Archive for August, 2010

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.