Securities Litigation

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 investigators.

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.
  • Inc.: PSW attorneys obtained a $90 million settlement on behalf of shareholders of the Internet-based real estate company for falsified financial statements and accounting irregularities. In a follow-up class action lawsuit, PSW attorneys secured a $17.5 million settlement from's accounting firm, PricewaterhouseCoopers, for its part in the auditing scheme that artificially increased's profitability.
  • 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.
  • Appellate Issues : 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).

See Notable Cases for more information about these and other securities class action lawsuits.

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 here.

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 here.

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 (E.D. PA).

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.

Los Angeles:(818) 788-8300
San Francisco:(415) 433-9000
Minneapolis:(612) 389-0600

The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.

Pearson, Simon & Warshaw, LLP

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Phone: (818) 788-8300
555 Montgomery St., Suite 1205
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Phone: (415) 433-9000
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Wayzata, MN 55391 View Map
Phone: (612) 389-0600

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