Of Current Interest

Madoff Related Claims

A San Francisco based FINRA arbitration panel has awarded $750,000 to clients of the Law Offices of Cary S. Lapidus in connection with their investment in the FutureSelect Prime Advisor II Fund.

The FutureSelect Prime Advisor II Fund was a feeder fund which invested approximately 94% of its assets into Ryle Broad Market Funds which then turned the money over to Bernard L. Madoff Securities, LLC.

The securities brokerage firm which recommended the FutureSelect Prime Advisor II Fund and which was found liable was Stone & Youngberg, LLC, a San Francisco based company.

The FINRA arbitration panel found Stone & Youngberg liable for the entire $750,000 invested and lost by its clients as a result of the firm’s recommendation to invest in the Fund. The investors claimed in their lawsuit that Stone & Youngberg failed to conduct adequate due diligence before it recommended that the clients invest their money in the Fund.

The award is believed to be the first arbitration award against a securities brokerage firm for its recommendation to invest in a Madoff feeder fund. The attorney for the investors who received the award, Cary S. Lapidus, predicts that a tidal wave of claims will be asserted against securities brokerage firms who did not perform proper due diligence on the Madoff feeder funds they recommended to their clients.

"My clients were awarded the full amount of their losses said Lapidus. “The arbitrators agreed with our position that a securities brokerage firm which recommends an investment has a duty to do its homework before making the recommendation. This is consistent with both FINRA rules and the case law of most jurisdictions.” said Lapidus.

The Law Offices of Cary S. Lapidus is currently representing clients who were advised by their brokers or investment advisers to invest in Madoff Feeder Funds. The basis for these actions is the adviser's failure to conduct proper due diligence, as required under SEC and FINRA rules and regulations, before recommending the purchase of a Madoff Feeder Fund. The Law Offices of Cary S. Lapidus has obtained a $750,000 award against a securities brokerage firm in such a case - believed to be the first in the nation. (See the Firm's website pages at "Case Results" - Kay v. Stone & Youngberg and "In the News" - Wall Street Journal and San Francisco Chronicle articles").

For more information about lawsuits against brokers and advisers who recommended the purchase of Madoff Feeder Funds, please contact Cary S. Lapidus at 415-296-7101 or by e-mail at Cary.Lapidus@gmail.com

TW Tax Advantaged Fund, L.P.

July 7, 2010 -- A San Francisco based American Arbitration Association (AAA) arbitration panel has awarded more than $2.1 million to clients of the Law Offices of Cary S. Lapidus in connection with their purchase of the TW Tax Advantaged Fund, L.P.  

The TW Tax Advantaged Fund was a leveraged municipal arbitrage bond fund created by First Republic Investment Management and sold through First Republic Securities Company, formerly a subsidiary of Merrill Lynch (BAC)., in August 2007.  The TW Fund was marketed only to high net worth clients of the firm. The fund collapsed less than one year later causing losses of approximately 70% to investors.

The award represents the largest known arbitration award against a securities brokerage firm involving a leveraged municipal arbitrage bond fund.  Other leveraged municipal arbitrage bond funds were sold by a broad spectrum of securities firms including Citigroup, Stone & Youngberg and others.

The three person arbitration panel found that First Republic committed professional negligence by failing to conduct proper due diligence in designing the Fund, by failing to properly train its sales agents to sell the Fund, by failing to adequately supervise the sales agent in the selling of the Fund to the claimants, by causing its sales agents to recommend to claimants an investment that was unsuitable for them, by failing to deliver effectively to Claimants, detailed, accurate, intelligible warnings concerning not only the facts of the risk of the Fund but also the scope, character and locus of that risk, and by failing to keep Claimants timely and accurately informed concerning the progress of the Fund or lack thereof.

The arbitrators rejected First Republic’s defense that the losses were caused by the “virtually unprecedented and wholly unforeseen dislocation” in the yield spread between taxable and tax-exempt bonds said to be “part of an equally unforeseen credit crisis” .

"My clients were awarded the full amount of their losses plus all of the fees and expenses paid to the American Arbitration Association” according to Cary S. Lapidus.   “The arbitrators agreed with our position that this Fund was unsuitable for my clients given their investment objectives and risk tolerance” said Lapidus.

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The Law Offices of Cary S. Lapidus is currently representing clients of First Republic Investment Management, Inc. and First Republic Securities Company, LLC who purchased units in the TW Tax Advantaged Fund LLC.   The Administrative Manager of the Fund is First Republic Investment Management, Inc.

We have recently filed an arbitration proceeding against First Republic alleging that the investment was unsuitable for our clients who had conservative investment objectives and a low tolerance for risk.  The lawsuit further alleges that First Republic and its representative misrepresented numerous aspects about the investment in the TW Tax Advantaged Fund, LLC including the risk of the investment, the alleged investment in the Fund by First Republic principals and other material facts.

Investors who purchased units of the TW Tax Advantage Fund have lost up to 70% of their money.

For more information about the lawsuit against First Republic involving the TW Tax Advantaged Fund LLC, please contact Cary S. Lapidus at 415-296-7101 or by e-mail at Cary.Lapidus@gmail.com

FNMA Preferred Stock

The Shockman Law Office and The Law Offices of Cary S. Lapidus are currently investigating claims for investors in California and Arizona who purchased FNMA Preferred Stock, including Series T. The FNMA Preferred Stock was sold by many brokerage firms such as Smith Barney (Citigroup Global Markets, Inc.), Merrill Lynch, Morgan Stanley, UBS Securities, Wachovia Securities, Inc., Banc of America Securities, LLC, Wells Fargo and others. The Stock was sold to clients who were looking for safe, secure, income producing investments.  Sales of the FNMA Preferreds were being made at or around $25 per share even as late as the summer of 2008. The value of these FNMA Preferreds plummeted just a short time after they were sold to investors in 2008.

Investors have claimed that their brokers represented to them that the FNMA Preferred Stock was a safe place to invest their money.  Our investigation reveals that the FNMA Preferred Stock was not a safe or secure investment and, in fact, posed a very high degree of risk to investors, especially during the spring and summer of 2008.

For more information about these lawsuits, please contact please contact Rosemary J. Shockman at 602-955-2465 or Cary S. Lapidus at 415-296-7101.

Stone & Youngberg Municipal Advantage Fund I, L.P.

The Law Offices of Cary S. Lapidus is currently representing clients of Stone & Youngberg, LLC who purchased limited partnership units in the Stone & Youngberg Municipal Advantage Fund I, L.P.   The General Partner of this investment is named S&Y Asset Management (SYAM) , an affiliate of Stone & Youngberg, LLC.

We have recently filed an arbitration proceeding with FINRA against Stone & Youngberg, LLC and its representatives alleging that the investment was unsuitable for our clients who had conservative investment objectives and a low tolerance for risk.  The lawsuit further alleges that Stone & Youngberg, LLC misrepresented numerous aspects about the investment in the Stone & Youngberg Municipal Advantage Fund I, L.P.  including the nature and risk of the investment.  The claim alleges that misrepresentations about the safety of the investment was made through misleading marketing materials and oral statements by Stone & Youngberg, LLC representatives. 

Investors who purchased limited partnership units of the Stone & Youngberg Municipal Advantage Fund I, L.P. have lost 100% of their money as of March 31, 2007. 

For more information about the lawsuit against Stone & Youngberg, LLC involving the Stone & Youngberg Municipal Advantage Fund I, L.P. , please contact Cary S. Lapidus at 415-296-7101 or by e-mail at Cary.Lapidus@gmail.com