New York Securities Lawyer BlogLax & Neville, LLP recently won an $880,000 FINRA arbitration award against Merrill Lynch for purported sales practice abuses concerning the Merrill Lynch Phil Scott Team and the Merrill Lynch Phil Scott Team Income Portfolio. The Merrill Lynch Phil Scott Team recommended that 100% of Claimants’ assets be invested in the Merrill Lynch Phil Scott Team Income Portfolio, which consisted of 100% equities. In doing so, the claimants asserted that the Merrill Lynch Phil Scott Team ignored the Claimants’ individual risk tolerances and investment objectives. Specifically, the claimants argued that the most egregious fact was that the Merrill Lynch Phil Scott Team recommended that a 90 year old widow in very poor health invest all of her assets in the 100% equities Merrill Lynch Phil Scott Team Income Portfolio. During the arbitration process, Lax & Neville, LLP focused on the Merrill Lynch Phil Scott Team’s disregard of industry and regulatory obligations. In addition to the $880,000 award in compensatory damages, the Panel also granted Claimants’ Motion for Sanctions and “assessed fees for hearings on discovery to Respondent as sanctions against Respondent for untimely compliance with the Panel’s orders to compel the production of documents.”
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FINRA Cites SAC Capital Advisors for Suspicious Trading
What is it going to take for the SEC to respond accordingly to tips of insider trading and hedge-fund fraud? When initial suspicion of Bernie Madoff’s widespread Ponzi scheme was discovered by FINRA, the SEC was slow to act on it. Now, multiple referrals from FINRA of suspicious trading at the hedge-fund firm, SAC Capital Advisors LP, have emerged and the SEC is hesitant to take further action once again. Below is the article from the Wall Street Journal regarding this issue.
Referrals on SAC Disclosed By JEAN EAGLESHAM June 16th, 2011
The Securities and Exchange Commission has received 65 referrals of suspicious trading at hedge-fund firm SAC Capital Advisors LP over the last decade, or 46 more than previously disclosed, according to Sen. Charles Grassley.
Lax & Neville Investigates David Lerner and Apple REIT’s
Lax & Neville, LLP a leading securities arbitration law firm has been contacted by investors in Apple REIT and we are currently investigating the sales of the Apple REIT’s by David Lerner and other firms to the public. On March 31, 2011, the Financial Industry Regulatory Authority (“FINRA”) charged David Lerner & Associates (“David Lerner”), a Long Island based broker-dealer, based upon its misrepresentations regarding the Apple REIT Ten, an unlisted $2 billion Real Estate Investment Trust. FINRA alleged that David Lerner unsuitably invested unsophisticated and elderly investors in the illiquid Apple REIT Ten. David Lerner significantly profited from, at the expense of thousands of innocent investors, when underwriting and selling approximately $7 billion of Apple REIT securities.
FINRA Fines UBS for Sale of PPNs
There has been a significant development for UBS customers who purchased principal protected structured notes issued by Lehman Brothers Holdings, Inc (“Lehman Brothers”). The Financial Industry Regulatory Authority (“FINRA”) fined UBS $2.5 million and also ordered it to pay $8.25 million in restitution to innocent investors as a result of UBS’s misconduct. These principal protected structured notes were developed, underwritten, offered, marketed and sold by UBS to its customers as safe and principal protected investments; however, they were extremely risky and became worthless when Lehman Brothers filed for bankruptcy.
Don’t Limit Your Recovery If You Are a Owner Of Lehman Principal Protected Notes
On January 25, 2011, Lehman Brothers Holdings Inc. (“Lehman”) and its affiliates (collectively the “Debtors”) filed an Amended Plan and Disclosure Statement which included, among other things, the Debtors’ estimate of the percentage of recovery for Lehman’s senior note holders. According to the Disclosure Statement, investors with “Senior Unsecured Claims” in the Lehman bankruptcy are expected to recover 21.4% of the allowed amount of their claims. The estimated recovery percentage will be reduced to 17% if the requisite percentage of investors does not vote to accept the Amended Plan.
FINRA Revises Sanction Guidelines
Recently, FINRA has modified the FINRA Sanction Guidelines (Regulatory Notice 11-07). The FINRA Regulatory Notice indicates that the changes reflect the experience of FINRA’s Departments of Market Regulation and Enforcement in settling and litigating cases, and incorporate the findings of federal appellate courts and SEC precedent in recent FINRA disciplinary cases. The revised Sanction Guidelines are effective immediately and are available on FINRA’s website.
Service of Madoff Adversarial Proceeding Clawback Actions
Hundreds of Madoff Victims have been named as defendants in Bernard L. Madoff Securities, LLC (“BLMIS”) Adversarial Proceeding Clawback actions. Irving Picard, the BLMIS Trustee, filed the Clawback complaints alleging avoidance claims and preference claims on or before December 11, 2010. Pursuant to the Federal Rules of Civil Procedure, the Trustee has 120 days from the date of filing the Clawback complaint with the Southern District Court in New York, to serve the named defendant. It is our understanding that approximately 50% of all Clawback actions have been served upon the named defendants. Many of the named Defendants who have not yet been served with the Clawback complaint question whether all of the Clawback actions that were filed by the Trustee will actually be served or if the Trustee will abandon or stop pursuing some of the Clawback complaints. Through our communications with the Trustee it is our belief that all filed Clawback complaints will eventually be served upon the defendants. Once the defendant is served, the defendant either has 30 or 60 days to respond to the Clawback complaint. Although this time to respond is designated in the summons which is served along with the Clawback complaint, it is possible to receive an extension of time to respond through a request to the Trustee. If you have been named as a Defendant in a Clawback complaint or served with a Clawback complaint, feel free to contact Lax & Neville, LLP for a consultation regarding your potential defenses.
Lax & Neville, LLP Scheduled to Appear and Argue at the March 3, 2011 Net Equity Appeal At the United States Court of Appeals for the Second Circuit
Many Madoff victims are eagerly anticipating the appeal of Judge Lifland’s Net Equity decision. On March 3, 2011, the Net Equity appeal will take place before the United States Court of Appeals for the Second Circuit. Lax & Neville remains at the forefront of the net equity appeal process since we represent a multitude of Madoff victims. Specifically, Lax & Neville, LLP will be arguing a portion of the appeal by raising various legal and equitable arguments that bear upon the core definition and determination of Net Equity as defined by the Securities Investor Protection Act (“SIPA”).
FINRA Arbitration Panels Continue to Find in Favor of Investors in Lehman Brothers Principal Protected Structured Notes
The Lax & Neville Blog provides commentary and news on developing legal issues in broker-dealer, securities, regulatory, and employment matters. Our goal is to keep the public informed of new and exciting developments in the securities and investment industries.
Agape Victims Face Preference Actions
Trustee Kenneth P. Silverman, Esq., recently initiated over 200 clawback cases against victims of the Agape World Inc. Ponzi Scheme. Attorney David J. Mahoney, of Silverman Acampora LLP, is representing the trustee in these actions. On January 26, 2007, Nicholas Cosmo, founder and owner of Agape World Inc. and Agape Merchant Advance LLC in Hauppauge, N.Y., was arrested for operating a $370 million Ponzi Scheme. Lax & Neville, LLP currently represents numerous victims of Ponzi Schemes that have been sued by trustees in clawback actions. Clawback actions normally consist of either preference claims or fraudulent conveyance claims. There are defenses to both types of claims and you should contact a qualified attorney to discuss your options. If you are an Agape victim and you receive notice of a pending preference or fraudulent conveyance action from the trustee, or you simply have questions regarding clawback actions and the possible defenses to and resolution of a clawback actions, please do not hesitate to contact Lax & Neville, LLP for a free consultation.