FINRA

Published on: June 29, 2012

News: Merrill Lynch Fined by FINRA

A June 21^st announcement by the Financial Industry Regulatory Authority (FINRA) stated that the regulator has fined Merrill Lynch, Pierce, Fenner & Smith Inc. The firm was fined $2.8 million for supervisory failures and failing to provide required trade notices, and ordered to pay $32 million in remediation to affected customers, plus interest. The supervisory failures allegedly resulted in overcharging customers in the form of unwarranted fees amounting to $32 million. Securities arbitration lawyers continue to file claims on behalf of investors who have been overcharged by the firms with which they invest.

News: Merrill Lynch Fined by FINRA

According to FINRA’s findings, Merrill Lynch failed to provide an adequate supervisory system from April 2003 to December 2011. This lack of adequate supervision allegedly resulted in customer billing that was not in accordance with contract and disclosure documents. This inaccurate billing affected almost 95,000 customer accounts. The unwarranted fees, plus interest, have since been returned to the affected customers by Merrill Lynch. Securities fraud attorneys say that when firms do not provide adequate supervisory systems, they can be held responsible for investor losses. This applies to both overcharges and instances where the firm does not supervise its brokers, some of whom then commit fraud.

In addition, Merrill Lynch did not provide customers with timely trade confirmations, as a result of computer programming errors, in certain advisory programs. Because of these errors, over 10.6 million trades in more than 230,000 customer accounts did not receive trade confirmations. Furthermore, Merrill Lynch did not properly identify its role on account statements and trade confirmations in certain transactions, specifically whether it acted as principal or agent. Securities arbitration lawyers, and FINRA’s decision, support the idea that computer programming errors are never an excuse for improper conduct on the part of a securities firm.

Published on: June 28, 2012

Investors Beware Retirement Account Fraud

by InvestorLawyers

Investment fraud lawyers are currently investigating potential claims on behalf of investors who suffered losses as a result of a breach of fiduciary duty related to their retirement accounts.

Investors Beware Retirement Account Fraud

Cofounder and director of Results One Financial LLC, Steven Salutric, was recently ordered to restore $1,211,902.25 to clients who held pension plans with him. The money was allegedly withdrawn from four pension plans between 2005 and 2009. This action violated the Employee Retirement Income Security Act. Allegations against Salutric stated that he misdirected client assets to entities such as a restaurant, a film distribution company, a real estate partnership and the church at which he served as treasurer. Salutric had a personal interest in all these entities, according to stock fraud lawyers.

“It is particularly egregious when those entrusted with protecting workers’ retirement assets jeopardize them by committing illegal acts for personal gain,” Hilda L.Solis, secretary of the U.S. Department of Labor, said.

Published on: June 27, 2012

Mountain V Oil and Gas Investors Could Recover Losses

by InvestorLawyers

Investment fraud lawyers currently are investigating potential claims on behalf of investors who suffered significant losses as a result of their investment in a Mountain V Oil and Gas investment, or other similar investments. In many cases, broker-dealers improperly recommended these risky investments to clients for whom the investment was unsuitable.

Mountain V Oil and Gas Investors Could Recover Losses

Mountain V’s headquarters are in Bridgeport, West Virginia. Steve and Mike Shaver founded Mountain V Oil & Gas Inc. in March of 1994. It was founded in order to acquire and develop gas and oil reserves located in the Appalachian Basin.

According to investment fraud lawyers, oil and gas investments are not suitable for unsophisticated investors because of the substantial risks involved. These investments should only be recommended to sophisticated investors.

Published on: June 25, 2012

Paladin Realty Income Properties REIT, Wells REIT Investors Could Recover Losses

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who have suffered significant losses as a result of their investment in Wells or Paladin Realty Income Properties REITs.

Paladin Realty Income Properties REIT and Wells REIT Investors Could Recover Losses

Reportedly, investors were recently told by Paladin Reality Income Properties Inc. that its stock would cease to be sold next month because its current scale cannot cover expenses. This comes after it raised, in more than four years, $78.7 million. Reports about Wells Real Estate Funds state that, in an attempt to cut costs, the firm laid off its executive sales staff recently. This is not a good sign for investors, who are hoping their investment will rebound after dividend cuts and price drops.

Securities fraud attorneys have stated that as illiquid, non-traded investments, many REITs are not a suitable investment for all investors. Financial Industry Regulatory Authority rules have established that firms have an obligation to fully disclose all the risks of a given investment when making recommendations, and those recommendations must be suitable for the individual investor receiving the recommendation. Furthermore, brokerage firms must, before approving an investment’s sale to a customer, conduct a reasonable investigation of the securities and issuer.

Published on: June 22, 2012

Customers of Benjamin Daniel DeHaan Could Recover Losses

by InvestorLawyers

Potential claims are currently being investigated by securities fraud attorneys on behalf of Benjamin Daniel DeHaan customers. The Securities and Exchange Commission filed a civil action on June 9, 2012, against Lighthouse Financial Partners LLC and Benjamin Daniel DeHaan in the United States District Court for the Northern District of Georgia. Lighthouse has been owned and operated by DeHaan since 2007.

Customers of Benjamin Daniel DeHaan Could Recover Losses

According to the SEC’s complaint, from January 2011 until early May 2012, DeHaan allegedly moved about $1.2 million of investor funds to a bank account under his control, in Lighthouse’s name. By moving the funds to this account from the client accounts that were held at a custodial broker-dealer, DeHaan was able to gain control and custody of the client assets. Allegedly, the customers were told that new accounts at another broker-dealer would be opened through the use of these funds. However, once the funds were in the Lighthouse account, at least some of them were moved to DeHaan’s personal account and other accounts used for Lighthouse business expenses.

Client funds totaling at least $600,000 are still unaccounted for. Furthermore, DeHaan allegedly provided false documents to the SEC’s staff and the State of Georgia’s examiner.

Published on: June 21, 2012

Victims of Burton Douglas Morriss Fraud Could Recover Losses

by InvestorLawyers

Securities arbitration lawyers are investigating potential claims on behalf of investors who suffered significant losses as a result of the alleged fraud committed by Burton Douglas Morriss. An announcement by the Securities and Exchange Commission stated that the SEC has obtained emergency relief, including the appointment of a receiver and an asset freeze, and has filed charges against several St. Louis, Missouri management companies and private investment funds. According to the complaint, the principal of these entities, Burton Douglas Morriss, allegedly misappropriated investor assets totaling more than $9 million.

Victims of Burton Douglas Morriss Fraud Could Recover Losses

The complaint, which was filed in the St. Louis federal court, states that between 2003 and 2011, Morriss, Acartha Group LLC and MIC VII LLC raised a minimum of $88 million from at least 97 investors. According to the SEC’s allegations, Morriss’ investors were told that their money would be invested in a portfolio of technology companies and financial services by his private management companies and investment funds. However, stock fraud lawyers say, investors were unaware that over the last several years, their money had been misappropriated by Morriss. Millions of dollars were allegedly misappropriated through fraudulent transfers to himself and an entity under his control, Morriss Holdings LLC. Securities arbitration lawyers say these funds were allegedly used for personal expenses including pleasure trips, household expenses, mortgage payments, alimony payments and personal loan payments. Allegedly, Morriss concealed his fraud by later disguising the fraudulent transfers as personal loans.

Another allegation included in the SEC’s complaint is that Morriss orchestrated a scheme to recruit investors to invest in membership interests in a private investment fund he owned, which would dilute the fund’s current investors’ investments, without the required unanimous consent of current investors.

Published on: June 20, 2012

Arbitration Claim Filed Against Securities America for Churning

by InvestorLawyers

Stock fraud lawyers are investigating potential claims on behalf of investors of Securities America who may have suffered significant losses as a result of life insurance investment twisting and churning.

Arbitration Claim Filed Against Securities America for Churning

Investment fraud lawyers say churning is a common problem in the securities industry. According to the S.E.C., “Churning refers to the excessive buying and selling of securities in your account by your broker, for the purpose of generating commissions and without regard to your investment objectives.” In short, churning is a form of broker misconduct in which the broker performs excessive trading to generate personal profit. For more information on churning, see the previous blog post, “Investment Churning: A Slippery Slope of Broker Misconduct.”

A Financial Industry Regulatory Authority arbitration claim was recently filed on behalf of an 81-year-old Peoria, Illinois resident. The claimant, a retired widow, was sold various life insurance policies and annuities. These investments were allegedly held for only a short period of time before being liquidated. According to the claim, the investments’ proceeds were then rolled into other annuity contracts and policies. Allegedly, most of these transactions incurred surrender charges and fees that were charged to the claimant. As an example detailed by the Statement of Claim, the funds of a Lincoln Annuity, purchased on August 20, 2003 and surrendered two years later, were rolled into a 15-month Fidelity Annuity. The proceeds of this transaction were rolled, on the same day of the sale, into a Hancock Annuity. The Hancock Annuity was held for just over two years. When it was sold, its proceeds were rolled into a Jackson Annuity.

Published on: June 18, 2012

Claim Against Stifel Nicolaus Could Mean More Arbitration Claims for Cardiac Network Promissory Note Investors

by InvestorLawyers

In light of a recent claim against Stifel Nicolaus, securities arbitration lawyers say other investors may come forward to recover losses sustained as a result of their investment in a Cardiac Network Promissory Note. This month, a claim was filed against Stifel to recover losses suffered by an 89-year-old veteran of World War II who suffered losses as a result of his investment in the Cardiac Network Promissory Note.

Claim Against Stifel Nicolaus Could Mean More Arbitration Claims for Cardiac Network Promissory Note Investors

According to securities fraud attorneys, the note was allegedly sold to the claimant, by a representative of Stifel, without prior approval by Stifel. This action is known as “selling away.” Securities brokerage firms have a legal obligation to provide reasonable supervision of their financial advisors’ activities. If a firm fails to reasonably supervise their advisors, they can sometimes be held responsible for losses sustained by investors.

The claim’s allegations state that the claimant was approached by the Stifel advisor and he was presented with an opportunity to earn 10 percent on a six-month investment. The advisor allegedly recommended a $150,000 Promissory Note investment but did not provide a prospectus or any other offering materials and did not mention he would be investing in “Cardiac Network.” Instead, the adviser allegedly only represented the investment as a Stifel enterprise that was being offered to affluent clients of the firm. The claimant agreed to the investment in the note based on its purported affiliation with Stifel. However, securities arbitration lawyers say that when the note came due, the claimant received no principal payment and the note is now believed to be worthless.

Published on: June 15, 2012

FINRA Investor Alert: Beware Nutraceutical Stock Scams

by InvestorLawyers

Last month, the Financial Industry Regulatory Authority (FINRA) issued an Investor Alert, “Nutraceutical Stock Scams — Don’t Supplement Your Portfolio with These Companies.” The purpose of the alert is to warn investors to beware of stock scams related to nutraceuticals. Stock fraud lawyers are aware of these scams and say that pitches for these types of stocks can be received in many ways, including email, cold calls, blogs, tweets and message board posts.

FINRA Investor Alert: Beware Nutraceutical Stock Scams

Products that claim to assist in weight loss, provide an energy boost or help people live longer are nutraceuticals. These products can include food and drink products that contain additives that are allegedly beneficial for health and dietary supplements. Investment fraud lawyers say that while there are legitimate nutraceutical companies, many are illegitimate and could be targeting investors for fraud.

According to FINRA, “The con artists behind nutraceutical stock scams may try to lure investors with optimistic and potentially false and misleading information that in turn creates unwarranted demand for shares of small, thinly-traded companies that often have little or no history of financial success.”

Published on: June 14, 2012

BNI Investors Could Recover Losses Through Securities Arbitration

by InvestorLawyers

Stock fraud lawyers are investigating potential claims on behalf of investors who suffered losses as a result of their investment in BNI Equities LLC, BNI TIC (tenant-in-common) or BNI Notes. In many cases, brokers improperly recommended the purchase of risky real estate and TIC investments offered by BNI. Many brokers were motivated to make these improper recommendations because of the high commission paid to them by real estate private placements. This commission is frequently as high as 10 percent.

BNI Investors Could Recover Losses Through Securities Arbitration

FINRA arbitrations involving real estate investments, such as TICs, are not uncommon. In many cases, securities arbitration lawyers were able to prove that the financial professionals that recommended the investments did not perform the necessary due diligence before they made the recommendation to their clients.

According to stock fraud lawyers, a major problem with structured real estate investments is that they often involve liquidity restrictions and high risks. To make matters worse, these risks are often misrepresented by brokerage firms. Instead, many firms focus on the investments’ promised income streams. Retired investors are often attracted to these income streams but don’t realize that because of the high risks involved, the investment could be unsuitable for them. Financial Industry Regulatory Authority rules have established that firms have an obligation to fully disclose all the risks of a given investment when making recommendations, and those recommendations must be suitable for the individual investor receiving the recommendation given their age, investment objectives and risk tolerance. Furthermore, brokerage firms must, before approving an investment’s sale to a customer, conduct a reasonable investigation of the securities and issuer.