updated 11/16/2010 11:46:40 AM ET 2010-11-16T16:46:40

LAKELAND, Fla., Nov. 16, 2010 (GLOBE NEWSWIRE) -- The Law Firm of Shepherd Smith Edwards & Kantas LLP ( www.sseklaw.com ) continues to investigate all claims regarding Collateralized Mortgage Obligations (CMOs). These products, along with a similar product known as Collateralized Debt Obligations (CDOs) have traditionally been marketed to sophisticated institutional investors. However, over the past few years brokerage firm have begun marketing them to the average consumer as safe and sound investments for income needs. Nothing could be further from the truth, as these products can be quite risky and are unquestionably complicated.

A CMO is essentially an investment that combines or pools mortgages and then issues tranches based on the pool. Each tranche is unique, possessing different risks and characteristics.  Furthermore, CMOs are different than most fixed income products, in that they do not pay off at maturity. Instead, they make principal payments throughout the life of the security.  Inverse floater CMOs pay adjustable rates of interest. These adjustable rates move opposite from standard interest rate indices, such as LIBOR. FINRA, and its predecessor the NASD, has long maintained that inverse floating rate CMOs are suitable only for "sophisticated investors with a high-risk profile."

Shepherd Smith Edwards & Kantas LLP has a team of attorneys, consultants and others with more than 100 years of combined experience in the securities industry and in securities law. Since 1990, we have represented thousands of investors nationwide to recover losses.  We have represented clients in Federal and state courts and in arbitration through the Financial Industry Regulatory Authority (FINRA), the New York Stock Exchange Inc. (NYSE), the American Arbitration Association (AAA) and in private arbitration actions. Collectively, we have represented clients in more than 1,000 matters in negotiation, mediation, arbitration and litigation. 

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