Category: Uncategorized

CVB Securities Class Action Lawsuit Revived

The Ninth Circuit has revived a proposed securities class action accusing CVB Financial Corporation, the holding company for Citizens Business Bank, of issuing false statements about its exposure to underperforming loans. According to the recent ruling, an announcement of a government investigation into a company and the disclosure of an alleged misrepresentation can be used to demonstrate why investors lost money.

The court opinion tracks closely to a Fifth Circuit holding, in which the disclosure of a Securities and Exchange Commission (SEC) investigation related to an alleged misrepresentation, taken with a subsequent revelation of that statement’s inaccuracy, can form the basis for a theory of loss causation. In that case, Public Employees’ Retirement System of Mississippi v. Amedisys, Inc., the court ruled that announcements of government investigations were sufficient to establish loss causation when “viewed together with the totality of the other alleged partial disclosures.”

Shareholders initially sued CVB over statements made in 2009 and in its 2010 SEC filings about having “no serious doubts” about certain borrower’s abilities to repay CVB loans.

That same year, the SEC requested information on CVB’s loan underwriting process, and after disclosing the probe, shares fell by 22 percent – a total of $245 million in market capitalization. Around this time CVB wrote down $34 million in loans to the Garrett Group, a commercial real estate company. A further $48 million in loans to Garrett were listed as nonperforming.

The case has been remanded for further proceedings.

Call a Los Angeles Investment Fraud Attorney Today

If you are a shareholder with CVB or Citizens Business Bank, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles investment fraud attorney for a consultation today.

Gruber Systems Inc. and CEO John Hoskinson to pay $1.1M

Gruber Systems Inc. has agreed to pay $1.1 million to its employee stock ownership plan to settle a suit brought by the U.S. Department of Labor after it was alleged that the plan purchased company stock for more than its fair market value. Gruber makes equipment used to manufacture bathtub and counter molds for residential construction.

The Valencia-based company was accused of steering money into stock purchases to fund the financially strapped company, instead of funding the retirement accounts of the company’s retirees.

The consent judgment also bars CEO and co-defendant, John Hoskinson, from serving as a fiduciary or service provider to any ERISA-covered employee benefit plan. Gruber and Hoskinson also agreed to pay $220,000 in civil penalties.

The company had been losing money on an investment in China and faced further revenue problems with a declining housing market. Because of their situation, the company and Hoskinson transferred more than $2 million from an employee stock plan to the company in exchange for company stock that had been assessed at values much higher than its fair market value. The plan participants lost money on this investment, and the Department of Labor brought suit in May 2015.

Call a Los Angeles Stock Fraud Attorney Today

If you were employed at Gruber Systems Inc. and lost the money in your retirement account, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles stock fraud attorney for a consultation today.

If you have heard or seen (or invested in) a pitch for your money to help launch a project, you have been solicited by what is known as “crowdfunding.” Crowdfunding has grown as a method to raise start-up or seed money for a business from a wide number of investors at relatively small investment amounts from each investor.

This type of fundraising has become increasingly common as of late, and the Securities and Exchange Commission (SEC) has voiced concerns about proper regulation of this new investment platform. Last week, the SEC and FINRA moved one step closer to full launch, inviting online funding portals to apply for registration.

The rules will not take place until May 16, but crowdfunding portals can get the ball rolling by becoming FINRA members and registering with the SEC. Proponents of the new system argue that crowdfunding portals have strong incentives to monitor their programs for fraud and to protect the legitimacy of the system.

Before a portal can be cleared to operate, it will have to submit information about its company and business plans to both the SEC and FINRA. The SEC currently requires that funding portals become members of a national securities association registered under federal law – and only FINRA meets this qualification.

The application process is similar to the procedure for broker-dealers, although portals not seeking to operate as full-fledged broker-dealers will face fewer requirements.

Call a Los Angeles Securities Fraud Attorney Today

Crowdfunding is in its early stages but will continue to expand. If you experience investment losses through a crowdfunding portal, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles securities fraud attorney for a consultation today.

Department of Labor Proposed Rules

The U.S. Department of Labor has proposed a set of contentious rules aimed at expanding the fiduciary standard for retirement advisers. The rules have been sent to the White House for approval, following protests from both lawmakers and securities industry groups.

The Office of Management and Budget has confirmed receipt of the proposed rules, which have faced extreme opposition from Congress and industry groups that want to wait until the SEC revises its fiduciary standard.

The proposal would expand the rule already in place for certain investment advisers under the Employee Retirement Income Security Act (ERISA) to cover retirement advisers as well. The rule would require retirement advisers to put their clients’ interest before their own. The rule would close an exemption that currently allows advisers to steer clients into investments as long as the investment are “suitable,” even if the investments carry with them significant fees and commissions and may not necessarily be the best option for investors.

In short, the current suitability standard affords less protection to investors than the proposed fiduciary standard would provide. Given that fact, one has to question why the securities industry would not want investors to receive more protections from unscrupulous brokers. Of course, the obvious answer is that brokers and brokerage firms can make more money when they are not required to place investors’ interests ahead of their own.

The Securities Industry and Financial Markets Association is one of the groups who oppose the proposed rule, claiming that it could hurt those saving for retirement by increasing costs and providing reduced access to advice. We have seen any objective evidence that supports this claim.

The House of Representatives passed a bill in October, the Retail Investor Protection Act, requiring the Department of Labor to wait for the SEC to pass its own rule first. The White House has threatened to veto the bill, which is currently in committee with the Senate.

Under the provisions of the Dodd-Frank Act, the SEC has the authorization to develop a uniform definition of fiduciary duty that would apply to both broker-dealers and investment advisers, of which the definition for broker-dealers is currently a more relaxed one.

Call a Los Angeles Investment Fraud Attorney Today

At the moment, the rule is still just a proposal, but if it becomes law your retirement adviser’s duties may change. Contact an experienced Los Angeles investment attorney today for a consultation to discuss your rights.

California Attorney General Kamala Harris is looking into whether Exxon Mobil Corp. lied to the public and its shareholders about the risk to its business from climate change, and whether those misrepresentations and omissions amount to securities fraud and environmental law violations.

Central to the investigation is what Exxon Mobil knew about global warming and what the company told its investors. According to internal company documents, Exxon Mobil factored climate research into its business practices and planning but publicly argued that the science was inexact.

One state representative from Torrance, Ted Lieu, has called on federal authorities including the Securities and Exchange Commission (SEC) to investigate the company for securities fraud and other violations, including racketeering, consumer protection, shareholder protection, and more.

Some experts say that SEC rules require companies to disclose the risks of climate change to their business operations but that almost no action gets taken to enforce such rules. Exxon Mobil already has received a subpoena for documents dating as far back as 1977 from Eric Schneiderman, New York’s attorney general.

Call a Los Angeles Securities Fraud Attorney Today

Exxon Mobil may be facing a series of charges for securities fraud and other violations. If you invested in Exxon Mobil stock, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles securities fraud attorney today for a consultation today.

A California federal judge granted U.S. Aerospace Inc. shareholders a victory in their litigation surrounding a boardroom takeover, agreeing with a magistrate judge’s ruling that the company’s advisers could not distance themselves from the actions taken by their attorney, Mark Vega.

According to the judge’s findings, the defendant could not distance themselves from the actions taken by their attorney, which include employing a strategy to delay discovery in the case by filing as many dispositive motions as possible. Because the defendants, who include USAE senior adviser Charles Arnold, chose Vega to represent them, they cannot avoid the consequences of his actions.

The court also found that the defendants were aware of their attorney’s misconduct even before the plaintiffs, who are comprised of various noteholders, filed a motion for sanctions in this case.

The plaintiffs sued the USAE, Arnold, and others in 2011, accusing the officers of the company with conspiring to artificially inflate the company’s stock price through several fraudulent offerings and bogus defense contract bids. That same year, named plaintiff David Defrees brought a shareholder derivative suit on behalf of public investors bringing the same allegations.

Call a Los Angeles Shareholder Fraud Attorney Today

If you invested with USAE, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles shareholder fraud attorney today for a consultation today.

Claims of Insider Trading and Fraud

A Bank of Internet shareholder has sued the bank’s parent company in California federal court, alleging that the bank’s directors made millions of dollars from insider trading and artificially inflated the company’s stock price, in violation of federal banking regulations.

The lawsuit claims that 12 directors of the San Diego-based bank participated in and covered up violations of banking and securities laws and secrecy laws and also fired an internal auditor for reporting the violations to federal regulators.

According to the complaint, the scheme was intended to make the company appear more profitable and attractive to investors, while the directors sold millions of dollars’ worth of shares at artificially inflated prices based on inside material information.

In February, Bank of Internet’s internal auditor Matt Erhart notified the SEC that the company allegedly lied in response to an SEC subpoena and hid information about suspicious loans. The bank’s internal practices also were questioned, including making loans to foreign nationals and keeping hundreds of deposit accounts without tax identification numbers. Erhart was fired last June and has filed suit against his former employers.

Other counts in the complaint against the bank’s directors allege that they breached their fiduciary duties to stockholders, abused internal controls, committed gross mismanagement, and unjust enrichment.

The Bank of Internet and several of its executives are defendants in a separate action brought by investors in California federal court.

Call a Los Angeles Shareholder Fraud Attorney Today

If you are a shareholder or investor with Bank of Internet, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles shareholder fraud attorney today for a consultation.

A “pump and dump” scheme is a two-part investment fraud scam designed to make perpetrators money at the expense of other investors. In the first part, promoters of a stock make false or misleading statements about the company in order to induce investors to buy the stock, which drives the stock price higher.

Once the price has increased sufficiently, the fraudsters will “dump” their stock, i.e., flood the market with their shares, usually for substantial profit. When the large number of share sales hit the market and the promoters stop hyping the stock, the price goes down and the investor who were fraudulently induced to buy the stock suffer losses.

In the past, this type of practice was usually done through cold calling but now it generally occurs online, through the use of blogs and chat rooms on which the fraudsters post bogus positive comments about the stock to entice others to buy the stock. These “promoters” may claim to have access to some sort of inside information that puts the investor at an advantage over everyone else.

Perpetrators often use this scam with “penny stocks” that are traded over the counter (rather than on NYSE or NASDAQ), usually because they are easier to control due to a lack of independent information about the company.

Call a Los Angeles Investment Fraud Attorney Today

If you have suffered losses after investing in what turned out to be a “pump and dump,” you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles investment fraud attorney today for a consultation today.

If you’ve ever purchased a house, car, or home appliance, you likely have done your homework by researching the product before committing a significant amount of your hard-earned money. The same rules should apply before entrusting your money to a stockbroker, purchasing securities, or making any kind of financial investment. Before you invest, you should consult with a qualified professional and try to ask as many questions as possible. First, use FINRA’s BrokerCheck system online to learn if the potential stockbroker has a disciplinary or customer-compliant history. Even if you consider yourself a savvy investor and have plenty of experience with stocks, bonds, and the like, there are a number of investment “blind spots” that can keep you from reaching your potential. Below are a few investment tips to always be mindful of before investing:

Be Thorough

Always pay attention to your investment – one easily avoidable mistake is failing to monitor and assess your investments, because markets can – and will – change. Make sure to periodically review your account and your strategy to make sure it remains consistent with your risk tolerance and investment objectives.

Remember Your Limitations

Be careful not to be overly optimistic about your abilities. Even confident and successful investors and securities brokers will consult others instead of relying on their own judgment.

Be Patient

If you’re constantly trading, you will need to generate enough investment returns to cover your transaction costs before you see any profits from your investments. The more transactions, the more costs and commissions you likely will have to pay. In fact, low turnover (i.e., few trades) is more closely linked to higher returns than high turnover. Finally, be wary of bias – i.e. holding on to a stock for too long because of attachment.

Have a Clear Goal in Mind

Last, but certainly not least, have a goal and stick to it. Make sure your investment strategy aligns with your goal, and try not to deviate from it.

Call a Los Angeles Investment Attorney Today

Make sure to keep these concepts in mind when investing. If you experienced investment losses due to the bad advice or fraud of a broker, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles investment attorney today for a consultation today.

What is Elderly Financial Abuse and the Characteristics of its Predators

Elderly financial abuse includes the illegal or improper use of an older person’s funds or property for any reason that does not benefit the owner. Elder financial abuse crosses a wide range of conduct, from theft, forgery, deception, and even coercion.

The perpetrator of this type of financial abuse is not limited to a scammer on the phone in a far away place. In fact, often times it is someone close to the victim, such as a child or grandchild – or even a spouse. In certain circumstances, the family member may feel they have a “right” to money or property or feel a false sense of entitlement because they cared for the older person. Although predatory individuals do not have to be a family member, they will share certain common characteristics. This will typically include:

• Regularly expressing their love for the older person
• Getting the elderly investor to trust the perpetrator
• Abusing a position of trust already established

Some predators seek out employment in fields that put them in close contact with the elderly for this express purpose. For example, stockbrokers who advise elderly investors are in a position to commit elder financial abuse.

What to Look Out For

There are several indicators that can make you aware that you or a loved one may be the victim of elderly financial abuse, including:

• Unpaid bills
• Unexplainable bank account withdrawals or transfers (real estate, financial or otherwise)
• Senseless trading in a brokerage account
• Suspicious signatures on checks or other documents
• Missing property
• Legal documents that the older person did not understand the significance of, especially power of attorney forms

Call a Los Angeles Fraud Attorney Today

If you or someone you know has been the victim of elder abuse, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles fraud attorney today for a consultation regarding your rights.