Investment fraud lawyers in our Consumer Fraud Section handle litigation involving securities and investment fraud. Our practice surrounding securities fraud has expanded to include shareholder derivative litigation, securities fraud class actions, municipal bond insurance litigation and individual investor claims. We also investigate claims of financial loss related to violations of the Employee Retirement Income Security Act (ERISA) of 1974. In January 2021, our investment fraud lawyers filed a class action lawsuit on behalf of Mercedes-Benz employees. The lawsuit alleges the automaker’s failure to properly manage retirement investments has had stark financial consequences for the thousands of retirees who rely or will rely on that retirement income in the future.
Securities Fraud and Municipal Bonds
Beasley Allen’s investment fraud lawyers are investigating claims for various public entities, such as municipalities, public universities and public hospital systems, against municipal bond insurance companies. These investment fraud claims involve the purchase of surety bond insurance coverage from the insurance companies by public entities that 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 that 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
A shareholder derivative suit is a lawsuit filed by a shareholder or group of shareholders on behalf of a corporation. Usually, shareholders can only file a complaint on the corporation’s behalf when the corporation has had a valid cause to sue but has failed to take legal action. Such a scenario usually occurs when the defendant in the suit is an insider of the corporation, such as an executive officer or director.
Shareholder plaintiffs in a derivative lawsuit do not sue on a cause of action on behalf of themselves as individuals. Rather, they pursue legal action as representatives of the company on behalf of the corporation to enforce the corporation’s rights. If the lawsuit results in a successful outcome for the plaintiffs, proceeds go to the corporation, not to the shareholder or shareholders who brought the suit.
Beasley Allen’s team of investor fraud lawyers continue to investigate and monitor investment fraud claims against corporations that have intentionally and/or negligently caused the devaluation of their stock price to the detriment of shareholders. Our firm is currently investigating several claims against major corporations in the form of shareholder derivative actions.
Mutual Fund Fraud
Mutual fund fraud generally occurs when brokers violate their fiduciary duty to investors by putting their own interests before those of their clients. Such a breach of duty can occur in a multitude of ways, but it usually stems from actions taken by the broker for self-enrichment, such as taking actions to boost their own commissions or fees.
Our investment fraud attorneys also are working on investment fraud 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 for investment fraud.
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 that 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.”
Beasley Allen’s investment fraud lawyers are seeking class action status for an ERISA lawsuit filed against Mercedes-Benz US International, Inc. and the administrators of its U.S. employees’ 401(k) plan, alleging their failure to properly manage retirement investments resulted in thousands of workers paying “unreasonable and excessive” service fees. The lawsuit also demonstrates the enormous economic shortfall of the Mercedes-Benz employee retirement plan over the long term due to the alleged improper management of the plan’s administrators.