Securities America Fraud Victims Settle for Little More Than 30 Cents on the Dollar

Competing claims by customers of Securities America who lost $400 million in allegedly fraudulent securities in Medical Capital and Provident Royalties have finally been resolved. As followed in this blog, the proponents of a class action lawsuit against Securities America and its parent, Ameriprise Financial, sought to force investors who filed their own arbitration proceedings to abandon their own claims and compel them to participate in the class action settlement. The investors in arbitration successful argued for their right to pursue their own claims, and the judge overseeing the class action rejected the onerous settlement agreement.

This week, Securities America agreed to settle the class action claim and the individual arbitration proceedings for a total of $150 million. While that is certainly a significant settlement amount, it nonetheless still means that investors, who will recover slightly more than 30% of their losses, will have to bear the brunt of the MedCap and Provident losses. Given the fact that an investor won an award of $1.2 million against Securities America earlier this year -- an award that included punitive damages to punish the firm for its conduct -- it seems that Securities America secured a global settlement on favorable terms.

Investors who believe they have been defrauded by an investment advisor, or who believes they have suffered investment losses due to broker misconduct, should contact an investment fraud lawyer to investigate their right to recover damages.

Banco Santander Pays $9 Million to Settle Claims It Improper Sold Reverse Convertibles To Elderly Investors

Hardly a week goes by without a report that yet another financial institution has settled claims of selling improper investments to groups of investors, often including senior citizens. This week, the largest bank in Spain, Banco Santander, is reported to have paid $7 million directly to investors and $2 million to the Financial Industry Regulatory Authority ("FINRA") to settle claims that it improper sold high-risk reverse convertibles to elderly, retired investors.

Reverse convertibles are risky, high yield, short-term bonds that automatically convert to the stock of an underlying company's shares if the company's share price rapidly declines. In 2010, banks sold nearly $7 billion worth of these securities to U.S. investors.

According to the allegations, Banco Santander brokers not only sold reverse convertibles to conservative investors, they sometimes recommended that customers use margin to purchase the securities, which had the effect of increasing the risk of significant losses.  Banco Santander is the most recent in a string of fines against banks for improperly selling reverse convertibles. Last year, a subsidiary of Royal Bank of Canada and a subsidiary of Ameriprise Financial were fined a total of $890,000 for similar practices.

Investors who have reverse convertible securities in their portfolios may want to consult with investment fraud lawyers to investigate whether they have a claim to recoup losses incurred by these investments.