best broker fraud lawyer

As securities lawyers generally representing investors before the Financial Industry Regulatory Authority in cases against stockbrokers and financial institutions for fraud in connection with the sale of defective securities, or defective financial advice, we always inform our clients that they need to pay special attention to any notice regarding the pendency or settlement of any class action.

Typically, where there is the sale of defective or less than transparent securities, such as Auction Rate Securities, Principal Protected Notes, high yield bond funds, or in 2008, the sale of more than eight billion dollars of the preferred securities of already troubled financial institutions, the class action bar swarms to bring class action cases against the issuers and sometimes a class of underwriters, for the violation of the federal securities laws.

Law firms publish, as they are arguably required to publish, notice of these actions so that the person or persons with the greatest financial interest can petition the court to serve as a class representative, but invariably, individual investors will call the law firm and are told they will be part of any eventual class, or until relatively recently that their purchases will be aggregated by a firm or group of firms to gain the coveted and highly lucrative position of lead or co-lead counsel.

Of course these law firms generally do not tell these investors that they may have claims against the stockbroker or brokerage firm that sold or recommended the offending securities, for negligence, suitability, conflicts of interest, or the failure to conduct due diligence. Motions for the appointment of lead counsel, the filing of consolidated amended class action complaints, motions to dismiss, and other activities can sometimes cause these cases to drag on for a number of years, sometimes beyond any applicable statute of limitation, and sometimes, ultimately,  the class action lawsuit may be dismissed.

The danger, however, is generally not when these actions are dismissed, but perhaps more importantly when they are settled.

Defendants like class actions, and they like the settlement of class actions, because of their preclusive effect. Sometimes, no all the time, you have to be careful. Class cases against Countrywide Mortgage included absolution for its underwriters, including Citigroup, and its agents, i.e. the stockbrokers that sold these securities to retail customers. One case against Ameriprise Financial Services, based upon among other things, its pay-for-play mutual fund platform, was settled for $100 million. The lawyers made $30 million in fees, and were all too happy to extend the definition of the class and the class claims to include the provision of unsuitable or defective investment advice.

Customers who did not “opt out” of the class action were bound to receive only their defined or pro rata portion of the class settlement, and were also bound and permanently barred from asserting these claims in any other forum including in arbitration before FINRA.

However, the problem with class actions recently hit home, at least for me.

Several years ago, we purchased the most expensive refrigerator made by Electrolux, the cost of a moderately priced used car. Shortly after our purchase, the ice-maker stopped working. We called Electrolux, and an authorized repairperson came and fixed it. However, a few months later, it began leaking and broke again. We called again, they fixed it again, and of course, it broke again. This time when we called Electrolux, we were told that our warranty had expired, that we would have to pay the full cost of repair, but for approximately $950, we could purchase an extended warranty.

We did nothing for about a year, and then one day opened the mail to receive a  Notice of the Settlement of a Class Action involving the ice-makers of several Electrolux models, including our refrigerator. According to the class settlement, customers having repairs completed months before the notice of the settlement was published would have their costs reimbursed, up to a total of $250,000 for the entire class, and each class member would receive $100.

Defendants professed that there may be as many as 120,000 eligible class members, so they put a $12 million valuation on the class, and class counsel walked away with approximately $3 million in legal fees.

Obviously, $100 was not going to do it for us. Electrolux insisted on selling us a $950 warranty and refused to budge off our request to simply fix our ice-maker, even though while it was under warranty, Electrolux had replaced the parts with more defective parts.

We knew that the Judge was likely to approve the fairness of the class action settlement, which would occur after the opt-out period.

So just like any red blooded lawyer in America, I opted out of the class action, copied the factual information from several of the Class Action Complaints, and filed my own individual case in State court. Now I know why my mother wanted me to become a lawyer.

The day before the Answer was due, I was contacted by their in house counsel and agreed to settle my case for simply an extended warranty, which included the repair of my ice-maker. Electrolux, however, on their own decided to send me their brand new, top of the line refrigerator, for free.

Must be they were really concerned about my lawsuit and wanted to do the right thing.

Was I not wrong. The nice man who came to install our new refrigerator said the ice-makers never worked, and due to a design defect that cannot be repaired.  All he does is replace defective refrigerators.

So much for the $100 to be paid to each class member.  I wonder if the class members know their ice-makers cannot be repaired.  I wonder if the judge knows. I wonder if Electrolux told the judge. However, more importantly, I wonder if lead counsel for the class knows, either before or after, they earned their $3 million in fees from the approval of the settlement.

Guiliano Law Group

Our practice is limited to the representation of investors. We accept representation on a contingent fee basis, meaning there is no cost to you unless we make a recovery for you.  There is never any charge for a consultation or an evaluation of your claim. For more information, contact us at (877) SEC-ATTY.


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