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Frequently Asked Investment Questions
About Subprime Investment Problems
- How did subprime investment problems develop?
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Between 1994 and 2006, there was a dramatic increase in amount of subprime related investments sold to investors. The amount of subprime mortgage issues shot up from $35 billion in 1994 to $625 billion in 2005.
- Are subprime mortgage backed securities (MBS) and collateral debt obligation (CDO) problems likely to get worse?
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Over recent months the business press has reported extensively on the nature and extent of problems attributable to the subprime mortgage market. These problems have had a swift and dramatic impact on many investments and losses already run into the billions of dollars.
The Role of Rating Agencies
- What Do The Ratings from the Rating Agencies Mean?
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The three largest and best-known ratings agencies are Moody's Corporation (Moody's); Standard & Poor's (S&P), a division of The McGraw-Hill Companies; and Fitch Ratings (Fitch). These three use a specific rating structure.
- What was the Role of the Rating Agencies; Why did They Miss the Mark?
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No analysis of the subprime debacle can be complete without addressing the culpability of the ratings agencies that routinely gave “investment grade” ratings to securities that were backed primarily by rights in pools of subprime mortgages.
Working with our Lawyers
- How do the law firms work with investors?
- First, by helping them understand their rights. Frequently, investors who have been wronged complain to the NASD, SEC, or their state securities division. Certainly, nothing is wrong with this, but frequently they are unable to help aggrieved investors recover losses. Unfortunately, most people don't understand that brokerage firms are required to arbitrate disputes through the securities arbitration process. This means that any investor who feels that they have been misled or unfairly treated can get an independent party to hear, investigate, and rule on their case. With an arbitration complaint, the broker involved is forced to take notice and respond in a timely manner. If nothing else, the arbitration proceeding puts an end to the delay tactics frequently used by brokerage firms.
- Does it matter when I made the investment?
- Yes. Filing your claim sooner increases your chances of a recovery because, information and witnesses are more available and their recollection is often better. If a case is not timely filed the broker gains certain legal defenses that could bar your claim. These defenses are commonly referred to as Statute of Limitations defenses and may be as short as one year. Filing a claim as soon as possible is very important. For more information about statutes of limitations.
- Does the arbitration process take long?
- It depends on the complexity of the case. Simple cases are generally decided in less than a year. Fortunately, a large number of investors' cases settle prior to a hearing, and that's good news for you.
- What fees are involved with the securities arbitration process?
- There are numerous ways our legal association can be retained, and that is arranged with the client in advance and in writing. Most clients prefer a contingency fee with no legal fees unless you recover losses. Whatever method is selected, you will have the opportunity to decide what is best for you. There is never a fee for the initial consultation.
- Is there a size limit to the case?
- Yes. We are open to assisting all investors. However, legal economics dictates that some claims are too small to pursue. For example, it would not make economic sense to spend $25,000 to pursue a $20,000 claim.
- Who actually works on my case?
- All cases are handled by an attorney, and in some cases, experts will also be used to help prove your case.
- How do I get started?
- Don't delay. The sooner we can start working on your case, the faster the potential recovery time. Contact us.
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