NEW YORK, Sept. 22, 2010 (GLOBE NEWSWIRE) -- The Securities Arbitration Law Firm of Klayman & Toskes ("K&T"), , announced today that it is investigating potential claims against HSBC Securities ("HSBC") (NYSE:HBC) on behalf of investors who purchased Collateralized Mortgage Obligations (CMOs). Last month, the Financial Industry Regulatory Authority ("FINRA") fined HSBC $375,000 for recommending unsuitable sales of inverse floating rate CMOs to its customers. FINRA is a self-regulatory organization which provides regulatory oversight of all broker-dealers that do business with the public. FINRA found that HSBC failed to adequately supervise the suitability of the CMO sales and fully explain the risks associated with inverse floating rate or other CMO investments to its customers. Moreover, FINRA determined that HSBC failed to provide its brokers with sufficient guidance and training relating to the suitability and risks of CMOs. Particularly, HSBC failed to inform its brokers that inverse floaters were only suitable for sophisticated investors who had a high-risk profile. Further, HSBC did not provide its brokers with information regarding the risks associated with the specific inverse floaters that were available for sale to customers.
A CMO is a security that pools mortgages and issues tranches with various risks and features. CMOs make principal payments throughout the life of the security with the maturity date being the last date by which all of the principal must be returned. One of the more risky CMO tranches is the inverse floater, a type of tranche that pays an adjustable rate of interest that moves in the opposite direction from movements of an interest rate index, such as LIBOR. FINRA has advised firms that inverse floating rate CMOs "are only suitable for sophisticated investors with a high-risk profile."
Presently, K&T is prosecuting numerous arbitration claims on behalf of aggrieved investors to recover losses sustained in mortgage-backed securities and structured asset-backed securities. These claims have been filed with FINRA Dispute Resolution. According to Lawrence L. Klayman, senior partner at K&T, "We believe that the fraudulent sales of these complex, risky products were systemic throughout the industry. HSBC was not the first to be fined for the sale of these investments, nor do we anticipate they will be the last." In July of this year, Goldman Sachs agreed to pay a record $550 million to settle charges brought by the SEC relating to a subprime mortgage CDO. In connection with the settlement, Goldman acknowledged that the CDO's marketing materials were incomplete.
Retail and institutional investors who sustained losses in mortgage-backed securities and structured asset-backed securities, including CMOs, can contact K&T to explore their legal rights and options. The attorneys at K&T are dedicated to pursuing claims on behalf of investors who have suffered investment losses. K&T, an experienced, qualified and nationally recognized securities litigation law firm, practices exclusively in the field of securities arbitration and litigation. It continues its representation of investors throughout the world in securities arbitration and litigation matters against major Wall Street brokerage firms.
If you wish to discuss this announcement or have investment losses of $100,000 or more in mortgage-backed securities and/or structured asset-backed securities, please contact Steven D. Toskes, Esquire of Klayman & Toskes, P.A., at 888-997-9956 or visit us on the web at
CONTACT: Klayman & Toskes 888-997-9956
