Raymond James has once again been ordered to make good on clients’ investments in illiquid auction-rate securities. It is the third time this summer that arbitrators with the Financial Industry Regulatory Authority (FINRA) have ruled against the broker/dealer over claims involving auction-rate securities.

As reported Aug. 27 by Investment News, the most recent arbitration claim, dated Aug. 16, awards claimants $925,000. Since July 1, arbitrators have ordered Raymond James & Associates, the company’s employee brokerage firm, and Raymond James Financial Services Inc., its independent broker/dealer, to buy back $3.5 million in auction-rate securities from clients.

When the market for auction-rate securities crashed in February 2008, Raymond James Financial’s clients held $1.9 billion in auction-rate debt. Since then, the amount has been reduced to $600 million.

The latest case against Raymond James concerns investors Rex and Sherese Glendenning, both of whom alleged that Raymond James recommended, and then invested their money in, auction-rate securities that consisted of sewer revenue bonds. The investors also claimed that the actions of their Raymond James broker created the “false impression that there were deep pools of liquidity in the auction market.”

Our affiliation of lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.

The demise of the auction-rate securities market created financial havoc for retail and institutional investors alike. People lost fortunes and companies went bankrupt. One such company was LandAmerica 1031 Exchange Services and its parent company, LandAmerica Financial Group. Now, two-plus years later, the trustee for LandAmerica says others also bear blame for the exchange company’s downfall.

Earlier this summer, attorneys for LandAmerica’s liquidating trustee issued subpoenas to both Sun Trust Banks and Citigroup for information related to auction-rate securities sales. The story was initially reported July 17 by the Richmond Times-Dispatch. According to the article, more than 1 million documents have been accumulated in the matter so far.

In February 2008, when the auction-rate securities market came to a standstill, LandAmerica had more than $200 million of client funds invested in auction-rate securities. The issue now is whether the exchange company’s brokers - i.e. SunTrust Robinson Humphrey and Citigroup’s Smith Barney unit - falsely represented the liquidity of the investments to investors.

Countless clients who invested with LandAmerica and the supposedly safe auction-rate securities lost everything when LandAmerica closed shop. Case in point: Jean Ann Simmons. As reported back in March by McClatchy Newspapers, the Simmons family entrusted LandAmerica with more than a quarter of a million dollars of their money. A day before Thanksgiving 2008, Simmons arrived at her Texas home to find a one-page letter notifying her that LandAmerica was going out of business.

According to the article, the Simmonses’ money, which came from selling a farm that had been in the family for decades, was gone.

“Like the game of musical chairs, the music stopped and the current 400-plus exchangers were left standing,” said one lawsuit against LandAmerica officials and SunTrust.

Our affiliation of lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.

A Financial Industry Regulatory Authority (FINRA) arbitration panel has ordered Raymond James Financial to buy back $2.5 million in auction-rate securities (ARS) from investor Greg Merdinger.

According to a July 27 Wall Street Journal article, Merdinger filed a claim in June 2009 against Raymond James & Associates and Raymond James Financial Services on allegations of breach of fiduciary duty and contract. In the addition to the $2.5 million ARS buyback, FINRA awarded Merdinger $86,000, plus 5% interest on the $2.5 million until Raymond James buys back the securities.

FINRA’s ruling stated that Merdinger initially wanted to invest in money-market funds, but changed his mind based on recommendations from Raymond James. Instead, Raymond James advised him to invest in auction-rate securities, which it said were safer. In making the recommendation, Raymond James concealed the risks associated with the products, FINRA said.

When the market for auction-rate securities collapsed in February 2008, Raymond James continued to advise Merdinger to buy auction-rate securities. As reported in the Wall Street Journal article, copies of emails showed that financial managers at Raymond James realized there were problems in the auction-rate market long before its ultimate collapse.

Our affiliation of lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.

For the past year, ASTA/MAT investors have been biding time as they wait for their arbitration claims against Citigroup to be heard. The focus of investors’ legal claims centers on a group of six hedge funds sold under the brand names of ASTA and MAT. Investors say Citigroup misrepresented the funds as safe, relatively low-risk investments.

Instead, the funds produced staggering financial losses for investors because of a highly risky investing strategy known as municipal bond arbitrage. When the credit and bond markets began to become unglued in the summer of 2007, ASTA/MAT plummeted in value.

As reported in a July 27 Wall Street Journal article, one series of Citigroup funds lost between 70% and 97% of their asset value by the end of February 2008. The funds were later given life support when Citigroup stepped in with more than $650 million of its own capital.

Recently, however, some ASTA/MAT investors and investors in similar funds have begun to see a light at the end of the tunnel. This month, a Financial Industry Regulatory Authority (FINRA) arbitration panel awarded a California family $2.1 million - the full amount of their losses on a $3 million investment in a municipal bond fund investment sponsored by First Republic Securities Co. (formerly owned by Merrill Lynch & Co.)

In May and June, three groups of investors in funds sold by Citigroup - the largest sponsor of such funds - won a total of $2.1 million in separate arbitration proceedings.

Our affiliation of lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.

Investors with losses in a group of ill-fated Morgan Keegan bonds emerged victorious recently in five out of six arbitration claims presented before the Financial Industry Regulatory Authority (FINRA). The decisions, which cover the months of May and June 2010, are related to a series of proprietary Morgan Keegan bond funds that made investments in speculative mortgage loans and toxic collateralized debt obligations (CDOs).

According to investors, Morgan Keegan marketed and represented the funds in question as safe investments that were suitable for low-risk investors. When the housing market crashed in 2007, however, the funds plummeted in value by as much as 80%. Investors meanwhile experienced enormous financial losses.

A slew of lawsuits and arbitration claims have been filed against Morgan Keegan, as well as against several of the company’s top executives. In the past year, evidence has continued to come forth to back up investors’ claims that the Memphis-based brokerage deliberately misled clients when it marketed and sold the bond funds.

Further affirmation came in April 2010 when the Securities and Exchange Commission, state regulators and FINRA charged Morgan Keegan and two employees - James Kelsoe and Joe Weller - with fraud for inflating the value of the risky securities held by the bond funds.

Our affiliation of lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.

Changes are coming to BrokerCheck, the online tool managed by the Financial Industry Regulatory Authority (FINRA) that documents investor complaints and other information about stockbrokers, financial representatives and brokerage firms.

Among the changes planned: increasing the number of customer complaints reported publicly; posting certain information about brokers on a permanent basis; and extending the public disclosure period from two years to 10 years for all brokers who leave the industry.

“The greater amount of information that is available to the investing public will only provide the opportunity for investors to be better informed as to the investment professionals they are entrusting their assets to,” said Steven Caruso of Maddox Hargett & Caruso, P.C., in a July 14 phone interview with On Wall Street.

As part of the changes, FINRA also will formalize a dispute process for current or former brokers to dispute the accuracy of, or update, factual information disclosed through BrokerCheck.

Our affiliation of lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.

The Financial Industry Regulatory Authority (FINRA) nearly doubled its fines and disciplinary actions in 2009 against brokerages and financial advisors. As reported in FINRA’s recently released report, 2009 in Review, FINRA fined firms and individuals approximately $50 million in 2009, almost twice as much as in 2008.

In addition, FINRA resolved more disciplinary actions in 2009 (1,090) versus 2008 (1,007), but fewer than what were resolved in previous years - 1,344 in 2005; 1,147 in 2006; and 1,107 in 2007.

The top enforcement issues in 2009 concerned mutual funds, which produced fines totaling about $12 million. More than one-half of the mutual fund cases included allegations involving suitability issues.

Suitability cases also ranked high in FINRA’s report, with total fines reaching $11.9 million. Variable investment cases generated approximately $6.45 million in fines and/or actions.

Another finding in FINRA’s report concerns fines of $1 million or more. In 2009, FINRA imposed 10 such fines versus three in 2008.

Our affiliation of lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.

Morgan Keegan & Co. has lost an attempt to vacate a $1.46 million arbitration award involving former NBA star Horace Grant. On June 25, Judge S. James Otera denied the Memphis-based broker’s claims that arbitrators were biased when they initially ruled in favor of Grant.

The award to Grant, which included $1.45 million in compensatory damages and $10,000 in costs, was announced in September by a Los Angeles arbitration panel of the Financial Industry Regulatory Authority (FINRA).

Grant is among hundreds of investors who have filed arbitration claims against Morgan Keegan and six proprietary bond funds that were heavily invested in collateralized debt obligations (CDOs) and other mortgage-related securities. The funds declined in value by as much as 95% following the housing bubble burst.

According to many investors, Morgan Keegan marketed the funds as conservative investments appropriate for retirees looking to protect their principal.

In trying to have Grant’s award dismissed, Morgan Keenan said that one member of the arbitration panel - attorney Jonathon Schwartz - failed to reveal his background as an expert in recovering losses from collateralized debt obligations. The judge in the case, however, disagreed.

Our affiliation of lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.

Morgan Keegan is back in the news - this time over an arbitration case with a former employee. On June 30, the Wall Street Journal reported that a Financial Industry Regulatory Authority (FINRA) arbitration panel ordered a former Morgan Keegan broker to pay back some of his signing bonus to Morgan Keegan. In an unusual move, however, FINRA also demanded that Morgan Keegan compensate the broker.

According to the article, Paul Kotos was ordered to pay Morgan Keegan about $350,000, plus the firm’s attorney’s fees, from a signing bonus he received when he joined the Memphis-based brokerage two years ago. In Kotos’ counterclaim, the FINRA arbitration panel ordered Morgan Keegan to pay him $200,000.

According to Kotos, Morgan Keegan defamed him with a statement on his Central Registration Depository, or CRD, Form U5. A U5 provides information on the reasons for a broker leaving a firm.

In making the award, FINRA stated that “the procedure deployed by [Morgan Keegan] in the termination of [Kotos] fell significantly short of industry standards.”

Our affiliation of lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.

Investment firm Morgan Keegan must pay more than $200,000 to an investor after a state court denied a request by the broker to overturn a decision by a Financial Industry Regulatory Authority (FINRA) arbitration panel.

Judge Nicole Gordon Still affirmed a $220,000 award in favor of United Prison Ministries International and its claim against Morgan Keegan over a group of bond funds that suffered massive losses in 2007 and 2008.

Collectively, investors have lost $2 billion in six of the Morgan Keegan funds in question. The funds include Regions Morgan Keegan Select High Income, RMK High Income Fund, RMK Strategic Income Fund, Regions Morgan Keegan Select Intermediate Bond Fund, RMK Multi-Sector High Income and RMK Advantage Income Fund.

As reported June 10 by the Wall Street Journal, Morgan Keegan, a unit of Birmingham-based Regions Financial Corp. (RF), filed an appeal to overturn the initial award to United Prison Ministries in June 2009. At the time, the brokerage argued that the panel’s chairwoman, who previously sat on another FINRA arbitration panel that ruled against Morgan Keegan, should have been recused, according to court documents.

Judge Nicole Gordon Still, however, disagreed.

“The mere fact that she has served on arbitration panels of Morgan Keegan, and has ruled against Morgan Keegan in the past, is not enough to establish bias or prejudice,” the judge wrote in an opinion.