The Consumer Fraud Section handles cases involving securities and investment fraud. Our practice surrounding securities has expanded to include shareholder derivative litigation, securities fraud class actions, municipal bond insurance litigation and individual investor claims. We’re also investigating claims of financial loss related to violations of the Employee Retirement Income Security Act (ERISA) of 1974.
Securities Fraud and Municipal Bonds
We are investigating claims for various public entities (such as municipalities, public universities and public hospital systems) against municipal bond insurance companies. These claims involve the purchase of surety bond insurance coverage from the insurance companies by public entities who issue municipal bonds to raise capital. We allege the bond insurers inflated and misrepresented their financial stability by hiding the fact they had large holdings in the sub-prime mortgage structured security market.
These insurers charged millions of dollars to public institutions who purchased their insurance coverage. The coverage was supposed to allow the public institutions to issue bonds at the best rates possible. When the subprime mortgage market collapsed in 2008, the bond insurance became worthless and caused hundreds of millions of dollars in damage to cities, universities and hospitals.
Shareholder Derivative Litigation
We also continue to investigate and monitor claims against corporations that have intentionally and/or negligently caused the devaluation of their stock price to the detriment of shareholders. Our firm is investigating several claims against major corporations in the form of shareholder derivative actions.
Beasley Allen also is working on cases related to mutual funds. These cases involve claims that specific mutual funds participated in underlying investment strategies that illegally inflated the fund shares and resulted in damage to investors. We are pursuing derivative claims for the mutual funds, as well as class action claims on behalf of investors. We seek the recovery of capital losses suffered by the funds and their investors, and the return of all fees and other compensation paid by investors and/or the funds to the investment advisors.
The Employee Retirement Income Security Act (ERISA) of 1974 is a federal law that sets minimum standards for pension and health plans offered by private businesses to their employees. ERISA was designed to protect employees who participate in such plans.
Under ERISA laws, the people responsible for overseeing employee benefits plans (often referred to as fiduciaries) must follow specific guidelines. These include acting in the best interests of the plan participants; providing participants with plan information, including information about plan features and funding; and providing a grievance and appeals process for participants. Breaches of fiduciary duty can result in a lawsuit being filed against plan fiduciaries.
According to the U.S. Department of Labor, “In general, ERISA does not cover retirement plans established or maintained by governmental entities, churches for their employees, or plans which are maintained solely to comply with applicable workers compensation, unemployment or disability laws. ERISA also does not cover plans maintained outside the United States primarily for the benefit of nonresident aliens or unfunded excess benefit plans.”