Securities Lawyer Blog | Victim of Fraud?

Archive for June 2011

Jun/11

30

Raymond James Financial Inc. Agrees to Settlement with States, SEC over Auction-Rate Securities; to Pay $1.7M Fine

Comments off · Posted by Securities Lawyer in FINRA

In a June 29, 2011, article by Bruce Kelly for InvestmentNews.com he writes that as part of a settlement with eight states and the Securities and Exchange Commission, Raymond James Financial Inc. will buy back $300 million in auction-rate securities from clients and pay a fine of $1.7 million. The states in charge of the settlement are Florida and Texas. Other states involved were Indiana, Missouri, New York, North Carolina, Pennsylvania and South Carolina.

It was reported that Raymond James has 30 days to extend an offer to repurchase the securities, and the offer must be open for 75 days after that initial bid.

Raymond James’ registered representatives and financial advisers told their customers that ARS were “cash equivalents” and “highly liquid” short-term investments that sported a higher yield than money market accounts, according to the consent order for the dispute.

Kelly goes on to say that Raymond James has been dealing with the ARS mess since the winter of 2008, when the market froze for billions of dollars of the securities, leaving institutional and retail clients locked into large cash positions. In August 2008, Raymond James said it was subject to investigations by regulators regarding the ARS sold be its registered reps to clients, who owned about $1.3 billion in paper at that time. Since then, the firm has been unwinding its position, but the issue of buying back ARS has been a thorn in the side of the brokerage for some time. In March 2009, the firm’s chairman and former chief executive, Tom James, said it was possible that Raymond James could sue an issuer of the securities, Pacific Investment Management Co. LLC, if it failed to buy back the securities from clients.

“These [issuing firms] are going to refinance; otherwise, as I’ve told them, ‘We’re going to sue you guys,’” Mr. James said at the time. “‘You don’t understand. We distributed for you guys, and you haven’t lived up to your obligations.’”

It was reported in the InvestmentNews.com article that Raymond James, which neither admitted to or denied the allegations, noted that it was fined by the states, not the SEC.

“Raymond James leadership worked diligently to facilitate redemptions by the issuers of ARS,” the firm said in a statement. “Client holdings at the firm were reduced from approximately $2.1 billion in February 2008 to $280 million this month.”

“I am pleased we are able to resolve this issue and provide liquidity to clients who continue to hold ARS in their portfolios,” said CEO Paul Reilly.

The $300 million buyback seems a large sum for Raymond James to pay, considering in May the B-D noted that “any action by a regulatory authority to compel us to repurchase the outstanding ARS held by our clients would likely be vigorously contested by us.”

What’s more, rival Morgan Keegan & Co. Inc. yesterday won a major court victory stemming from its sales of ARS. A federal judge in Atlanta on Tuesday rejected SEC claims that the brokerage, a unit of Regions Financial Corp., misled investors about $2.2 billion in ARS. In announcing the summary judgment, U.S. District Court Judge William S. Duffey Jr. said “failure to predict the market does not amount to securities fraud.”

The above information was obtained from InvestmentNews.com.

Attorney Lars Soreide, of Soreide Law Group, PLLC, feels this is good news for many of his clients who have pending FINRA arbitrations against Raymond James Financial. If you or a loved one have purchased auction rate securities from Raymond James call Soreide Law Group, PLLC and speak to a Securities Arbitration Lawyer for a free consultation on how to recover your losses.  To speak with an attorney, call 888-760-6552, or visit www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA  the Financial Industry Regulatory Authority.

· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ·

Jun/11

30

RAYMOND JAMES MAKES OFFER TO PURCHASE AUCTION RATE SECURITIES

Comments off · Posted by Securities Lawyer in FINRA

The following information was posted on Raymond James’ website:

Raymond James Offer to purchase eligible auction rate securities

After providing ready liquidity to investors for over 23 years, in mid-February 2008 the Auction Rate Securities (ARS) market reacted to the unprecedented contractions in the credit markets, resulting in widespread auction failures. While some issuers have redeemed significant portions of their outstanding ARS, the market for ARS remains mostly illiquid.

To address this illiquidity for clients, Raymond James is offering to purchase eligible ARS that clients purchased through us.

Raymond James’ offer to purchase outstanding ARS comes after a settlement with the Securities and Exchange Commission and the North American Securities Administrators Association.

Purchase request process

Qualified investors will receive information with terms of and instructions for redemption by mail within 30 days of the public announcement (June 29, 2011). Clients who believe they are eligible and do not receive instructions should contact their financial advisor or Raymond James Client Services at 800-647-7378.

For ARS to be eligible for the purchase offer, the following must be true:

  • The securities must have been purchased from Raymond James on or before February 13, 2008.
  • Clients must have held those securities on February 13, 2008.
  • Clients must currently own the securities or have sold them below par value.
  • The securities must have failed at auction at least once since February 13, 2008.
  • The securities must not have been called or redeemed, or be subject to calls or redemptions as of June 29, 2011.

In accordance with the settlement, Raymond James will continue to consider client inquiries until 12 a.m. September 30, 2011.

Pricing and fees

If clients accept the offer, Raymond James will purchase eligible ARS at par value, which is the face value of the security. They will also receive payment of interest or dividends, if any, at the rate established at the last reset date and will not incur any fees or commissions for transactions related to the purchase of eligible securities.

Other claims

Participating in this offer will not result in a waiver of any claims you may have against Raymond James. Important information on arbitration procedures that have been established to resolve any claims are available.

The above information was posted on Raymond James’ website.

Attorney Lars Soreide, of Soreide Law Group, PLLC, wants you to know that if you or a loved one DO NOT meet this criteria, call a Securities Arbitration Lawyer for a free consultation on how to recover your losses.  To speak with an attorney, call 888-760-6552, or visit www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA  the Financial Industry Regulatory Authority.

· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ·

Jun/11

29

FINRA’S THREE C’S RULE: CONCENTRATION, COST, & COMPLEXITY

Comments off · Posted by Securities Lawyer in FINRA

In a June 28, 2011, article written by Darla Mercado for InvestmentNews.com, she writes that Finra’s variable annuity suitability rule should be old news to broker-dealers, but firms that want to avoid an arbitration land mine ought to review their procedures.

This warning came from Andrew A. Favret, associate vice president and regional chief counsel at the Financial Industry Regulatory Authority Inc. Mr. Favret, along with Robert H. Watts, a Finra arbitrator and former compliance officer for John Hancock Financial Services Inc., held a boot camp on annuities at the Insured Retirement Institute’s Government, Legal & Regulatory Conference in Washington June, 27th. Both shared tales of broker-dealers’ missteps on following VA suitability rules and highlighted the red flags that likely would bring a firm under Finra’s suspicion.

“It’s funny how often firms have good procedures [for sales practices] and the reps will say they’ve never seen them,” Mr. Favret said. “Firms need to be able to show they have good procedures and that they’re getting the word out to their reps.”

Occasionally, Ms. Mercado writes, broker-dealers have been caught with outdated supervisory procedures and standards of conduct, and have been unable to give Finra an adequate explanation as to how the procedures were drafted or who exactly is responsible for ensuring that reps follow the rules. In some cases, the person responsible for providing supervisory approval at a broker-dealer had left the firm years ago, Mr. Favret said.

“Whenever Finra finds something, they look at who’s the nearest principal,” said Mr. Watts. “What did they do? What should they have done?”

The common pitfalls for firms include failure to have written supervisory procedures, failure to have appropriate policies and steps to assess suitability, and failure to document complete suitability information.

Mr. Favret also highlighted “the three C’s” that help determine whether Finra will pursue a case: concentration and how a firm justifies placing upward of 50% of a client’s net worth into a VA; costs and whether the rep took that into account when either selling or transferring a VA; and complexity — whether the customer knows what he or she is buying.

Finally, Finra began an initiative this year where it combed through data from five or six major VA issuers for data on concentration levels and the sales of VA riders, Mr. Favret said. It’s a way for Finra to highlight problem areas throughout the industry without having to rely solely on complaints.

“We had relied on customer complaints, which isn’t a very efficient way to get at problems in the industry; you’re looking for a needle in the haystack,” Mr. Favret said. Instead, data mining “is a big deal in terms of how we look at this going forward.”

Fort Lauderdale, Florida, Securities Attorney, Lars Soreide, of Soreide Law, PLLC, has represented clients nationwide. If you or a family member feel you have become a victim of stock/securities loss, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses.  To speak with an attorney, call 888-760-6552, or visit www.securitieslawyer.com

Soreide Law Group, PLLC., representing investors nationwide before FINRA  the Financial Industry Regulatory Authority.

· · · · · · · · · · · · · · · · · · · · · · · · · ·

Find it!

Theme Design by devolux.nh2.me
To top