by Brian Mahany
Less than 24 hours after posting “Why Sue Your Broker,” one reader sent me a link to a Reuters article announcing the settlement of a class action against Ameriprise. The facts aren’t as important as the lesson – class actions often result in low recoveries.
In the Ameriprise case, clients of Ameriprise Financial Inc. sued the broker dealer for selling an investment in Medical Capital which apparently was nothing more than a Ponzi schemes. Ameriprise allegedly told customers that they were investing in safe medical receivables that would both preserve their capital and pay nice profits. They did not tell investors that the CEO of the company, Sidney Field, had a shady past and had lost his insurance license and was charged with racketeering and fraud.
Investors in the two deals that purchased through Ameriprise lost approximately $300 million. The amount of the settlement? Just $27 million or less than 10 cents on the dollar. That figure may be less depending on whether the settlement is pre or post legal fees.
Obviously, not every class action pays so little. Some return more to investors and some less. As a general rule, however, investors should always speak with their own lawyer and not simply rely on a class action. Most securities fraud lawyers will review your case for a very low fee or free of charge.
There is always tension between the class action bar and lawyers that specialize in stockbroker fraud and FINRA arbitration cases. Both groups have their place. Prudent victims, however, should always seek an opinion from a lawyer and not just hope the court or a class action lawyer will get back their money.
Mahany & Ertl is a full service boutique law firm that assists victims of fraud recover their money. Securities fraud, investment fraud, stockbroker claims, bank fraud and even attorney malpractice – call us, we can help.
Services provided throughout the United States. Offices in Milwaukee, Wisconsin; Detroit, Michigan and Portland, Maine. Contact Brian Mahany for more details at (414) 704-6731 (direct dial)