California Securities and Investment Fraud Litigation Attorneys
Protecting Investors from Fraud and Misrepresentation
The accomplished lawyers at
Pearson, Simon & Warshaw, LLP (PSW) have recovered millions of dollars for investors and municipalities
in litigation over fraudulent stock transactions, investment fraud and
broker misconduct. We are a nationally recognized force in class action
lawsuits and complex financial fraud litigation.
From our Los Angeles and San Francisco law offices, we represent investors
throughout California and nationwide. If you believe you have been the
victim of investment fraud or harmed by the conduct of a broker or brokerage
firm, call us toll-free at
(877) 391-8300 or
send an email.
What Is Securities and Investment Fraud Litigation?
A securities or investment fraud lawsuit alleges that a company or brokerage
firm did not follow rules established by the U.S. Securities and Exchange
Commission (SEC), the Financial Industry Regulatory Authority (FINRA)
or other federal and state laws when soliciting or managing investments.
While investment fraud arises in a number of contexts, the most common
situations in these types of litigation include:
- Breach of fiduciary duty owed to investors
- Broker fraud (unsuitable investment recommendations)
- Investment fraud (Ponzi schemes)
- Misrepresentation of material facts in offering documents
- Misrepresentation of financial results (financial statement fraud)
- Accounting malpractice
- Market manipulation
- Insider trading
- Unauthorized stock trading
For a more complete discussion of common securities litigation issues please
see our pages on:
Our securities lawyers have had notable success in class actions and individual
cases involving sophisticated scams, many perpetrated with the help of
accounting and auditing professionals. If your claim arises from an investment
account maintained at a brokerage firm, you may be required to arbitrate
your claim with a FINRA appointed arbitration panel. PSW attorneys have
years of experience representing investors in securities arbitration and
can advise you if you suspect misconduct by your broker. We also have
the ability to analyze complex securities transactions, such as Rule 144
restrictive stock sales, PIPE transactions and venture capital investments,
as well as violations of SEC regulations, working closely with federal
Representative Securities Class Actions and Investment Fraud Actions
PSW has recovered millions of dollars on behalf of investors, successfully
suing major brokerage firms, accountants, directors and officers, including:
Tripath Technology, Inc.: PSW brought an action for breach of fiduciary duty owed to creditors
and shareholders against the former officers and directors of Tripath
Technology Inc., a high tech public company that filed for bankruptcy
in 2007. In 2011, PSW obtained a settlement that resulted in Tripath's
unsecured creditors receiving over 80% of their allowed claims.
Morgan Keegan Closed-End Fund Litigation: In this case, PSW represented a class of investors that invested in Morgan
Keegan sponsored mutual funds. In March 2012, Judge Mays of the Western
District of Tennessee denied in substantial part the defendants' motion
to dismiss the plaintiff class's complaint. In April 2012, Morgan
Keegan and other defendants agreed to an all-cash settlement with the
plaintiff class for $62 million. The settlement was granted final approval
in August 2013.
In re Lehman Brothers Securities and ERISA Litigation: PSW represents six California cities and counties who lost tens of millions
of dollars investing in Lehman Brothers medium-term notes and commercial
paper. These cases have been consolidated in the Southern District of
New York before Judge Lewis Kaplan. In September 2011, PSW negotiated
a settlement of the California public entities' claims against Lehman
Brothers' former officers and directors. PSW has also negotiated settlements
with certain investment banks that underwrote Lehman Brothers' note
offerings. This litigation continues against Lehman Brothers' auditor
Ernst & Young.
Homestore.com Inc.: PSW attorneys obtained a $90 million settlement on behalf of shareholders
of the Internet-based real estate company Homestore.com for falsified
financial statements and accounting irregularities. In a follow-up class
action lawsuit, PSW attorneys secured a $17.5 million settlement from
Homestore.com's accounting firm, PricewaterhouseCoopers, for its part
in the auditing scheme that artificially increased Homestore.com's
Charles Schwab & Co.: As lead counsel in a class action against Charles Schwab & Co., PSW
attorneys obtained a $2.7 million settlement for unfair maintenance and
termination fees that were not properly disclosed to brokerage account holders.
: PSW lawyers have also been at the forefront of protecting investors'
rights in the appellate courts. Important decisions include
Lippitt v. Raymond James, 340 F.3d 1033 (9th Cir. 2003) (preserving investor's right to prosecute
claims in state court) and
Daniels v. Centennial Group, Inc., 16 Cal.App. 467 (1993) (overturning Superior Court's denial of class
certification of an investor group of over 25,000 individuals).
Notable Cases for more information about these and other securities class action lawsuits.
PSW attorneys have represented numerous investors in FINRA (previously
NASD) arbitrations. In 2008, PSW's Senior Counsel George Trevor negotiated
a multi-million dollar settlement on behalf of 25 investors who suffered
severe financial losses as a result of a single broker's alleged misconduct.
The settlement was obtained following 25 days of hearing and closing arguments.
Individual Shareholder Suits
PSW also represents the interests of minority shareholders who are forced
out by "cram down" or other stock manipulations. Our lawyers
have recovered damages for victims of hostile takeovers by demonstrating
how our clients' shares were intentionally devalued, forcing liquidation.
Securities Litigation News
The North American Securities Administrators Association (NASAA) on August
28, 2012, identified the top ten investor traps to look out for in the
coming year. To review these threats, click
On May 18, 2012, the Financial Industry Regulatory Authority (FINRA) announced
further guidance on its new rules concerning Know Your Customer and Suitability
of Investment Recommendations. FINRA Rules 2111 and 2090 are modeled after
former NASD Rule 2310 (Suitability) and former NYSE Rule 405(1) (Know
Your Customer). To read more about the new FINRA Suitability Rules, click
Morningstar Must Answer Complaint by Receiver for Failed Hedge Fund - A
federal district judge in the Eastern District of Pennsylvania denied
on August 24, 2012, Morningstar's motion to dismiss a complaint brought
by a receiver of a failed hedge fund. Although the Court issued only a
one line order denying the motion, the complaint raises interesting questions
as to a rating agency's liability. The receiver, appointed after the
SEC shut down Robert Stinson, Jr.'s STABL Mortgage Fund in 2010, alleges
that Morningstar issued a five star rating to the STABL Fund in reckless
disregard of numerous red flags. The complaint alleges claims for contribution
for violations of Rule 10b-5 and aiding and abetting fraud and breach
of fiduciary duty. The case is Schwartzman v. Morningstar, Case No. 2:12-cv-01647-BMS
Do You Have a Securities Case?
There are many factors that determine whether you have a securities case,
which we will review during your free initial consultation. If you suffered
a substantial investment loss because of false or misleading earnings
statements, broker misconduct or other financial fraud, call the securities
litigation team at Pearson, Simon & Warshaw, LLP toll-free at
(877) 391-8300 or
send an email.