many brokers do not even know the role that FINRA plays within the industry. This may be due to the fact that FINRA, a self-regulatory organization, is not a government entity and cannot sentence financial professionals to jail time for violation of industry rules and regulations. Nevertheless, all broker-dealers doing business with members of the public must register with FINRA. As registered members, broker-dealers, and the brokers working for them, have agreed to abide by industry rules and regulations, which include FINRA rules.

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Jul 9, 2013

Arbitration panel orders Wells Fargo to pay investor $2.8 million

Tue, Jul 9 2013 By Suzanne Barlyn (Reuters) – A securities regulator ordered Wells Fargo Advisors LLC to pay $2.8 million to an investor who said the firm failed to detect fraudulent transactions and theft in its account, according to a securities arbitration ruling. College Health and Investment Ltd, a family limited partnership, filed the case in Boca Raton, Florida against the Wells Fargo & Co unit in 2010, according to a ruling posted on Tuesday on the Financial Industry Regulatory Authority’s securities arbitration database. The case stemmed from Wells’ failure to detect alleged theft and unauthorized transactions by an employee of the partnership between 2006 and early 2008, according to Robert Wayne Pearce, a lawyer in Boca Raton, Florida, who represented the partnership. A family limited partnership is an estate planning tool used mainly by wealthy families to preserve their assets and minimize certain tax liabilities. The three-person FINRA securities arbitration panel found Wells liable on July 3 and ordered it to pay $2.3 million in damages and interest to the partnership, College Health and Investment Ltd. Wells must also pay $419,000 in margin interest and $35,000 in costs. College Health had sought $4.4 million, according to the FINRA panel ruling. “We’re disappointed in the panel’s decision and don’t believe it was warranted by the facts presented during the hearing,” a Wells Fargo spokeswoman said in a statement. “We are looking into next steps,” she said. A 2010 lawsuit filed by College Health against a former secretary, Esther Spero, in the U.S. District Court for the Southern District of Florida sheds light on the Miami-based partnership’s troubles. It said Spero forged names of College Health employees who were authorized to transfer funds from its accounts, but transferred the funds for her personal use. In October, 2010, U.S. District Court Judge K. Michael Moore of the Southern District of Florida, entered a $21 million judgment against Spero, who did not respond to the partnership’s complaint. Spero allegedly operated the scheme through Wells Fargo and other entities, according to the complaint. Spero could not be reached for comment. Wells tried to seek damages from Spero and another College Health employee in the FINRA arbitration case, but the panel ruled it lacked jurisdiction over them because they were not FINRA-licensed securities brokers. (Reporting by Suzanne Barlyn; Editing by Leslie Gevirtz)

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Jan 2, 2013

Investing in Private Placements

Private placement or “Regulation D” offerings have become an important source of capital for American enterprises. Since 2008, companies have issued over half a billion dollars a year in securities through the private placement market.

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Dec 1, 2011

It’s Not Too Late for Investors to Obtain Recovery of MAT/ASTA Municipal Arbitrage Losses

Investors who purchased MAT/ASTA municipal arbitrage funds between 2002 through 2005 may mistakenly believe that they have waited too long and it is too late to pursue a claim for damages against Citigroup. Fortunately, this is not the case. While statutes of limitation may arguably bar some claims based on deceitful sales practices such as misrepresentation and omission for some early MAT/ASTA investors, other legal claims exist that are clearly not barred, even for early investors in the funds. That was demonstrated by an August 2010 Financial Industry Regulatory Authority (FINRA) award exceeding $1.8 million to a MAT/ASTA investor. See Gerald J. Kazma, as Trustee of the Gerald J. Kazma Revocable Trust, et al. vs. Citigroup Global Markets, Inc., et al, FINRA Dispute Resolution Arbitration Number 09‑02697. The Kazma family was represented by Robert Wayne Pearce, P.A. of Boca Raton, Florida. Mr Pearce and his firm recently entered into an agreement with Page Perry, LLC to jointly investigate and prosecute MAT/ASTA claims. In the Kazma case, the arbitrators specifically found that Citigroup and Citigroup Alternative Investments, LLC negligently mismanaged the MAT/ASTA funds and negligently supervised their employees. Because Citigroup’s mismanagement of MAT/ASTA began during 2006 through 2007 and continued through early 2008, even early investors in the funds are now eligible to pursue their claims. Thus, claims based on mismanagement and negligent supervision in 2006 and 2007 remain actionable under the laws of most states. The impact of the decision is that it greatly expands the number of potential clients who can pursue valid claims against Citigroup and its affiliates. The Kazma award also strongly suggests that any MAT/ASTA investor, even a Citigroup employee who had no involvement with the funds, can file a claim for negligent management and may well recover his losses. While there is, of course, no guarantee that other arbitration panels will follow the Kazma award and reach the same conclusion, the decision is nonetheless significant in that it gives many MAT/ASTA investors the opportunity to finally recover the damages they sustained through no fault of their own. A PRUDENT CASE APPROACH Mr. Pearce, a former SEC attorney with over 40 years experience, focuses his practice on securities matters. He is a member of the Public Investors Arbitration Bar Association and serves as Chairperson of the SPBCBA Securities Committee. He has represented hundreds of investors in securities arbitration and have prosecuted multiple MAT/ASTA arbitration claims. Between them they have already been involved in representing almost 50 clients throughout the country in MAT/ASTA cases. The Law Offices of Robert Wayne Pearce, P.A. follows a multi‑theory approach encompassing three separate bases for recovery, depending on the facts and circumstances of the particular investor’s case. These include: (1) MAT/ASTA was a flawed investment product; (2) Citigroup and its affiliates misrepresented and failed to disclose material facts at the time the investor was sold the investment; and (3) Citigroup and its affiliates were guilty of negligent mismanagement of MAT/ASTA and negligent supervision of their employees. We believe that this approach gives investors three separate bases for recovering damages and enhances the likelihood of an award. We prefer not to put all of our clients’ “eggs in one basket.” If you are seeking a law firm with integrity, dedication, and substantial experience in MAT/ASTA fraud and mismanagement disputes, please schedule a confidential consultation with Mr. Pearce today. Call our firm at 561-338-0037 or toll-free at 800-732-2889, or fill out our intake form to schedule your free consultation.

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Nov 12, 2010

Citigroup Affiliates Found Liable for Mismanaging the MAT/ASTA Municipal Arbitrage Funds

In a recent Financial Industry Regulatory Authority (FINRA) arbitration, a South Florida panel specifically found that Respondents Citigroup Global Markets, Inc. f/k/a Citigroup Investment Services, and Citigroup Alternative Investments, LLC were guilty of negligent mismanagement of MAT/ASTA funds, as well as negligent supervision of their registered representatives. This award should open the door for many investors to recover the damages they sustained, particularly in early MAT/ASTA deals. The FINRA arbitration panel awarded more than $1.8 million to Gerald J. Kazma Revocable Trust and Amzak Capital Management, LLC in connection with their purchases of MAT/ASTA municipal arbitrage fund investments. MAT/ASTA was a series of leveraged municipal arbitrage hedge funds offered by Citigroup Fixed Income Alternatives and sold through Smith Barney and Citigroup Private Bankers. MAT/ASTA was marketed only to high net worth clients of the firm as a fixed income alternative. In truth the MAT/ASTA funds were risky investments that exposed investors to a 100 percent or more loss of principal. The funds imploded in early 2008 causing catastrophic losses to investors. The award is particularly noteworthy because the arbitration panel expressly found that Citigroup and its affiliates mismanaged the fund, and also that they failed to supervise. Specific findings like those made by the arbitration panel in this case are unusual, and are suggestive of an intent by the arbitrators to send a message. Despite widespread evidence of material misrepresentations and omissions, Citigroup has elected to employ the “blame the customer” defense, which arbitration panels have rejected. When confronted with evidence that Citigroup misrepresented MAT/ASTA’s risk level to their brokers who passed the misleading information on to their clients, a high ranking Citigroup official said that it would be “unwise” for customers of the firm to rely on what their broker told them about a recommended product. A PRUDENT CASE APPROACH Mr. Pearce, a former SEC attorney with over 40 years experience, focuses his practice on securities matters. He is a member of the Public Investors Arbitration Bar Association and serves as Chairperson of the SPBCBA Securities Committee. He has represented hundreds of investors in securities arbitration and have prosecuted multiple MAT/ASTA arbitration claims. Between them they have already been involved in representing almost 50 clients throughout the country in MAT/ASTA cases. The Law Offices of Robert Wayne Pearce, P.A. follows a multi‑theory approach encompassing three separate bases for recovery, depending on the facts and circumstances of the particular investor’s case. These include: (1) MAT/ASTA was a flawed investment product; (2) Citigroup and its affiliates misrepresented and failed to disclose material facts at the time the investor was sold the investment; and (3) Citigroup and its affiliates were guilty of negligent mismanagement of MAT/ASTA and negligent supervision of their employees. We believe that this approach gives investors three separate bases for recovering damages and enhances the likelihood of an award. We prefer not to put all of our clients’ “eggs in one basket.” If you are seeking a law firm with integrity, dedication, and substantial experience in MAT/ASTA fraud and mismanagement disputes, please schedule a confidential consultation with Mr. Pearce today. Call our firm at 561-338-0037 or toll-free at 800-732-2889, or fill out our intake form to schedule your free consultation.

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Nov 10, 2010

Questions Raised About SEC’s Delayed Prosecution of Citigroup For MAT/ASTA Fraud

MAT/ASTA LAWYER The recent front page Wall Street Journal article (“Citi Debt Funds Probe By SEC,” 11/8/10) highlights the ongoing SEC MAT/ASTA fraud investigation of Citigroup, Inc. and its affiliates. The WSJ reported about several former Citigroup/Smith Barney financial advisors sharing information with the SEC about the sales practices associated with the MAT/ASTA funds that lost more than 75% of their value between 2007 and 2008. The brokers who were mentioned in the WSJ article “blew the whistle” on Citigroup because they obviously believed that it had falsely marketed a flawed product to the brokers’ best customers and engaged in other misconduct. The recent $1.8 million arbitration award obtained by Robert Pearce in Kazma v. Citigroup and mentioned in the WSJ article may provide support for the brokers’ efforts. In Kazma, Mr. Pearce proved the MAT/ASTA funds were marketed as a low risk fixed income alternative but they were actually a very high risk equity type alternative investments. He also proved that Citigroup made representations about how it would invest the funds and deviated from those investment guidelines to suit its own financial interests. In Kazma, the arbitrators specifically found that Citigroup was guilty of “negligent mismanagement” and “negligent supervision.” The $1.8 million dollar Kazma Award obtained by Mr. Pearce proved the MAT/ASTA debacle was a “product problem” and not a “broker problem.” Mr. Pearce reports that Citigroup has even stipulated in one recent arbitration Award that this was a “product problem.” It has been over two and a half years since the SEC began its investigation and yet it has done nothing for MAT/ASTA investors. In the last year, Mr. Pearce has prosecuted over two dozen MAT/ASTA fraud arbitration claims to final resolution. He has reviewed millions of pages of the same documents Citigroup produced to the SEC that evidence misrepresentation and mismanagement of the MAT/ASTA funds. Mr. Pearce, a former SEC prosecutor, states: “there is no plausible explanation for the SEC’s delayed prosecution of Citigroup” and urges all Citigroup financial advisors to take the action necessary to get justice for their best customers. Although Mr. Pearce’s offices are located in Boca Raton, Florida, he represents MAT/ASTA investors nationwide. You may contact Mr. Pearce by telephone toll free 800-732-2889, by e-mail to Pearce@RWPearce.com or via his website at www.secatty.com for a free MAT/ASTA Investor Report. A PRUDENT CASE APPROACH Mr. Pearce, a former SEC attorney with over 40 years experience, focuses his practice on securities matters. He is a member of the Public Investors Arbitration Bar Association and serves as Chairperson of the SPBCBA Securities Committee. Mr. Pearce has represented hundreds of investors in securities arbitration and have prosecuted multiple MAT/ASTA arbitration claims. He is currently representing almost 50 clients throughout the country in MAT/ASTA cases. The Law Offices of Robert Wayne Pearce, P.A. follows a multi‑theory approach encompassing three separate bases for recovery, depending on the facts and circumstances of the particular investor’s case. These include: (1) MAT/ASTA was a flawed investment product; (2) Citigroup and its affiliates misrepresented and failed to disclose material facts at the time the investor was sold the investment; and (3) Citigroup and its affiliates were guilty of negligent mismanagement of MAT/ASTA and negligent supervision of their employees. We believe that this approach gives investors three separate bases for recovering damages and enhances the likelihood of an award. We prefer not to put all of our clients’ “eggs in one basket.” If you are seeking a law firm with integrity, dedication, and substantial experience in MAT/ASTA fraud and mismanagement disputes, please schedule a confidential consultation with Mr. Pearce today. Call our firm at (561) 338-0037 or toll-free at 1-800-732-2889, or fill out our intake form to schedule your free consultation. FREE CONSULTATION WITH ATTORNEYS WHO CAN HANDLE YOUR SECURITIES AND COMMODITIES PROBLEMS Contact The Law Offices of Robert Wayne Pearce, P.A., in Boca Raton to discuss your MAT / ASTA claim. The firm can be reached by phone at 561-338-0037, toll free at 800-732-2889 or via e-mail.

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Nov 8, 2010

Brokers May Reap Big Rewards for Reporting Alleged Fraudulent Conduct By Citigroup

BROKERS MAY REAP BIG REWARDS FOR REPORTING ALLEGED FRAUDULENT CONDUCT BY CITIGROUP IN THE MAT/ASTA MUNICIPAL ARBITRAGE FUNDS The Wall Street Journal reports that several former Citigroup/Smith Barney brokers have been sharing information with the SEC about alleged fraudulent practices associated with the MAT/ASTA municipal bond arbitrage funds that lost more than 75% of their value between 2007 and 2008. (“Citi Debt Funds Probed by SEC,” 11/8/10). These brokers may stand to be compensated handsomely if the SEC imposes big financial penalties against Citigroup for misrepresenting the risks of MAT/ASTA funds. That is because of an obscure provision in the recently enacted Dodd-Frank Financial Reform Act creating a financial rewards program that can pay a large sum of money to any person who provides “original information” to the SEC that leads to a successful enforcement action relating to the violation of federal securities laws. The Act provides for payments to “whistleblowers” ranging between 10% and 30% of the amount recovered by the SEC. Given that recent SEC fines have been in the hundreds of millions of dollars, there is the potential for a lot of money to be made by both whistleblowers and their lawyers, who typically handle such cases on a contingent fee or percentage basis. The new law allows whistleblowers represented by lawyers to present their information and claims anonymously, and it also contains legal prohibitions against industry retaliation as well as the right to sue any employer in the industry who retaliates against a whistleblower. According to Atlanta attorney Craig T. Jones of Page Perry LLC, “it is crucial that the whistleblower have a lawyer to not only protect his or her legal rights, but to confidentially funnel the information to the appropriate officials while protecting the client’s anonymity and negotiating for the best possible reward.” The new law also makes it illegal for brokerage firms to retaliate against whistleblowers, giving whistleblowers the right to sue their employers if they are fired, demoted, or blackballed for reporting misconduct to management or regulators. Robert Pearce represents dozens of investors who lost money in the MAT/ASTA funds and were marketed as being a low-risk fixed income alternative but which were actually a very high risk investment as Citigroup well knew. Mr. Pearce’s “recent MAT/ASTA arbitration awards against Citigroup including a $1.8 million award in the Kazma v Citigroup where arbitrators specifically found that Citigroup was guilty of negligent mismanagement and negligent supervision which are clearly not individual broker problems may provide support for the brokers’ efforts.” The brokers who were mentioned in the Wall Street Journal article ‘blew the whistle’ on Citigroup because they obviously believed that it had falsely marketed a flawed product to the brokers’ best customers and engaged in other misconduct, causing the brokers to lose business, suffer damage to professional reputation, and be subjected to legal action. While The Law Offices of Robert Wayne Pearce, P.A. only represents investors in the Citigroup MAT-ASTA cases, “we regularly talk with brokers and other financial industry whistleblowers in cases where we are not representing customers.” Mr. Pearce, a former SEC attorney with over 40 years experience, focuses his practice on securities matters. He is a member of the Public Investors Arbitration Bar Association and serves as Chairperson of the SPBCBA Securities Committee. Mr. Pearce has represented hundreds of investors in securities arbitration and have prosecuted multiple MAT/ASTA arbitration claims. He is currently representing almost 50 clients throughout the country in MAT/ASTA cases. The Law Offices of Robert Wayne Pearce, P.A. follows a multi‑theory approach encompassing three separate bases for recovery, depending on the facts and circumstances of the particular investor’s case. These include: (1) MAT/ASTA was a flawed investment product; (2) Citigroup and its affiliates misrepresented and failed to disclose material facts at the time the investor was sold the investment; and (3) Citigroup and its affiliates were guilty of negligent mismanagement of MAT/ASTA and negligent supervision of their employees. We believe that this approach gives investors three separate bases for recovering damages and enhances the likelihood of an award. We prefer not to put all of our clients’ “eggs in one basket.” If you are seeking a law firm with integrity, dedication, and substantial experience in MAT/ASTA fraud and mismanagement disputes, please schedule a confidential consultation with Mr. Pearce today. Call our firm at 561-338-0037 or toll-free at 800-732-2889, or fill out our intake form to schedule your free consultation.

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Nov 6, 2010

The UBS Lehman Brothers “100% Principal Protection” Note Fraud

In April 2011, the Financial Industry Regulatory Authority (FINRA) fined UBS Financial Services, Inc. (UBS) $2.5 million and ordered the broker dealer to pay $8.25 million in restitution for false and misleading representations regarding the so-called “principal protection” feature of the 100% Principal-Protection Notes issued by Lehman Brothers Holdings, Inc. (Lehman PPNs) .

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Sep 20, 2010

MAT/ASTA Municipal Arbitrage Funds – Citi’s Latest Product Problem

Citigroup misled its representatives who sold the firm’s MAT/ASTA municipal arbitrage hedge funds, and arbitrators are placing the blame squarely on the firm, according to a September 5 article by Bruce Kelly in Investment News (“Arbitrators: B-Ds Kept Brokers in the Dark on Private Deals”). Brokers at Citigroup’s former brokerage unit, Smith Barney, sold more than $2 billion of the MAT/ASTA funds as low-risk, fixed-in-come alternative investments, beginning in 2002. Those funds lost between 30% and 100% of their value, according to the article. Last month, a Financial Industry Regulatory Authority (“FINRA”) arbitration panel specifically found that Citigroup Global Markets Inc. was liable for “negligent management” of the MAT/ASTA funds, and ordered the firm to pay $1.82 million in damages. The arbitrators’ finding of mismanagement by Citigroup is an indication of the severity of the problem at that firm, according to attorney Robert Pearce, who represented the client in that claim. “There are tons of conflicts in these products and how they’re offered,” Mr. Pearce was quoted as saying, adding: “The financial advisers are the tools to sell these products, and they don’t get the full scoop on who’s managing them. The blow-up was due to management, who then passed it along to the advisers.” “The best advisers at Smith Barney sold MAT and ASTA to their best clients and wound up feeling totally betrayed by Smith Barney,” an industry recruiter was quoted as saying, adding: “in terms of a loss of faith in the firm, this is as big as anything.” The financial advisors who sold MAT/ASTA Funds to their clients trusted Citigroup to honestly inform them about the nature and risks of the funds and to manage the funds within established guidelines. That trust was betrayed. Based on our analyses and evaluations of the facts, we have made a conscious decision not to name financial advisors in these cases. The brokers will not be named in MAT/ASTA arbitrations filed by our law firm. A PRUDENT CASE APPROACH Mr. Pearce, a former SEC attorney with over 40 years experience, focuses his practice on securities matters. He is a member of the Public Investors Arbitration Bar Association and serves as Chairperson of the SPBCBA Securities Committee. Mr. Pearce has represented hundreds of investors in securities arbitration and have prosecuted multiple MAT/ASTA arbitration claims. He is currently representing almost 50 clients throughout the country in MAT/ASTA cases. The Law Offices of Robert Wayne Pearce, P.A. follows a multi‑theory approach encompassing three separate bases for recovery, depending on the facts and circumstances of the particular investor’s case. These include: (1) MAT/ASTA was a flawed investment product; (2) Citigroup and its affiliates misrepresented and failed to disclose material facts at the time the investor was sold the investment; and (3) Citigroup and its affiliates were guilty of negligent mismanagement of MAT/ASTA and negligent supervision of their employees. We believe that this approach gives investors three separate bases for recovering damages and enhances the likelihood of an award. We prefer not to put all of our clients’ “eggs in one basket.” If you are seeking a law firm with integrity, dedication, and substantial experience in MAT/ASTA fraud and mismanagement disputes, please schedule a confidential consultation with Mr. Pearce today. Call our firm at 561-338-0037 or toll-free at 800-732-2889, or fill out our intake form to schedule your free consultation.

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Sep 10, 2010

Citigroup’s Mismanagement of MAT/ASTA Funds Produces

In his September 9, 2010 article in The Bond Buyer entitled “Judgment Aids Investors in Citi Case,” author Dan Seymour describes a recent Financial Industry Regulatory Authority (FINRA) arbitration award of more than $1.8 million in favor of MAT/ASTA investors as “[a] grand-slam judgment [that] has emboldened the lawyers and investors seeking to recoup losses on $2 billion in municipal arbitrage funds run by Citigroup.” The amount of the award, while very substantial, is not the focus of the article. The reason why it is making news is the arbitration panel’s specific finding that Citigroup was guilty of negligent mismanagement of the MAT/ASTA funds, as well as negligent supervision of their employees. Citing J. Boyd Page, senior partner of Page Perry, LLC, Mr. Seymour noted that this was the first time that arbitrators explicitly found that Citigroup mismanaged the funds. The decision is pivotal because it opens the door to claims by earlier investors that might otherwise be barred by statutes of limitation. Mr. Page estimates that these claims represent $500 million to $700 million of the total $2 billion invested in the MAT/ASTA funds, according to the article. “It tells a lot of people that there are still very viable claims,” Mr. Page was quoted as saying. MAT/ASTA was a series of leveraged municipal arbitrage hedge funds offered by Citigroup Fixed Income Alternatives and sold through Smith Barney and Citigroup Private Bankers. MAT/ASTA was marketed only to high net worth clients of the firm as a fixed income alternative. In truth the MAT/ASTA funds were risky investments that exposed investors to a 100 percent or more loss of principal. The funds imploded in early 2008 causing catastrophic losses to investors. Citigroup told MAT/ASTA investors that it would adhere to a strategy of buying municipal bonds when the prices were low (i.e., when the yield spread of munis over Treasuries was high) and selling them when prices were high (i.e., when that spread ratio was low). Mr. Page and Robert Wayne Pearce, who represented the claimants in the arbitration that is the subject of Mr. Seymour’s article, uncovered evidence that Citigroup departed from these guidelines, buying when it should have been selling. As a result of those efforts, they are in a unique position to establish that Citigroup mismanaged the MAT/ASTA funds. A PRUDENT CASE APPROACH Mr. Pearce, a former SEC attorney with over 40 years experience, focuses his practice on securities matters. He is a member of the Public Investors Arbitration Bar Association and serves as Chairperson of the SPBCBA Securities Committee. He has represented hundreds of investors in securities arbitration and have prosecuted multiple MAT/ASTA arbitration claims. He is currently representing almost 50 clients throughout the country in MAT/ASTA cases. The Law Offices of Robert Wayne Pearce, P.A. follows a multi‑theory approach encompassing three separate bases for recovery, depending on the facts and circumstances of the particular investor’s case. These include: (1) MAT/ASTA was a flawed investment product; (2) Citigroup and its affiliates misrepresented and failed to disclose material facts at the time the investor was sold the investment; and (3) Citigroup and its affiliates were guilty of negligent mismanagement of MAT/ASTA and negligent supervision of their employees. We believe that this approach gives investors three separate bases for recovering damages and enhances the likelihood of an award. We prefer not to put all of our clients’ “eggs in one basket.” If you are seeking a law firm with integrity, dedication, and substantial experience in MAT/ASTA fraud and mismanagement disputes, please schedule a confidential consultation with Mr. Pearce today. Call our firm at 561-338-0037 or toll-free at 800-732-2889, or fill out our intake form to schedule your free consultation.

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