Securities Fraud Attorney Blog

Below is a profile of Ross Intelisano from the Spring 2010 edition of the Brooklyn Law School Magazine BLSLaw Notes.

BLSLawNotes
The Magazine of Brooklyn Law School | Spring 2010
Alumni Update
Ross Intelisano ’94: Fighting Fraud from Bear Stearns to Bernie Madoff and Beyond

In 2006, Ross Intelisano made a prediction. A seasoned securities arbitration lawyer with a reputation as one of the leading authorities on securities fraud and Ponzi schemes, Intelisano looked into the future and saw a financial crisis of unimaginable proportion. He put his vision on paper and published an article in Bloomberg Law Reports entitled “Hedge Fund Fraud — The Future of Securities Arbitration?” in which he predicted, one year prior to the Bear Stearns High Grade Funds implosion, that broker-dealers would roll out proprietary hedge funds that were bound to unleash havoc on the financial system. Unfortunately for the market, and for the countless number of investors hurt by Bear Stearns, Intelisano was right.

In 2007, as predicted, Bear Stearns’ High Grade hedge funds crashed, with $1.6 billion in losses. Intelisano was there to pick up the pieces, taking on Bear Stearns on behalf of Racetrac, a multi-billion dollar private company that had lost $5 million in Stearns’ High Grade Structured Credit Strategies Hedge Fund. In December 2009, after a 16-day arbitration in Atlanta, Intelisano won a $3.4 million arbitration award on their behalf. The award was groundbreaking for two reasons: It was the first verdict in any forum relating to the High Grade Funds, and it was rendered after portfolio managers Ralph Cioffi and Matthew Tannin were acquitted in a federal criminal trial.

While the Racetrac arbitration was an historic case, it was not the first time Intelisano had been on the pioneering end of an arbitration. He has long been a crusader for defrauded investors.

After graduating from the Law School in 1994, Intelisano joined Pressman & Associates, a one-man shop where he began to practice securities and employment law. Three years later, he was recruited by Eppenstein & Eppenstein, a premier securities arbitration firm, where he served as co-trial counsel on Engel et. al. v. Refco, the legendary commodities fraud case. The 100-day arbitration, on behalf of 13 individuals and family-run businesses, generated a $43 million judgment in 2001. It remains the largest collected arbitration award ever rendered on behalf of retail investors against a brokerage firm.

In 2003, he joined forces with Eppenstein colleague John G. Rich to form Rich & Intelisano where he continued to try landmark cases, most notably working on behalf of investors who lost over $25 million in the $300 million Bayou hedge fund Ponzi scheme run by convicted fraudster Sam Israel. In Bayou, Intelisano once again did the unprecedented, filing a group arbitration case not against Israel, but against the registered investment advisor who had recommended Bayou to investors, for failure to perform adequate due diligence. The case, which was settled in mediation, was the first time in the world of secu¬rities arbitration that anyone had implicated an investment advisor in a Ponzi scheme.

And then came Bernie Madoff and a Ponzi scheme so large that it dwarfed anything the securities world had ever seen ($18 billion is the latest estimate). Intelisano’s phone started ringing. “I spent hours consoling investors, listening to all of these tragic stories of middle class people who had lost every dime they had saved over a lifetime,” he recalled. “I knew they would never get it back. It was the lowest point of my career as a lawyer.”

While he knew he would not be able to help investors sue Madoff (their restitution is being handled by a court-appointed trustee), he brought back the “investment advisor theory” he advanced in Bayou, and is currently representing a group of 12 victims in claims against investment advisors to Madoff feeder funds. The hearings begin in June.

With the Madoff cases ahead of him, and the victories in Racetrac and Bayou behind him, Intelisano has become one of the country’s most well respected experts in the world of hedge fund fraud. He has appeared on The Today Show, Anderson Cooper 360, Dateline NBC, PBS’s Frontline, Closing Bell with Maria Bartiromo, and is regularly quoted in The New York Times and The Wall Street Journal.

Looking into the future, Intelisano believes the horizon remains clouded over with the potential for serious fraud. “Over-the-counter derivatives, credit default swaps, oil futures, all of these products that the government is worried about regulating are very complex and are improperly being sold to retail and institutional investors. Firms aren’t watching the shop. No one is.”

Prediction noted.

62 • BLSLawNotes

Sean Coffey has recently embarked on a campaign to become the next Attorney General of New York State. I have never been substantially involved in a political campaign before, but Sean is different. I’ve worked with and known Sean and his prior law firm for many years and I have never been more impressed with a potential candidate for elected office as I am with Sean. He is smart, loyal, strong and possesses all of the qualities needed to be a fantastic Attorney General. Therefore, I’m going to be actively involved in helping Sean become the next Attorney General. And I think he’s going to win. The press is certainly catching on very quickly. Kate Kelley, a very well respected writer for the Wall Street Journal, wrote a great piece about the AG race. Here is the link. http://online.wsj.com/article/SB10001424052748704561004575013503448906246.html

And a snippet from the piece:

“So far, Wall Street isn't taking much heat from current or potential candidates to succeed Mr. Cuomo.

Mr. Coffey, a former Navy pilot who won $6 billion for investors in the failed telecommunications company WorldCom Inc., was described in a magazine article that followed his victory as "Wall Street's New Nemesis." He said in an interview that his reputation "is not going to be an albatross around my neck in this election."

Noting the securities industry's importance to the economy of New York, he said his aim as attorney general would be to root out corrupt individuals. "I think Wall Street works great when it plays by the rules," said Mr. Coffey, 53.”

Sean has been committed to a lifetime of public service. His resume is truly spectacular. Here are some highlights. He graduated from Annapolis with merit in 1978. On active duty during the Cold War, Sean flew as a P-3 Orion mission commander tracking Soviet nuclear submarines.
After completing his first squadron tour, Sean was selected for important shore assignments in Washington, D.C. as Junior Officer Intern to the Joint Chiefs of Staff and the personal military assistant to then-Vice President George H.W. Bush. While stationed in Washington, Sean attended Georgetown University Law Center at night, winning several academic awards, serving as the sole evening-division editor of the Georgetown Law Journal and graduating magna cum laude.

In 1987, after resigning from active Navy service, Sean returned to New York as a litigation associate with the law firm of Paul Weiss Rifkind Wharton & Garrison. Sean was appointed an Assistant U.S. Attorney in the Southern District of New York in 1991. He worked with federal, state and local law enforcement agencies prosecuting a wide variety of cases involving firearms, narcotics, business crime, bank fraud, and other major crimes. Sean tried many cases to verdict.

In 1995, Sean joined the law firm of Latham & Watkins where, as counsel and later partner, he defended Fortune 500 companies in many complex civil, regulatory, and criminal matters. After several years as a corporate defense attorney, Sean decided to return to pursuing corporate misconduct and joined the litigation firm of Bernstein Litowitz Berger & Grossmann, which represents many of the world’s largest institutional investors, including New York State’s Common Retirement Fund and Teachers’ Retirement System and many Taft-Hartley union funds.

In his eleven years at Bernstein Litowitz, Sean led teams that recovered billions of dollars for victims of corporate fraud and malfeasance and won praise for achieving significant corporate governance improvements. Among Sean’s notable successes was his role in the WorldCom securities litigation, a case he took to trial in 2005 as lead attorney for thousands of investors, including the New York State Common Retirement Fund. Sean and his team recovered over $6 billion and -- in a historic first -- required all outside directors and key wrongdoers to contribute from their personal funds. Sean was selected as one of the National Law Journal’s “Winning Attorneys” of 2005, and profiled by Bloomberg Markets magazine (“Wall Street’s New Nemesis”), the American Lawyer (“Taking Citi to School” and “Breaking the Banks”), and The Wall Street Journal (“It’s Coffey Time”). Sean recently retired from Bernstein Litowitz to seek the Democratic nomination to become New York’s next Attorney General.

To me, the office of the Attorney General is one of the most important positions in our state’s government and, in more recent months, our country. As we face difficult times, I am confident Sean is the person who can best serve as the people’s lawyer and advocate. This is Sean’s first run for elected office and, with that, he brings a diverse and successful legal career as a prosecutor, defense attorney and plaintiff’s lawyer. He is an honest, loyal, professional man who will bring a great deal of integrity to the office.

FINRA announced yesterday that it won approval from the SEC to expand its BrokerCheck service to make records of final regulatory actions against brokers permanently available to the public, regardless of whether the broker continues to be employed in the securities industry.

The FINRA press release states disclosure records for former brokers will be available on BrokerCheck beginning November 30. It goes on to state, “This is an important step for investors and for investor protection," said FINRA Chairman and CEO Richard Ketchum. "Individuals previously barred by FINRA and other regulators have surfaced in a number of recent frauds in other parts of the financial industry that cost unsuspecting investors millions of dollars. It has never been more critical for investors to research the backgrounds of the financial professionals they deal with than it is today."

This is an important addition to the publicly available regulatory records of former brokers. Often times, permanently barred brokers, traders and salesmen will attempt to work at unregistered entities such as hedge funds. It is difficult for potential investors to do due diligence on a hedge fund manager without the historical BrokerCheck information. In the past, if a registered representative was out of the business for more than two years, a public investor had no access to the broker’s disciplinary record.

BrokerCheck is available at www.finra.org/brokercheck