RSS Feed
Twitter
Facebook
Email
HomeAnother Oppenheimer ARS Investor Unloads on New York AG Cuomo
Posted by Larry Doyle on March 8th, 2010 8:12 AM |
Investors defrauded in the distribution of auction-rate securities deserve a voice. Sense on Cents is happy to provide it. Aside from feeling screwed by Wall Street banks and money managers in the distribution of auction-rate securities as a cash surrogate, investors now feel increasingly incensed by the lack of support in the judicial system and in selected attorneys general offices in our country.
The latest AG to feel the wrath of ARS investors is New York AG Andrew Cuomo for his recent settlement with Oppenheimer Holdings. Rather than reading my opinion of Cuomo’s settlement, let’s listen to an investor (who remains nameless for obvious reasons). In my opinion, this individual’s letter speaks volumes and echoes the sentiments of thousands of investors who continue to hold the $150 BILLION in frozen ARS. (more…)
Did Hawaii Purchase ARS from FINRA through Citi?
Posted by Larry Doyle on March 4th, 2010 7:29 AM |
The auction-rate securities market did not instantaneously freeze in early 2008. The fact is, the ARS market started to fail in mid-2007 on the heels of a variety of market segments repricing given the liquidity issues on Wall Street. Recall that mortgage hedge funds at Bear Stearns cratered in spring 2007. At that point, Wall Street was becoming much more risk averse while shepherding the use of its own capital and balance sheets. During this point in time, the ARS market started to fail and ultimately totally froze in early 2008.
Evidence is rampant that Wall Street worked feverishly from mid-2007 until early 2008 to offload auction-rate securities anywhere and everywhere without informing investors of the failing nature of the market. (more…)
Oppenheimer ARS Investor Rails on NY AG Cuomo re: OPCO-ARS Settlement
Posted by Larry Doyle on March 3rd, 2010 5:15 PM |
How often do politicians declare victory while innocent victims remain baffled, bewildered, and befuddled as they hang onto the pangs of defeat? How often do politicians look to score political points while not delivering real progress let alone justice for those victimized by fraud? Regrettably, this dynamic plays out all too often.
I witness it in a letter sent today by an innocent investor victimized by the fraudulent distribution of auction-rate securities by Oppenheimer Holdings. This investor who remains nameless for obvious reasons shares his pain and anguish in a letter sent to New York Attorney General Andrew Cuomo’s office.
Feel his pain and know that Cuomo’s settlement and victory lap are not even a drop in the bucket of the remaining $150 billion frozen ARS market. Two years have passed since the ARS market froze. For many investors, their lives and well beings froze right along with it.
Who within our political circles, our financial regulatory framework, our media are truly willing to stand up for all these victims? (more…)
ARS UPDATE: David Shulman Gets Off Easy
Posted by Larry Doyle on February 18th, 2010 1:10 PM |
Are cracks developing in the Wall Street facade covering the fraud which encompassed the auction-rate securities market? While thousands of investors with upwards of $150 billion remain frozen in their auction-rate securities holdings, a hint of progress seems to be developing on the legal front addressing this sector. How so?
David Shulman, former sales manager at UBS, just settled an outstanding claim that he effectively front ran the ARS market in December 2007. This claim was brought by New York Attorney General Andrew Cuomo. Bloomberg highlights this story in writing, Former UBS Muni Chief Settles Probe for $2.75 Million:
David Shulman, UBS AG’s former global head of municipal securities, agreed to pay $2.75 million to settle a probe by New York Attorney General Andrew Cuomo in connection with the sale of auction-rate securities before the market collapsed in February 2008. (more…)
Walt Garrison Lassoed by Auction-Rate Securities
Posted by Larry Doyle on January 30th, 2010 3:06 PM |
Growing up as a young boy in Boston, I loved sports of all kinds. Regrettably, our local professional football team, the then Boston Patriots, were a perennial league doormat in the American Football League.
What team did I love? The Green Bay Packers. Led by Vince Lombardi, the Packers played on the frozen tundra otherwise known as Lambeau Field. The memories of the 1967 NFL Championship game, known as the Ice Bowl due to bone chilling negative temperatures, between my Packers and the hated Dallas Cowboys remain etched in my memory.
The Packers won the game 21-17 on a quarterback sneak by my hero Bart Starr with only seconds left in the game. This game was filled with so many legends, including Cowboys coach Tom Landry, quarterback Don Meredith, defensive tackle Jethro Pugh, middle linebacker Lee Roy Jordan, running back Dan Reeves and so many more. My Packers had Starr, middle linebacker Ray Nitschke, guard Jerry Kramer, receiver Boyd Dowler, running back Donny Anderson, safety Willie Wood, and so many more. I loved these guys and loved that game.
On the bench that day as a backup fullback for the Cowboys was Walt Garrison. I have no recollection of Garrison playing during that Ice Bowl, but he went on to a stellar career. When I think back to Walt Garrison, I think of one thing: he was one tough SOB. After his football days, Garrison was a popular figure on the rodeo circuit and became a spokesperson for Skoal chewing tobacco.
I will readily admit for the last thirty plus years, I have given little thought to Walt Garrison…until today. (more…)
FINRA and ARS: Pot Calling Kettle Black
Posted by Larry Doyle on January 25th, 2010 2:34 PM |
Thanks to a loyal Sense on Cents supporter for sharing the most recent copy of Compliance Reporter, a publication of Institutional Investor, Inc.. The lead article this week, FINRA Readies Slug of Enforcement Cases, addresses the fact that FINRA:
is targeting a slew of enforcement actions across a range of areas, including reverse convertibles and auction-rate securities.
Oh boy, here we go again. FINRA talking tough about auction-rate securities. Additionally, FINRA further flexes its muscle by:
warning firms that strained layoffs and resources are no excuse to delay responses to FINRA’s request for document production requests.
This self-regulatory organization has truly got some set of balls talking about delayed responses to requests for documents and information. (more…)
Raymond James Apology for Auction-Rate Securities
Posted by Larry Doyle on January 7th, 2010 1:25 PM |
A friend of Sense on Cents informed me the other day that Tom James, chairman and chief executive of Raymond James, issued an apology to the firm’s clients involved in the auction-rate securities fiasco. Wow! Given my keen interest in this topic and my empathy for the investors who have been abused by the industry, my heart raced. An apology by the head of a firm the size and scope of Raymond James is deeply meaningful.
Upon review of the article, Tom James Apologizes for Auction Rate Securities Purchases, published in the Tampa Bay Business Journal, I witnessed that it was written January 5th. Breaking news! Then I realized it was written January 5th but 2009!
Regardless of the fact that the article was published a year ago, I continued reading intrigued to learn more about this situation as it stood a year ago. The Tampa Bay Business Journal reported Tom James saying: (more…)
Auction Rate Security Anxiety Continues
Posted by Larry Doyle on December 29th, 2009 10:03 AM |
Still they wait.
$150 billion dollars.
Thousands of investors unable to access THEIR funds frozen in Wall Street’s greatest fraud, that is the world of auction-rate securities.
While an initial court ruling against Union Bank of Switzerland defined the sales and distribution of auction-rate securities as a fraud, recent court rulings have shifted the burden of responsibility onto investors.
When I worked on Wall Street, I was never involved directly or indirectly with the sales or trading of auction-rate securities. That said, I understand full well the explicit and implicit guarantees that brokers and salespeople made in distributing this product. The fact that those entities which distributed ARS have not been held to full and total account is an unspeakable travesty. The lives of investors who have been dramatically impacted get little to no attention from the media. Shame on them.
Our federal financial regulators housed within the SEC are nowhere to be found. FINRA remains in bed with the industry and would just as soon not draw attention to its own liquidation of $647 million ARS in mid-2007 as the market was failing.
Days, weeks, months, and now years pass. Where is the justice and retribution for those ARS investors still frozen and unable to access that $150 BILLION!!! (more…)
Will Ignorance Defense Continue to Screw Auction-Rate Securities Investors?
Posted by Larry Doyle on December 18th, 2009 8:03 AM |
Auction-rate securities investors remain at a decided disadvantage when it comes to pursuing legal claims. Misrepresentation by those distributing the auction-rate securities does not seem sufficient to warrant a claim, let alone retribution. The fact that investors are having difficulties bringing suit against Wall Street firms which distributed auction-rate securities should be further reason for investors to be cautious in engaging brokers and financial planners. Why? The fact that selected cases of auction-rate securities distribution have been designated as having occurred in a fraudulent fashion would seem to have established a significant precedent. The fact that the precedent has not been established is mind boggling.
$149 BILLION in auction-rate securities held by thousands of investors remain frozen. Where’s the justice?
Bloomberg provides a recent review of these developments in writing, Auction-Rate Investors Get Redo After Loss of First Fraud Suits:
Auction-rate securities investors who sued banks including Citigroup Inc. and UBS AG to recoup billions of dollars in losses went 0 for 5 as their first cases were thrown out. Now some are gearing up for a rematch over part of the $149 billion in securities that remain outstanding. (more…)
Ignorance Defense Works on Wall Street
Posted by Larry Doyle on November 10th, 2009 8:47 AM |
Ignorance of the law is never an acceptable defense on Main Street; regrettably, the same does not seem to hold true on Wall Street. How so?
A recent auction-rate securities arbitration case involving an investor who purchased ARS from a Raymond James financial representative acknowledges the ignorance of the sales rep, but effectively absolves the firm in the process. The implications of this decision should not be underestimated. The Wall Street Journal sheds further light on this case in a recent review, GETTING PERSONAL: Investor Loses Out In Auction-Rate Case:
A complaint brought by an auction-rate securities investor offers insight into the plight of those stranded in the instruments as well as the arbitration process some investors dread.
Like many investors, Gene McCutchin, a real-estate entrepreneur, was holding auction-rate securities when the $330 billion market froze up in early 2008. He filed a complaint against his broker, Raymond James Financial Services Inc., in September 2008 asserting negligence, fraud and breach of fiduciary duty, among other things. He said the brokerage failed to warn him about the risks before his purchase, and he asked for compensation and punitive damages.
A Financial Industry Regulatory Authority arbitration panel, in an Oct. 26 resolution, didn’t award damages or order that the share sale be rescinded. It supported some of McCutchin’s assertions, finding that a Raymond James broker, Rick Woolfolk, “was poorly trained with respect to the ARS product,” and it did order the brokerage to pay forum costs.
But the panel also said that McCutchin identified himself as “a sophisticated investor.” While McCutchin wasn’t informed about the extent of risk before the transaction, it was clear that his personal adviser, Dan Chilton, understood that he was buying ARS bonds, and that the higher returns they offered came with higher risk, the panel’s resolution said.
Let’s zero in on the phrase, “wasn’t informed about the extent of the risk before the transaction.” The fact that the FINRA arbitration panel is absolving Raymond James in this transaction, despite the fact that the customer was not informed of all the risks, should send chills down the spine of every investor in our public markets. With that statement, the arbitration panel is sending a message, loud and clear: “Buyer Beware!!” You are on your own.
To mitigate the enormous risk of purchasing an investment that a sales representative may not understand, I would strongly encourage individual investors to do the following: (more…)
