CIT InterNotes Investor Claims Being Reviewed by Lawyers

A number of securities fraud lawyers are investigating whether investors who were sold CIT InterNotes were defrauded by the brokerage firms that recommended and sold the inverstments, to determine whether individuals may be entitled to recover their investment loss.

CIT, a 101-year old commercial lender, declared bankruptcy at the beginning of November after falling $64.9 billion in debt, even after receiving assistance from the federal bank bailout program.

As the company’s financial situation worsened and institutional investors began to shy away, CIT began selling InterNotes to retail investors through major banks and brokerages, such as Bear Sterns, Citigroup, Merrill Lynch, Charles Schwab, Morgan Stanley, Wachovia Securities and others.

Some investors claim that they were sold the CIT InterNotes as stable and conservative investments, without full disclosure of the company’s financial situation, which should have been known by major investment firms. The notes dropped in value as the company lost value and its bonds were downgraded. According to press releases issued by several law firms, investors who were sold the notes may be able to recover their losses through a CIT InterNotes arbitration claim against their broker.

The Financial Industry Regulatory Authority (FINRA) is also investigating the sales practices involved with the distribution of CIT notes. FINRA is a non-governmental regulatory body that oversees more than 5,000 brokerage firms throughout the United Staters.

Investors are able to resolve disputes through FINRA arbitration panels for stock broker fraud claims such as breach of fiduciary duty, negligence, misrepresentation, breach of contract, unauthorized trading and other claims that investments were improperly handled.

CIT reported $3 billion in losses over the past two years, and its problems continued despite receiving $2.3 billion from the U.S. Treasury as part of the bank bailout on December 31, 2008. Treasury officials have said that it is not likely that taxpayers will get the money back.

The failure of CIT is the largest financial institution to fall since Washington Mutual’s assets were seized by regulators in September 2008. It is the fifth largest bankruptcy in history, in terms of asset value.