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Loss Recovery Center is currently representing a client from Boston whose stockbroker wanted to make up for the $165,000 in losses incurred as a result of the bad investment recommendations he had made over the previous 4 years.

In 2008 he convinced his client to deposit an additional $500,000 for him to manage to prove that he was still the right person for the job.

The stockbroker took what remained of his client’s irreplaceable life savings and invested the $500,000 in only 3 securities: MCG Capital Corporation (a commercial finance and advisory company), BP Prudhoe Bay Royalty Trust (entitled to royalties of Alaska crude oil production), and Enerplus Resources Fund (an energy trust that acquires oil and gas assets).

By the end of August of the same year the value of his account fell to $107,000.

The dramatic loss was not due to market conditions. The stockbroker failed to invest in a wide variety of investments that would have made it possible for the better performing securities to counterbalance the bad performance of others.

If you have experienced a similar situation, contact us for a free evaluation.

Banc of America Securities created and/or purchased a significant number of Collateralized Loan Obligations (CLO’s) (securities backed by corporate loans). Banc of America Securities bundled them, and sold one of them as LCM VII LTD Notes.

The LCM VII Notes were comprised of 7 tranches (one of a number of related securities offered as part of the same transaction): A-1, A-2, B, C, D, E-1, and E-2.

Banc of America Securities and/or its affiliates bought all of the Class A tranches.  A-1 was a revolving credit line and A-2 was a term note.  Both were rated AAA.

The B and C class shares were sold exclusively to Qualified Institutional Buyers such as universities, governmental entities, endowments, foundations, etc.

Class D and E-1 notes were available to Accredited Investors (annual income of $200,000+ for individuals, or $300,000+ joint; or net worth exceeding $1M), or to Qualified Institutional Buyers.

Class E-2 Notes were sold only to non-U.S. individuals living outside the United States.

There was a Threshold Value Event which called for the redemption of all of the notes if the market value of the CLO’s declined by a certain percentage. In October 2008, the Threshold Value Event was triggered and the Notes went into default.

Except for the fees paid to the creators and managers of this investment, what little money that remained after the Note went into default was paid to the investors based on the priority of classes i.e., A-1 to E-2.   Banc of America and its affiliates, owners of A-1 and A-2 classes, were the only entities to receive any of the proceeds from the sale of the underlying CLO’s.

Loss Recovery Center offers free case analysis for investors who have lost money due to bad advice or investments. If you feel you have incurred losses as a result of investing in LCM VII Notes, please contact our Reno, Nevada office at (775) 853-8778, or Toll Free at (877) 466-2722.