Securities Fraud
Securities fraud encompasses a full range of white collar
crimes, including misrepresentation, churning, excessive
trading, the coloring of stock reports, trading without
permission, malpractice, ineptitude/malpractice, stock
fraud, and investment fraud. Recently, a slew of investment
banking and brokerage firms--such as Merrill Lynch,
Charles Schwab, and Enron--have weathered allegations
of these crimes. Reportedly, such actions have cost
investors millions in savings and retirement. If you
believe you are a victim of securities fraud, we can
help.
Shareholder Fraud
If a company’s accountants or executives intentionally
mask profits, losses, debts, acquisitions, mergers,
or other financial transactions, shareholder fraud occurs.
Because they know that shareholders rarely buy stock
in companies rocked by excessive debt or suspicious
activity, those executives may try to conceal that debt,
inflate company profits, and cover up scandals in order
to lure investors. They might offer too-good-to-be-true
stock deals so that shareholders think they are getting
a superb deal when in actuality, they are just being
used to prolong the company’s inevitable crash.
One of the best examples of shareholder fraud is the
recent collapse of the financial giant Enron, which
defrauded investors by concealing billions of dollars
in debts before the company finally went bankrupt. Such
misrepresentation of a company’s true financial
status has cost consumers millions of dollars collectively—and
many have lost everything, including their life savings
or retirements. If you are a victim of shareholder fraud,
you have a right to file suit against the company that
deceived you. Please contact
us today if you have been victimized by shareholder
fraud.
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Investment Fraud
Investment fraud refers to a situation in which a company
or stockbroker intentionally misleads shareholders in
order to generate business and clients. For example,
a stockbroker may lure a shareholder with padded stock
reports that make a company look much more sound and
lucrative than it truly is. Sometimes, a stockbroker
will give a company whose stock he’s trying to
sell a higher rating so that investment banking firms
will be enticed. By intentionally manipulating investors,
the stockbroker could cause them to lose some or all
of their money on stock they thought was foolproof.
Merrill Lynch, Morgan Stanley, Deutsche Bank, Bear Stearns,
and JP Morgan are among the dozens of firms suspected
or convicted of investment fraud. If you have lost money
due to investment fraud, please contact
us today.
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Churning
Called churning, excessive trading occurs when a stockbroker
unnecessarily, repeatedly trades stocks for no reason
other than to increase his own commission. Churning
is both illegal and unethical. If you believe you have
been a victim of excessive trading, please contact
us today.
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Trading Without Permission
Stockbrokers must inform their clients whenever they
make trades on the clients’ accounts. They are
not authorized to make trades that their clients have
rejected. If your broker has made an unapproved trade
on your account, you can seek legal action. Contact
us today for assistance.
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Conflict of Interest
Often, securities firms specialize in both investment
banking and stock analysis. Trying to maintain balance
between the two may lead to a conflict of interest,
which may tempt analysts to give a more positive rating
to their clients’ stocks than to their clients’
competitors’ stocks. Such conflicts of interest
are illegal and can cause investors to lose money. If
you are the victim of a stock conflict of interest,
please contact us today.
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Insider Information
Insider trading occurs when a person buys or sells stocks
based on his inside knowledge that the stock’s
value will increase or decrease. Perpetrators may include
stock analysts, stockbrokers, company employees, and
investment bankers who may have been tipped off or who
have access to records before the public does. Insider
trading is illegal. If you’ve been deceived by
insider trading, please contact
us today.
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Ineptitude or Malpractice
By definition, malpractice occurs when a professional
inflicts injury—that another professional could
have avoided—on a victim by providing inadequate
services. Similarly, brokerage malpractice occurs when
an analyst or a stockbroker issues misleading, deceptive,
or dishonest advice to his client—who in turn
may make a dangerous investment choice and ultimately
lose money. If a securities firm hires a stockbroker
who commits brokerage malpractice, the firm may be at
fault. If you have been victimized by brokerage malpractice,
please contact us today.
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Risky Investment
A risky investment is made in a stock that could return
a huge profit but has a very high possibility of loss.
Buying start-up companies’ stocks or marginal
companies’ stocks are both very risky investments,
and an ethical stockbroker will encourage clients to
only invest what they can afford to lose—especially
since there is always the possibility of a total loss.
Please contact us today if
you have been talked into making a risky investment.
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Misrepresentation
Misrepresentation occurs when a securities firm purposefully
gives out wrong information or conceals true information.
In many cases, this means publicly supporting a stock
while privately admitting that it is a risk or a bad
buy. Misrepresentation can hurt investors by advising
them to put their money into businesses that are in
decline or have hidden problems. If you have lost money
due to misrepresentation, please contact
us today.
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Morgan Stanley
Morgan Stanley has been accused of giving preferential
treatment to Gucci, because Gucci is one of Morgan Stanley’s
investment banking clients. In an unrelated but similar
case involving 12 prominent brokerage firms, Morgan
Stanley refused to admit guilt but did agree to pay
$125 million in fines to the SEC. If you have been defrauded
by Morgan Stanley, please contact
us today.
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Charles Schwab
Charles Schwab, the nation’s leading discount
brokerage firm, first marketed itself as a reasonable
alternative to larger, bigger-name security firms and
attempted to avoid conflicts of interests and other
types of securities fraud. However, Charles Schwab has
nonetheless been accused of other frauds, including
charging higher-than-market prices for services and
administering delayed billing more than six months after
investors’ transactions were completed. If Charles
Schwab’s investment fraud caused you monetary
losses, please contact us
today.
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Merrill Lynch
In 2001, investment banking firm Merrill Lynch was accused
of publicly promoting stocks that it privately knew
were worthless. The company gave good ratings to companies
it knew were rapidly deteriorating, such as Enron. Although
Merrill Lynch admitted to no wrongdoing, it was ordered
to pay a $100 million fine (its estimated one-day earnings)
and directed to make drastic changes in the company’s
organization. Please contact
us today if you have lost money due to the Merrill
Lynch scandal.
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Smith Barney Citigroup
Salomon Smith Barney, the investment banking division
of CitiGroup, was accused of giving false stock ratings
to companies during the telecom meltdown in order to
attract new clients and keep current investment banking clients.
The company was charged with securities fraud, and the
case ended in a $400 million settlement. Please contact
us today if you were victimized by Salomon Smith
Barney.
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JP Morgan
JP Morgan Chase & Co. has come under a recent slew
of securities fraud allegations. The firm is accused
of contributing to Enron's fraud and eventual downfall
by providing cash to LJM2, one of the partnerships created
by Enron's former CFO to help cover its debt. JP Morgan
also controlled another company, Mahonia, Ltd., which
prepaid Enron for services, making it appear that Enron
was making more money that it really was. In addition
to the charges relating to the Enron case, JP Morgan
was involved in the conflict of interest lawsuit levied
by the SEC against a number of securities firms. The
firm agreed to pay $80 million in fines to the SEC in
that case. JP Morgan has lawsuits filed against it by
both Enron's shareholders and its own. If you have lost
money due to fraud committed by JP Morgan, please contact
us today.
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Goldman Sachs
Goldman Sachs experienced a great deal of economic success
in the 1990s but has not been able to escape the specter
of fraud allegations in the past several years. One
of the allegations against Goldman Sachs involves "laddering"
initial public offerings. Laddering IPOs means giving
certain clients shares in an IPO before it is made public
with the understanding that the client will buy a set
number of additional shares once the stock hits the
market. Their purchases of additional shares make the
stock look "hot," wooing additional investors.
The privileged clients can then sell their stock at
a high price, turning a large profit. Other investors
meanwhile see the value of their share diminish because
of the dishonest laddering. In December 2002, Goldman
Sachs was one of five securities firms to be fined by
the SEC for failing to keep proper email records. It
was also one of the 10 firms involved in another case
filed by the SEC that deals with conflicts of interest
between the investment banking and analysis branches
of securities firms. Goldman Sachs and the other firms
agreed to pay tens of millions of dollars in fines to
the SEC. If you have lost money because of fraud committed
by Goldman Sachs, please contact
us today.
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Bear Stearns
Bear Stearns is a major investment banking and brokerage
firm. In the past several years, Bear Stearns has been
accused of fraud in several cases. One 1999 case accused
Bear Stearns of helping its client A.R. Baron defraud
investors. Bear Stearns agreed to a $35 million settlement
in that case. In another 1999 case, Bear Stearns and
several of its employees were forced to pay a total
of $2.5 million to the National Association of Securities
Dealers (NASD) when a Bear Stearns client was found
guilty of defrauding consumers in a pyramid scheme.
Finally, in 2002, a class action lawsuit against Bear
Stearns was sent to trial because the judge was unable
to make a summary judgment based on the available facts.
A jury will eventually have to decide whether Bear Stearns
has any liability for the fraudulent actions of one
of its clients, David Blech. If you have lost money
because of fraud committed by Bear Stearns, please contact
us today.
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UBS Warburg
UBS Warburg and its sister company, Paine Webber, Inc.,
are financial firms with the former providing research
and analysis for the latter. UBS Warburg is accused
of misrepresentation because the firm continued to
rate Enron stock as a "strong buy" up until
four days before it declared bankruptcy. Because Paine
Webber had encouraged many Enron employees to invest
their 401(k) contributions back into Enron, many of
these emloyee-investors lost everything with the fall
of Enron. UBS Warburg allegedly fired one of its brokers,
Chung Wu, for warning investors about Enron's decline.
If you have lost money because of misrepresentation
by UBS Warburg, please contact
us today.
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Tyco
Tyco International, Ltd. is a company whose diverse
range of products are sold worldwide. In 2002, three
former top Tyco executives were indicted on fraud charges.
Former CEO L. Dennis Kozlowski, former CFO Mark Schwartz,
and former legal counsel Mark Belnick allegedly issued
themselves low or no interest loans, which they then
forgave through an unauthorized bonus program. They
are accused of concealing their illegal actions by keeping
the transactions out of the accounting books and away
from the eyes of shareholders and board members. Tyco
has since replaced its CEO and most of its board in
an attempt to purge the company of fraud and restore
its reputation. If you have lost money on Tyco stocks
or because of the scandal, please contact
us today.
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WorldCom
In July 2002, major accounting errors that hid vast
amounts of debt preceded WorldCom's bankruptcy. The
telecommunications giant faced increasing problems up
to that point, but investors were unaware of the company's
impending demise because of the accounting gaffes and
intentional cover-ups. Some former top executives of
WorldCom have been accused of altering transaction and
account records to conceal company debt; several have
admitted wrongdoing thus far. If you have lost money
due to the WorldCom scandal, please contact
us today.
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Enron
Enron filed for bankruptcy in December 2001. The former
energy giant was undone by accounting fraud and off-the-balance-sheet
transactions. In the Enron case, many players were involved
in fraud at multiple levels. Investigations have implicated
several former high level executives and have brought
into question the roles of many others. Enron's accounting
firm, Arthur Anderson, LLP, has already been convicted
of obstruction of justice because the firm allegedly
destroyed documents pertinent to the Enron case. If
you have a case involving Enron, please contact
us today.
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Global Crossing
Global Crossing filed for bankruptcy in 2001. Founder
and CEO Gary Winnick resigned a year later amid allegations
of securities fraud. Winnick himself is suspected of
using insider information to sell his stocks for over
$120 million several months before the company's bankruptcy.
Although plans to reorganize the company have been made,
they do not include provisions for compensating investors.
Several lawsuits have already been filed against Global
Crossing. If you have lost money due to the Global Crossing
bankruptcy, please contact us
today.
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InfoSpace
InfoSpace is a telecommunications company specializing
in wireless services. The company and its former Chairman
and CEO Naveen Jain are facing securities fraud charges.
Jain allegedly hired new, qualified employees, offering
them stock options as part of their benefits package.
The catch was that they had to be employed by InfoSpace
for at least one year or they would lose their stock.
Jain allowed them to work for a few months, and then
fired them before the year was up. The firm has settled
with three of its former top employees, paying millions
of dollars to each. In addition to these charges, Jain
is accused of using inside information to sell over
$400 million in stock before the telecom industry bust.
If you have lost money due to the InfoSpace scandal,
please contact us today.
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Peregrine Systems
Peregrine Systems is a software company based in San
Diego. In May 2002, Peregrine Systems announced that
it had to restate its earnings -- the company actually
had more than $100 million less than it had originally
reported. Peregrine Systems fired its accounting firm,
Arthur Anderson, LLP, shortly before the accounting
irregularities were uncovered. Steve Gardner, former
Chairman and CEO, and Matt Gless, former CFO, resigned
their positions around the time of the announcement.
If you have lost money due to the Peregrine Systems
scandal, please contact us
today.
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iVillage
iVillage is an online network for women, addressing
issues from fitness to pregnancy to parenting. From
the summer of 1999 to the summer of 2000, iVillage stock
price fell drastically. Despite the hard times, Henry
Blodget of Merrill Lynch continued to rate iVillage
stock as a buy. It is thought that his positive assessment
of the deteriorating stock had more to do with Merrill
Lynch's interest in retaining its investment banking
relationship with iVillage than with the stock's actual
potential. If you lost money on iVillage stock, please
contact us today.
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Adelphia Communications Corp.
Adelphia is a cable communications company that appeared
to be on the fast track to success until alleged securities
fraud drove it to bankruptcy in June 2002. Adelphia
was run by members of the Rigas family and several other
top executives who have since been charged with securities
fraud among other criminal and civil offenses. Adelphia
is accused of reporting higher earnings and more subscribers
than the company actually had, failing to report debts
accurately, and hiding the personal purchases, loans,
and illegal deals made by the Rigases. If you have lost
money due to the Adelphia scandal, please contact
us today.
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