Bernard Madoff Ponzi Scheme

The fallout from Bernie Madoff’s alleged Ponzi scheme has left thousands of individual and institutional investors with significant losses and unanswered questions regarding their assets. Investors world-wide have revealed the exposure to Madoff’s firm is nearly $30 billion, and it is estimated that this figure could reach $50 billion. Among the biggest victims were wealthy individuals, charities, hedge funds, and banks in Europe, Latin America and Asia.

Zamansky & Associates is currently representing victims across the world who have lost investment funds either through directly investing with Bernard Madoff or through the so-called “feeder funds” and fund-of-funds. Reports have shown an alarming lack of due diligence on the part of the managers of these funds into Mr. Madoff and his investment scheme.

These funds may be held liable for investor losses as could other third-parties including clearing brokers, auditors, and others that may have aided or abetted Mr. Madoff’s stunning fraud.

Among the investments firms that could face liability are:

• Fairfield Greenwich Advisors
• Tremont Capital Management
• Banco Santander
• Bank Medici
• Ascot Partners
• Access International Advisors
• Fortis
• Union Bancaire
• Nataxis SA
• Royal Bank of Scotland Group PLC
• BNP Paribas
• BBVA
• Man Group PLC
• Reichmuth & Co.
• Nomura Holdings
• Maxam Capital Management
• EIM SA
• AXA SA
• UniCredit SpA
• Nordea Bank AB
• Hyposwiss
• Banque Benedict Hentsh & Co
• Bramdean Alternatives
• Harel Insurance Investments & Financial Services
• Societe Generele
• Kingate Global Fund, LTD
• Rye Investment Management (division of Tremont Group Holdings)

If you were invested with any of these organizations and/or have suffered losses stemming from the Bernard Madoff Ponzi Scheme, please contact Zamansky & Associates by calling 212-742-1414 or by emailing us here.

Zamansky & Associates will also be representing Madoff Ponzi scheme investors seeking monetary recoveries with the Securities Investor Protection Corporation, or SIPC. Investors with brokerage accounts may be protected when a firm fails. Brokerage customers may be able to recover as much as $500,000 for stolen securities and $100,000 for stolen cash.

Recovery of losses through SIPC due to the Madoff Ponzi scheme is likely to be a difficult process. Zamansky & Associates is representing investors with SIPC claims and is overseeing the process on their behalf.

Zamansky & Associates has extensive experience with Ponzi Schemes and can assist investors – big and small – and recover lost investments. Contact us for a free consultation. We ensure complete confidentiality.

Bank Stocks the Next Tech-Bubble?

by on July 29, 2008

It comes as no surprise that the subprime/credit crunch crisis has led to an increased level of securities class action filings. Research firm Cornerstone just released a report which shows the financial sector was the target of the most filings with 63 in the first half of 2008 alone. The research is an indication that many believe there are disclosure issues which led to inflated stock prices.

But another area of concern is that brokers made speculative plays in these stocks on behalf of their retail clients. Sensing a bottom, many brokers loaded up their clients with stocks like Citigroup, Merrill Lynch, and even Bear Stearns. Trying to catch a falling knife is not an appropriate recommendation for an investor with amoderate or conservative risk profile and we are seeing such complaints become more common.

Clearly, brokers fell asleep at the wheel on two levels: there was no reasonable basis for expecting the financial services industry was finished with its subprime write-downs unless they were duped nor was there any reasonable basis for many investors to buy financial stocks during the past year and a half.

During the tech-bubble, we filed many claims on behalf of investors whose brokers pushed them into bottom fishing for tech stocks that were rightly beaten down. This is another example of Wall Street’s history repeating itself.

Needless to say, any broker who recommended buying bank stocks in the past year and a half should be prepared to explain their rationale in an arbitration hearing.

Some Ex-Wall Street Employees Say They Got Shorted

Dow Jones Newswires : by on February 29, 2008

Alt-A Mortgage Class the Next Shoe to Drop?

by on February 29, 2008

For credit rating purposes, the class above subprime is known as “Alt-A“. It is likely Alt-A bonds is the next shoe to drop… that is if it hasn’t already.

Issuances of Alt-A mortgages has tumbled, according to a Dow Jones report, however, “the mortgages still made up 28 percent of all mortgages originated in the quarter, the same level as two years earlier.” The lending industry’s continued appetite for these loans is still alarmingly high considering Alt-A delinquencies are rising at a rapid pace:

After 18 months, Alt-A loans originated in 2006 had a delinquency rate of 4.71 percent, versus 1.97 percent for such loans from 2005 and 1.07 percent for 2004. The trend for 2007 loans is even worse than 2006, suggesting last year could be “the worse ever for the Alt-A market,” S&P said.

This is terrible news for hedge funds, fund-of-funds and individual investors that have billions invested in Alt-A bonds. In 2006 alone $400 billion Alt-A loans were originated and likely sold to investors.

The fall-out of a collapse in this market will likely mirror that of the subprime loan market. Amidst the subprime rubble, allegations of hidden risks and omissions have been commonplace as well as accusations that Wall Street unloaded toxic subprime debt on unsuspecting investors. We could see a similar legal landscape in the near future.

According to our sources, Alt-A investments were pitched in a comparable fashion as subprime. Brokers and managers told clients Alt-A investments were backed by secure assets and were steady gainers, unlike tech stocks of the late 90s. Alt-A securitized investments in reality are backed by loans requiring little documentation regarding salary and other assets that would determine a consumer’s credit worthiness. The phrasing is interesting: “Alt-A mortgages typically got to borrowers whose credit is deemed good enough to forgo proof of claimed assets or income.”

Analysts are also eyeing the Alt-A market suspiciously. In a Marketwatch story from earlier this month, Mark Adelson, head of structured finance research at Nomura Securities International, calls “Alt-B” products:

“The Alt-A market has absorbed and disguised a portion of the subprime space,” he said. “You can debate how to define these loans, but many have ended up being an Alt-A product with subprime deficiencies…”In the past few years, Alt-A loans were made to weaker and weaker borrowers and the sector expanded downward along credit spectrum,” he said. “In doing that, you draw up into the Alt-A space some of the problems that are affecting the subprime space.”

In other words, “Alt-A” isn’t simply the next subprime, it could be subprime.

Ponzi Scheme

New York Law Journal : by on January 29, 2008

Sub-Prime Crisis and the Ratings Agencies

by on January 29, 2008

Sub-Prime Crisis and the Ratings Agencies

Back in August, Fortune ran a story that took the ratings agencies to task for their role in the subprime mortgage crisis. A noted investor named Jim Chanos, the head of Kynikos Associates, acknowledged he had a short position in Moody’s stock: “If the rating agencies will downgrade only when we can all see the losses, then why do we need the rating agencies?”

If what I read in the Sunday Business Section is true about Attorney General Andrew Cuomo’s investigation and the participation of Clayton Holdings, a company based in Connecticut that vetted home loans for many investment banks, then Mr. Chanos is due for a windfall (he’s already at least more than doubled his money). Apparently Clayton Holdings has provided extensive documentation to the attorney general’s office in exchange for immunity that shows investment banks allegedly knew many of the loans it was packaging for unwitting investors were more risky than was disclosed. Early on in the subprime crisis when I filed the first hedge fund investor arbitration claims against Bear Stearns, we made the similar allegations regarding the firm’s failure to disclose risks.

More shocking is the allegation that the investment banks never turned Clayton’s due diligence reports over to ratings agencies. Instead, according to the article, “in these disclosures, underwriters typically said that loans that did not meet even lowered lending standards, called exceptions, accounted for a “significant” or “substantial” portion of the loans contained in the securities, but they offered little hard, statistical information that Clayton promised prosecutors it would provide as evidence.”

Wall Street’s selective disclosure to the ratings agencies is only half the story. My question is, should the ratings agencies even need such information? I thought the ratings agencies did their own due diligence. If this story is accurate, what value-added are the ratings agencies providing if they aren’t able to perform their own analysis?

Later on in The New York Times story, Raymond W. McDaniel Jr., the CEO of Moody’s says of the investment bank’s reports: “Both the completeness and veracity was deteriorating.” My question to Mr. McDaniel is how could Moody’s possibly award ratings to securities based on incomplete information?

Ordinarily we would just let market forces deal with such failure. However firms like Moody’s, Standard & Poors, and Fitch are granted special competitive advantages because they are part of a select group of eight companies designated as Nationally Recognized Statistical Rating Organization (or “NRSRO”). Based on their record, the government should not be protecting them. If there was more competition the ratings might be more predictive and less expensive. Maybe if investors had gotten their hands on Clayton’s reports they would have never invested in the first place.

The fact is ratings agencies have become lagging indicators. Mr. Chanos knows this better than anyone. He was an early short-seller of Enron after investigating the firm and finding accounting irregularities. It wasn’t until mid-October of 2001 that three credit-rating agencies started to warn investors of Enron’s deteriorating condition, and not until Nov. 28, just days before Enron filed for Chapter 11 bankruptcy protection, that they lowered their debt ratings below “investment grade.”

If the only service ratings agencies provide is assigning some combination of the first four letters in the alphabet to a security, then maybe they can be replaced by a smart preschooler.