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Our law firm is investigating the sales of Lyon Capital Management VII (“Lyon Capital”) and Bryn Mawr II Collateralized Loan Obligations (“CLOs”) by Banc of America Securities (“Banc of America”) (NYSE: BAC), n/k/a Merrill Lynch, to its high net worth and institutional customers. Lyon Capital and Bryn Mawr CLOs were structured and sold in 2007 at a time when investments created by pooling loans together had already begun to lose value. KlaymanToskes believes that their poor performance shows that Banc of America knew or should have known the deals were bad given the then-existing market conditions. This also raises questions concerning the valuation procedures used to price the loans in the products.
On February 10, 2012, the State of Massachusetts issued a subpoena to Bank of America concerning its involvement in Lyon Capital and Byrn Mawr that resulted in $150 million in losses to investors. According to William Galvin, the Secretary of Massachusetts, “My securities division is investigating these CLOs to determine if the issuer was knowingly over-valuing the assets in the portfolio to get them off their books and onto investors. What did the issuers know at the time of the sales and were the assets being priced truthfully?”
Also in February 2012, a Financial Industry Regulatory Authority (“FINRA”) Arbitration Panel Awarded a Lyon Capital CLO investor $1.38 million which represents the entirety of the investment lost by the Claimant, attorney’s fees, interest and hearing session fees. According to the Claimant in that case, Lyon Capital CLO was sold as low risk investment. However, the Claimant alleged, unbeknownst to him, while Banc of America was packaging the Lyon Capital deal, the loans which had been purchased in previous months were already losing value. Consequently, the Claimant purchased what he contended to be artificially inflated assets that were intrinsically worthless on the day the deal closed.
Investors who purchased Lyon Capital or Bryn Mawr CLO from Banc of America can contact KlaymanToskes to explore their legal rights and options to attempt to recover their investment losses.