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With Puerto Rico settlement in sight, clients win $4.8M award from UBS

Tobias Salinger's With Puerto Rico settlement in sight, clients win $4.8M award from UBS" Financial Planning story reports on a recent recent settlement of $4.8 million in relation to arbitration filings in Puerto Rico. UBS has been accused of unauthorized use of lines of credit and margin, breach of fiduciary duty, breach of contract, unsuitability and negligence by multiple high profile clients following the crash of the Puerto Rico bond market, and SLCG's Edward O'Neal is quoted saying that this is common when a broker finds a particular product, and begins suggesting it to every client they have. If that product goes under, they have to answer to each of those clients that lost money under their fiduciary care.

AG Ferguson wins historic $14.5M after trial on "trust mill" scheme

A press release from the Washington State Attorney General details a historic settlement of $14.5 million after CLA Estate Services, Inc. and CLA USA, Inc. earned millions deceptively selling estate-planning services and annuities to Washington seniors. Quoted from his testimony in the case, Dr. McCann states in the article that during his extended time as an expert witness, he has never seen a product in which "there is a zero chance that a fully informed investor would ever purchase".

Merrill to pay $26 million to New Hampshire, former NH Governor to settle churning allegations

CNBC article "Merrill to pay $26 million to New Hampshire, former NH Governor to settle churning allegations" details the conclusion of a FINRA hearing regarding Merrill Lynch being accused of churning the bank accounts of the former Governer of New Hamsphire. The article quotes Dr. McCann, saying that this $24.25 million settlement is the second largest in history for an individual claimant. Dr. McCann has published extensive research on the concept of churning.

UBS's Costly Puerto Rican Adventure

Sophie Schimansky's "UBS's Costly Puerto Rican Adventure" reviews the UBS debacle in Switzerland's largest German-language newspaper. The article quotes SLCG's Craig McCann on the devastating impact UBS's conflicted sale of closed end funds and on the high likelihood that additional arbitrations will continue to be filed for many years to come. For a quick summary of SLCG's research into UBS and Puerto Rico, read our blog post "UBS Puerto Rico's Bond Fund Debacle: What We Know so Far".

Puerto Rico Investors Win Relief From UBS

Mike Cherny's "Puerto Rico Investors Win Relief From UBS" in the Wall Street Journal reports on a string of arbitration wins by UBS PR customers over the sale of leveraged closed end bond funds. The WSJ article cites SLCG's analysis of the UBS PR funds and quotes Craig McCann.

Teacher says UBS broker's advice lost her $400,000

Josh Kosman's "Teacher says UBS broker's advice lost her $400,000" reports on the financial losses faced by an investor in UBS Puerto Rico bond funds. The article quotes Dr. Edward O'Neal on the concentration of these funds.

Problem Puerto Rico Bond Trades Erased, Survey Shows More Troubled Sales

Kyle Glazier's "Problem Puerto Rico Bond Trades Erased, Survey Shows More Troubled Sales" reports on dozens of cancelled Puerto Rico bond deal sales to customers that were "erased from EMMA or altered as if they never occurred." The article quotes Dr. Craig McCann on the MRSB's failure to take its "investor protection mandate seriously."

Bond Funds: The Downside

Kirsten Grind's "Bond Funds: The Downside" reports on the recent high returns earned by some short term bonds funds. These higher yielding funds tend to hold bonds with longer maturities and more credit risk than the bonds which dominate lower yielding bond funds' portfolios. The article quotes Craig McCann pointing out that the bond funds that have the highest yields in 2012 will suffer the largest losses if credit spreads widen again as they did in 2008. The higher risk taken by some bond funds to boost yields in comparison to their peers is the subject of our "What Does a Mutual Funds' Term Tell Investors?" and our "What Does a Mutual Funds' Average Credit Quality Tell Investors?"

Appeals Court Reinstates Morgan Keegan Ruling

The U.S. Court of Appeals for the 5th Circuit ruled that a district court's decision to throw out the arbitration award was made in error, according to an opinion released on Tuesday.

U.S. District Court Lynn Hughes in Houston ruled in September, 2011, that the arbitration ruling should be thrown out because, in part, it was obtained through the alleged 'fraudulent' testimony of Craig McCann, an expert witness and former U.S. Securities and Exchange Commission economist.

The federal appeals panel, however, noted that there was a 'total absence of any evidence' to support that finding. The evidence 'supports nothing more than a conclusion that a member of Dr. McCann's staff made a calculation error that he did not discover until after he testified,' the court wrote.

Schwab Pays in YieldPlus Settlement

The Wall Street Journal's "Schwab Pays in YieldPlus Settlement" reports on Charles Schwab Corp.'s $119 million settlement with the SEC over its marketing of the YieldPlus fund as an ultra short bond fund despite the heavy concentration of private label mortgage back securities, it's high and misrepresented average maturity and low and misrepresented average credit quality. The SEC Complaint against the firm and the Complaint against Kim Daifotis and Randall Merk closely track the results of SLCG's independent research into YieldPlus. See YieldPlus Risk and What Does a Mutual Fund's Average Maturity Tell Investors?

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