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Representing Individual, High Net Worth & Institutional Investors

Office in Indiana


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Institutional Investors

Increasingly, institutional and corporate investors are taking action to recoup financial losses where their investment advisors were negligent or simply failed to follow their investment directives or guidelines. Traditionally, institutional and corporate investors have relied on class action recoveries as their solution to these losses. As evidenced by the growing number of cases and recoveries by sophisticated investors simply relying on a class action recovery may no longer be adequate.

As a general rule, in our experience when an investor has sustained significant losses, an individual action should result in a more significant recovery. In theory, class action litigation is designed to allow groups, with small damages, to proceed in an economically feasible manner. Class members participation is generally passive and their recovery is often a prorate share of the groups recovery.

In the past year, many investment firms, including J.P. Morgan, Bank of America/Merrill Lynch, Morgan Stanley, UBS Financial Services, Lehman Brothers Holdings, Credit Suisse, Bear Stearns and Citigroup/Smith Barney have been the subject of arbitration claims and lawsuits filed by institutional investors over sales of auction rate securities, hedge funds, and other structured financial and derivative products. In claims involving auction rate securities, one of the most common allegations is that brokerage firm or advisor misrepresented the investments as liquid, short-term investments without disclosing their inherent risks.

Although every case varies, institutional and corporate claims often entail breaches of duties owed them by their financial advisors, negligence and violations of the State and Federal securities laws.

On Feb. 11, 2009, a New York FINRA arbitration panel (Case No.08-00512) ordered Credit Suisse to pay STMicroelectronics $406 million in an action arising out of the sale of auction rate securities. STMicroelectronics' actions to recoup these investment losses served as compelling testament as to why institutional and corporate investors should evaluate filing individual claims to recoup investment losses. STMicroelectronics initially filed a FINRA arbitration against Credit Suisse on Feb. 22, 2008, alleging violations of Section 10(b)(5) of the Securities Exchange Act of 1934 and SEC Rule 10 b(5), common law fraud, intentional misrepresentation, fraudulent concealment, breach of contract, breach of fiduciary duty, breach of duty of good faith and fair dealing, unjust enrichment, unsuitability, and unauthorized transactions.

Our Institutional Investor Experience

The attorneys at Maddox Hargett & Caruso represent corporate and institutional investors from across the globe in issues involving State and Federal securities laws, financial fraud, negligence and breach of contract.

In many instances, these claims originate from a failure to disclose significant conflicts of interests. Undisclosed conflicts of interests violate State and Federal securities laws and can often escalate to the level of fraud. Therefore, it is clearly a good business decision to recover investment losses related to stockbroker misconduct and pursue the negligent brokerage firm.

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