FINRA

Published on: April 18, 2012

Investors Who Sustained Losses as a Result of Retail Property of America Inc. REIT May Have Claim

According to securities arbitration lawyers, investors who sustained losses as a result of Retail Properties of America Inc. Real Estate Investment Trust (REIT) may be able to recover losses through Financial Industry Regulatory Authority (FINRA) arbitration. Formerly known as Inland Western REIT, Retail Properties of America is the third-largest shopping center REIT in the nation. The investment’s recent IPO offering had some disastrous results for investors.

Investors Who Sustained Losses as a Result of Retail Property of America, Inc. REIT May Have Claim

Recent reports show that the $8 offering price of Retail Properties came only as a result of reverse-stock-split engineering. Furthermore, this price is significantly less than the $10 to $12 expected pre-offering price. Investors who originally paid $10 per share for the REIT are actually receiving a split-adjusted value of $3 per share. Investment fraud lawyers say this 70 percent decline may result in significant losses that could be recovered through securities arbitration.

Retail Properties is a non-traded REIT. According to investment fraud lawyers, REITs typically carry a high commission, which motivates some brokers to make the recommendation to investors despite the investment’s unsuitability. The commission on a non-traded REIT is often as high as 15 percent. Non-traded REITs like this one carry a relatively high dividend or high interest, which also helps make them attractive to investors. However, they are inherently risky and illiquid, which limits access of funds to investors. This becomes a major problem for investors, especially retired individuals, who may need to access their funds when the need arises. In addition, frequent updates of the investment’s current price are not required of broker-dealers, causing misunderstandings about the financial condition of the investment. Because frequent updates are not required, investors may believe the REIT is doing much better than it actually is. For more information on REITs, see the previous blog post, “FINRA Investor Alert: Public Non-Traded REITs.”

Published on: April 16, 2012

Wells Fargo Clients May Have Securities Arbitration Claim

by InvestorLawyers

According to stock fraud lawyers, clients of Wells Fargo Advisors LLC may be able to recover losses through Financial Industry Regulatory Authority arbitration. A claim was recently filed with on behalf of a Wells Fargo client because of the sales practices of one or more of its brokers. Allegedly, the client suffered significant losses, which amounted to a substantial part of his life savings, due to an unsuitable recommendation by a Wells Fargo broker. The client was persuaded to invest in several “penny stocks.” The client purchased shares of Camac Energy, Tombstone Exploration and Blue Earth.

Wells Fargo Clients May Have Securities Arbitration Claim

The claim states that clients purchased the penny stocks based upon statements that the stocks were recommended by Wells Fargo. Furthermore, the stocks were represented, even to unaggressive investors, as good investments. However, the stocks were actually very high risk and, when the stocks fell, large sums of money were lost by investors. In addition, the stocks were recommended by the broker because of research done by Liviakis, a third-party analyst, and not because of Wells Fargo’s research or recommendation. According to stock fraud lawyers, Liviakis is not currently facing any charges or claims of misconduct.

Securities fraud attorneys believe that many investors could have been defrauded in this manner, based upon the broker’s sales methods. High risk investments, such as penny stocks, are unsuitable for investors with a conservative portfolio and low risk tolerance. Prior to recommending an investment to a client, brokers are required to perform the necessary due diligence to establish whether or not the investment is suitable for the client, given their age, investment objectives and risk tolerance.

Published on: April 12, 2012

Investors of Odyssey Partnership, BGK Income, Opportunity Fund Could Recover Losses Through Securities Arbitration

by InvestorLawyers

Investment fraud lawyers are investigating certain private placements in potential securities arbitration claims. Two of these private placements are the BGK Income and Opportunity Fund. Allegedly, some of the broker-dealers that recommended these private placement investments could be liable for investor losses.

Investors of Odyssey Partnership, BGK Income and Opportunity Fund Could Recover Losses Through Securities Arbitration

Because of the high commission paid by private placements (often as high as 10 percent), stockbrokers often make improper recommendations in order to earn the commission. If this fraud has occurred, a securities fraud attorney can help investors recover their losses through Financial Industry Regulatory Authority (FINRA) securities arbitration.

Another investment currently being investigated by securities fraud attorneys is the Odyssey Limited Partnership investment. Odyssey Operating Partnership II Ltd. apparently raised $30 million from investors through limited partnership unit sales. In addition, through secured note sales, Odyssey Residential Inc., Odyssey Residential II LLC, Odyssey Property III LLC and Odyssey Diversified VI LLC raised more than $69 million. These partnerships are only appropriate for sophisticated investors and involve substantial risks. Any investment recommendations made to unsophisticated investors could be considered unsuitable.

Published on: April 11, 2012

FINRA Fines David Lerner Associates

by InvestorLawyers

David Lerner Associates was recently ordered by the Financial Industry Regulatory Authority (FINRA) to pay more than $3.7 million in restitution and fines. The decision is a result of David Lerner’s practices in overcharging retail customers on sales of 1,700 collateralized debt obligations (CDOs) and over 1,500 municipal bonds transactions. The municipal bonds and CDOs were rated investment-grade or above. Securities fraud attorneys are currently consulting with customers of David Lerner.

FINRA Fines David Lerner Associates

From January 2005 through January 2007, David Lerner charged excessive markups which resulted in “unfairly high prices” and lower yields being incurred by customers, according to a release issued by FINRA. The FINRA panel stated that David Lerner’s trades “reflected a pattern of intentional excessive markups” for investments that could be obtained at “significantly lower prices.” These types of sales practices have gotten the attention of stock fraud lawyers, whose job it is to help investors who have been wronged by their broker or firm.

These unfair pricing practices apparently continued despite a letter of caution on the topic that followed a 2004 exam and Wells notices on the issue, which were received by David Lerner Associates in July 2009. This, combined with the fact that the firm “has not taken any corrective measures to improve their fixed income markups policies and practices” was taken into consideration by the panel when the sanctions were set.

Published on: April 9, 2012

Cornerstone Core Properties REIT Investors Could Recover Losses

by InvestorLawyers

According to investment fraud lawyers, investors who sustained significant losses because of their investment in Cornerstone Core Properties REIT may be able to recover losses through Financial Industry Regulatory Authority (FINRA) arbitration. Full-service brokerage firms who sold Cornerstone are now being investigated. Pacific Cornerstone Capital Inc., the sponsor of the Cornerstone REIT, is only one of the firms included in this investigation by securities arbitration lawyers.

Cornerstone Core Properties REIT Investors Could Recover Losses

Investors in the Cornerstone REIT received a letter in March which stated that the share price of their investment had suffered a 72 percent decline, dropping from $8.00 to $2.25. As a result of this decline, significant damages have been suffered by the investors of Cornerstone REIT.

Investment fraud lawyers have stated that as an illiquid, non-traded investment, Cornerstone REIT was not a suitable investment for all investors. FINRA 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: April 6, 2012

Improper Variable Annuity Sales Practices Lead to Fine, Restitution Order by FINRA

by InvestorLawyers

The Financial Industry Regulatory Authority (FINRA) recently fined one of the United States’ largest independent broker-dealers, Cadaret Grant. Grant must pay a $200,000 fine in addition to restitution to investors because of improper sales practices of variable annuities to elderly investors. According to investment fraud lawyers, improper sales of variable annuities are a common cause for securities arbitration claims.

Improper Variable Annuity Sales Practices Lead to Fine, Restitution Order by FINRA

According to investment fraud lawyers, variable annuities are popular investment vehicles for retirement. Essentially, they are insurance contracts that are joined with an investment product. They have insurance-like properties but function as tax-deferred savings vehicles by providing a tax deferral using the insurance policy. The combination of the investment product and insurance contract provides four appealing features: a tax deferral on earnings, the ability to name a beneficiary for the account, the ability to use your life expectancy to receive payments for life and the ability to receive guarantees based on the insurance component. However, variable annuities are also a common vehicle for investment fraud, according to securities arbitration lawyers.

One of the registered representatives for Cadaret Grant sold 13 elderly clients unsuitable death benefit riders to variable annuities from 2006-2008, according to FINRA’s decision announcement. All 13 of the clients were age 77 or older. Apparently, the death benefit was only effective through age 80. Furthermore, despite the fact the death benefit did not apply beyond age 81, it cost the clients 25 additional basis points in fees for the duration of the policy. Apparently, four of the clients could not benefit from the rider in any way.

Published on: April 5, 2012

News: Citi International Fined by FINRA for Excessive Markups, Markdowns

by InvestorLawyers

On March 19, 2012, the Financial Industry Regulatory Authority (FINRA) announced its decision to fine Citi Financial Services LLC for charging excessive markups and markdowns and related supervisory violations. In addition to a $600,000 fine, FINRA ordered Citi Financial to pay $648,000 in restitution and interest to wronged customers. Over 3,600 customers were charged excessive markups and markdowns, according to FINRA. Securities fraud attorneys appreciate FINRA decisions such as this one, which hold firms responsible for the fees they charge their customers.

News: Citi International Fined by FINRA for Excessive Markups, Markdowns

According to FINRA’s findings, from July 2007 through September 2010, Citi International charged excessive markups and markdowns on corporate and agency bonds. These markups and markdowns, which were as low as 2.73 percent and as high as more than 10 percent, are considered excessive within the given market conditions, value of the services rendered and cost of transaction execution. Furthermore, from April to June 2009, reasonable diligence was not given to the purchase or sale of corporate bonds in order to present the most favorable price to customers. Citi International, a subsidiary of Citigroup Inc., neither confirmed nor denied the charges.

FINRA’s Executive Vice President of Market Regulation, Thomas Gira, stated, “FINRA is committed to ensuring that customers who purchase and sell securities, including corporate and agency bonds, receive fair prices. The markups and markdowns charged by Citi International were outside of appropriate standards for fair pricing in debt transactions, and FINRA will continue to identify and address transactions that violate fair pricing standards, regardless of whether a markup or markdown is above or below 5 percent.”

Published on: April 4, 2012

Victims of LPL Financial Advisor Could Recover Losses

by InvestorLawyers

Victims of Elliot Kravitz, an LPL Financial Corp. independent client investment representative, are seeking the help of investment fraud lawyers in recovering their losses. Kravitz pleaded guilty recently to one count of wire fraud, according to the Cincinnati Business Courier. The wire fraud was in connection with an investment scheme. In this scheme, nine of Kravitz’ customers were defrauded out of over $2 million.

Victims of LPL Financial Advisor Could Recover Losses

Kravitz sold securities through LPL Financial Corp., which was formerly Waterstone Financial Corp., according to the plea agreement. In accordance with Kravitz’ recommendation, a client pulled money out of the stock market in order to invest in a REIT, or real estate investment trust, in July 2007. In order to gain permission to move the money, Kravitz had the client sign a distribution form. However, Kravitz placed the money in an account under his control instead of investing it in the REIT. Kravitz then made 12 additional withdrawals from the client’s account, totaling $713,765. The client then received a year-end account portfolio statement from Kravitz that listed the fake REIT. Allegedly, Kravitz diverted funds from eight other clients as well, amounting to approximately $1.12 million, for personal use.

According to securities arbitration lawyers, a firm may still be held responsible for investment losses if it can be proved that they were negligent in the supervision of their brokers, even if the broker or advisor was conducting business without their knowledge. Therefore, victims of Kravitz’ fraud may be able to recover losses with the help of an investment fraud lawyer, through securities arbitration against LPL Financial.

Published on: April 2, 2012

Investors Could Recover American Investment Exchange Losses

by InvestorLawyers

Investment fraud lawyers are currently representing individuals who suffered losses as a result of their investments in an American Investment Exchange TIC or other real estate co-ownerships investments. In many cases, brokers improperly recommended the purchase of tenant in common investments that were too risky for the investor’s portfolio and/or investment objectives. American Investment Exchange TICs are among these risky investments.

Investors Could Recover American Investment Exchange Losses

TICs, or tenancies-in-common, are investments in which multiple investors are sold a property. These investors are then co-owners of the property, and receive fractional interests in said property. The investors then enjoy their own share of the net income and expenses, proceeds of sale and appreciation of the property.

Because of the high commission paid by co-ownership real estate investments and TICs, stockbrokers often make improper recommendations in order to earn the commission, which is often as high as 10 percent. If this fraud has occurred, a securities arbitration lawyer can help investors recover their losses through Financial Industry Regulatory Authority securities arbitration.

Published on: March 30, 2012

Victims of Former LPL Financial Representative, Arthur Lin, Could Recover Losses

by InvestorLawyers

Securities arbitration lawyers are currently consulting with investors who suffered losses because of their association with Arthur Lin. A former LPL Financial representative, Lin has been accused of selling “…$5,360,000 in unregistered promissory notes issued by Malarz Equity Investments LLC to at least 20 investors, including 15 LPL customers,” according to Securities and Exchange Commission documents. Lin was registered with the Financial Industry Regulatory Authority (FINRA) member firm LPL Financial; investors who suffered losses during the time he was registered may be able to recover their losses through FINRA arbitration.

Victims of Former LPL Financial Representative, Arthur Lin, Could Recover Losses

According to the SEC, Lin was permanently enjoined from future violations of federal securities law on January 25, 2012. Between September 2006 and December 2008, Lin allegedly sold unregistered promissory notes to LPL Financial clients. Some fraudulent promissory notes should be registered with applicable regulatory bodies but, instead, bypass registration. Unregistered promissory notes that should have been registered are in violation of federal securities laws and victims of this fraud may be able to recover losses through securities arbitration.

Furthermore, according to the complaint, “Lin knowingly or recklessly made material misrepresentations or omitted to state material facts to investors regarding the risks of the investments and the use of investor funds,” according to the SEC.