FINRA

Published on: March 8, 2012

Investors of Reef Oil and Gas Partnership Could Recover Losses

Investors who suffered losses as a result of a Reef Oil and Gas partnership investment may be able to recover losses through securities arbitration. Investment attorneys are investigating potential claims on behalf of individuals who invested in Reef Oil and Gas partnerships based on the unsuitable recommendations of various broker-dealers. Reef Oil and Gas partnerships are risky and, therefore, not suitable for many investors, especially those with a conservative portfolio.

The general partner of Reef Oil and Gas Companies, Reef Oil & Gas Partners L.P., engages in the developing, producing, and exploiting of oil and natural gas. Furthermore, it operates wells that are, or will be, drilled. Reef Oil and Gas Partners L.P. is based in Richardson, Texas and was founded in 1987.

The substantial risks of oil and gas partnerships make them investments that are only appropriate for sophisticated investors. Nevertheless, many broker-dealers have recommended them to investors for which the investment was unsuitable. Under the rules of fiduciary duty, broker-dealers must adequately disclose the investment’s risks before recommending an investment. Furthermore, they must perform adequate due diligence in determining whether or not the investment is suitable for each investor, given their individual risk tolerance and investment objectives. If a broker does not perform these necessary actions, they have committed broker misconduct in the form of making an unsuitable recommendation and can be penalized and required to return investors’ losses through securities arbitration with the Financial Industry Regulatory Authority. According to investment attorneys, many brokerage firms appear to have failed to perform due diligence when recommending oil and gas partnership investments to investors.

Published on: March 7, 2012

Investors Who Suffered Losses as a Result of W.P. Carey REIT May Have Valid Securities Arbitration Claim

by InvestorLawyers

Investors of W.P. Carey REIT may be able to recover losses through securities arbitration, investment attorneys say. A recent Financial Industries Regulatory Authority (FINRA) announcement stated that it is paying close attention to the way REITs are being marketed and sold by broker-dealers. In many cases, brokers made unsuitable recommendations of REITs and marketed the investments as safe, despite the risk level of the investments.

Investors Who Suffered Losses as a Result of W.P. Carey REIT May Have Valid Securities Arbitration Claim

Typically, REITs carry a high commission, which motivates 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, such as the W.P. Carey REITs, carry a relatively high dividend or high interest, making them attractive to retired investors.

However, non-traded REITs 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.

Published on: March 2, 2012

News: FINRA Files Complaint Against Ex-broker

by InvestorLawyers

On February 9, 2012, ex-broker James Scott McKee was charged with aggravated theft in the first degree. As a result of his broker misconduct, McKee faces four charges of theft. In addition, a complaint has been filed against him with the Financial Industry Regulatory Authority (FINRA). McKee was formally affiliated with LPL Financial LLC, Morgan Stanley Smith Barney LLC and Berthel Fischer & Co. Financial Services Inc. According to the complaint filed with FINRA, McKee’s victims included a local church, an 81-year-old retiree and other unsophisticated investors.

McKee convinced an LPL client to invest $400,000. This investment took place in April 2007 and was put into a real estate venture. However, according to the FINRA complaint, McKee failed to notify or receive approval from LPL for the venture. Following a heart attack, which subjected the investor to significant medical expenses, she contacted McKee to have her money returned. McKee received two checks for $200,000 in February 2008 but failed to return the money to the investor. Instead, he told the client the funds remained invested and then used them for his own use. The money has not yet been returned to the client.

According to the police statement on the matter, McKee “committed aggravated theft by deception and fraud with respect to securities or securities business” from February 2008 to the present. According to Oregon officials, McKee sold unregistered securities, conducted unauthorized liquidation of investment account monies, concealed the liquidation and made an unauthorized deposit of said funds into his personal bank account.

Published on: March 1, 2012

FINRA Investor Alert: Inspecting Account Statements Helps Investors Detect Securities Fraud

by InvestorLawyers

Securities fraud often goes undetected because investors either don’t understand or don’t closely inspect their account statements from their securities firm. On February 23, 2012, the Financial Industry Regulatory Authority (FINRA) issued a new Investor Alert called “It Pays to Understand Your Brokerage Account Statements and Trade Confirmations.” This Investor Alert is designed to help investors to better understand their account statements. A careful inspection of account statements can help investors detect errors and broker misconduct, including overcharges and unauthorized transactions.

FINRA Investor Alert: Inspecting Account Statements Helps Investors Detect Securities Fraud

FINRA’s Vice President for Investor Education, Gerri Walsh, in a FINRA press release about the Investor Alert stated, “Investors whose portfolios have taken a hit might not be keen to open their account statements, but investors should review their statements carefully. Investors should also review trade confirmations as soon as they receive them because a single keystroke can make the difference between 100 and 1,000 shares.”

The Investor Alert uses plain language to detail to investors their account statements’ key elements and “red flags” that could indicate to investors that misconduct or mistakes may have occurred. Investors should also look for their investment objective, which is listed on many account statements. This investment objective will indicate the investor’s strategy and will contain words such as “conservative” or “growth.” This description – and the account activity – should accurately reflect the goals of the investor.

Published on: February 29, 2012

Investors Recovering TIC Investment Losses Through Securities Arbitration

by InvestorLawyers

There has been a recent series of Financial Industry Regulatory Authority (FINRA) securities arbitration rulings in which panels have sided with investors who sustained losses because of TIC exchanges. TIC, or tenant-in-common, investments involve tax-deferred exchanges of property ownership interests. In the majority of these arbitration awards, the sale of TICs, along with other products, came from DBSI Inc. DBSI raised almost $1 billion from around 140 separate deals prior to its bankruptcy declaration in 2008.

Investors Recovering TIC Investment Losses Through Securities Arbitration

Securities Arbitration Commentator research and InvestmentNews reports indicate that $12.6 million in cases involving DBSI’s direct broker-dealer sales of TICs have been filed with FINRA.

LPL Financial LLC has also faced a FINRA panel because of TIC investments. Heinrich and Araceli Hardt, both 76 from San Diego, California, purchased two TIC exchanges from David Glenn, an LPL broker. According to the Hardts’ allegations, LPL and Glenn’s broker misconduct included elder abuse and securities fraud. On February 10, the FINRA panel awarded the Hardts $1.4 million. Claims were also filed on behalf of the Hardts against Orchard Securities LLC and Meridian Capital Partners. However, the claims against Meridian Capital and Orchard Securities were dismissed by the Hardts in December.

Published on: February 27, 2012

LPL Financial Investors of Direct Invest LLC May Be Eligible to Recover Losses Through Securities Arbitration

by InvestorLawyers

Investment attorneys are investigating claims on behalf of investors against LPL Financial regarding the sale of private placements. The many investors who sustained losses in private placements, specifically Direct Invest LLC, may be able to recover losses through securities arbitration. Earlier this month, a Financial Industry Regulatory Authority Arbitration Panel awarded two LPL investors $1.4 million as a result of losses they sustained from Direct Invest LLC. Their investments included Braintree Park LLC and Heron Cove LLC. In addition to the $1.4 million award, LPL was also ordered to pay hearing session fees totaling $35,700.

LPL Financial Investors of Direct Invest, LLC may be Eligible to Recover Losses Through Securities Arbitration

According to claimants’ allegations, LPL’s sale of investments in Direct Invest LLC was fraudulent in that the investments were marketed as private placements to retirees, promising that the investments could generate a consistent income stream. Claimants alleged that the sources of the projected distributions, the real estate market and the actual properties were misrepresented by LPL. Furthermore, claimants stated that they were told that their received distributions would come from real estate operations while, in actuality, a large part of the distributions came from the use of leverage or a return of their own investment.

The original FINRA claim also named Meridian Capital Partners LLC and Orchard Securities LLC as respondents. However, the claims against these firms were resolved with claimants prior to the FINRA panel’s ruling. Therefore, details of how the issues were resolved are not present in this case.

Published on: February 23, 2012

Fannie Mae, Freddie Mac Investors Could Recover Losses Through Securities Arbitration

by InvestorLawyers

Stock fraud lawyers are investigating potential securities arbitration claims for investors who suffered losses through their investments in Fannie Mae and Freddie Mac Preferred Securities. Claims are currently being filed against Merrill Lynch and other brokerage firms with the Financial Industry Regulatory Authority’s (FINRA) Office of Dispute Resolution. According to the allegations of claims already filed with FINRA, fraudulent misrepresentation and omission of material facts occurred when the investments were solicited to investors. The actual risks associated with Freddie Mac and Fannie Mae preferred stock investments were not fully and accurately disclosed to investors with a conservative portfolio.

Fannie Mae and Freddie Mac Investors Could Recover Losses Through Securities Arbitration

Allegedly, retail investors were told that the investments were as safe as de-facto government-backed bonds. However, this was not the case. In fact, significant risks were associated with Fannie Mae and Freddie Mac-preferred stocks. In reality, preferred stocks are more volatile than bonds and have characteristics that make them much more risky than corporate bonds’ guaranteed status. These risks were not disclosed to investors.

Furthermore, in the event that the company should encounter a financial problem when waiting for the company’s assets, preferred stockholders would wait behind bond holders. In a company like Freddie Mac or Fannie Mae, if the company fails, bondholders would be the first to receive repayment. It is for this reason that holders of Freddie Mac and Fannie May-preferred stock suffered an extreme default risk. Preferred stock holders were not informed that they were not fully protected. In addition, Freddie Mac and Fannie Mae eliminated preferred dividend payments, which, for income purposes, was an important disclosure fact related to a product investment.

Published on: February 22, 2012

Bernoulli High Grade CDO-II Investors Could Recover Losses Through Securities Arbitration

by InvestorLawyers

Merrill Lynch customers who purchased Bernoulli High Grade Collateralized Debt Obligations could recover their losses through securities arbitration. Bernoulli High Grade CDO-II was sold to institutional and high-net-worth customers of Merrill Lynch. The Bernoulli High Grade CDO-II was underwritten by Merrill Lynch in 2007. However, all 30 of the CDOs underwritten by Merrill Lynch in 2007 were either in technical default, had their best-rated portion cut to junk, were in danger of being liquidated or were in the process of being liquidated by the summer of 2008. Stock fraud lawyers are now investigating how Bernoulli High Grade CDO-II was marketed and sold by Merrill Lynch.

Bernoulli High Grade CDO-II Investors Could Recover Losses Through Securities Arbitration

Securities that are backed by underlying pools of loans or bonds are CDOs, or collateralized debt obligations. While these investments are inherently risky, they are relatively common among “qualified investors.” Currently, stock fraud lawyers are also investigating if Merrill Lynch properly disclosed the CDO risks to investors in the sale of Bernoulli High Grade CDO-II. Furthermore, the value of Bernoulli High Grade CDO-II may have been inflated and overstated by Merrill Lynch. Many investment attorneys believe that Merrill Lynch either knew or should have known the 2007 CDO deals were bad in the existing mortgage market conditions, given the poor performance of the CDOs.

On January 31, 2012, a Financial Industry Regulatory Authority Arbitration Panel awarded $1.38 million to Bobby Hayes, an investor who purchased Collateralized Debt Obligations from Merrill Lynch in 2007. For more on this case, see the previous blog post, “After Securities Arbitration, Merrill Lynch Must Pay $1.4 Million to Investor Over CDO Loss.”

Published on: February 20, 2012

Lexington Capital CDO Investors Could Recover Losses Through Securities Arbitration

by InvestorLawyers

Merrill Lynch customers who purchased Lexington Capital Funding III Collateralized Debt Obligations could potentially recover their losses through securities arbitration. Lexington Capital was sold to institutional and high-net-worth customers of Merrill Lynch. The Lexington Capital CDO was underwritten by Merrill Lynch in 2007. However, all 30 of the CDOs underwritten by Merrill Lynch in 2007 were either in technical default, had its best-rated portion cut to junk, was in danger of being liquidated or was in the process of being liquidated by the summer of 2008. Stock fraud lawyers are now investigating how Lexington Capital was marketed and sold by Merrill Lynch.

Lexington Capital CDO Investors Could Recover Losses Through Securities Arbitration

Securities that are backed by underlying pools of loans or bonds are called CDOs, or collateralized debt obligations. While these investments are inherently risky, they are relatively common among “qualified investors.” Currently, stock fraud lawyers are also investigating if Merrill Lynch properly disclosed the CDO risks to investors in the sale of Lexington Capital. Furthermore, the value of Lexington Capital may have been inflated and over-stated by Merrill Lynch. Many investment attorneys believe that Merrill Lynch either knew or should have known the 2007 CDO deals were bad in the existing mortgage market conditions, given the poor performance of the CDOs.

On January 31, 2012, a Financial Industry Regulatory Authority Arbitration Panel awarded $1.38 million to Bobby Hayes, an investor who purchased Collateralized Debt Obligations from Merrill Lynch in 2007. For more on this case, see the previous blog post, “After Securities Arbitration, Merrill Lynch Must Pay $1.4 Million to Investor Over CDO Loss.”

Published on: February 17, 2012

Securities Arbitration May Be Better Path for UBS Lehman Brothers Investors

by InvestorLawyers

Investment attorneys continue to seek investors who suffered significant losses in Lehman Brothers 100 Percent Principal Protection Notes and who wish to pursue securities arbitration claims in order to recover losses. Lehman Brothers 100 Percent Principal Protection Notes, also known as Principal Protected Notes, were issued by UBS Financial Services and have resulted in significant losses for many investors.

Securities Arbitration May be a Better Path for UBS Lehman Brothers 100% Principal Protected Notes Investors

Many claims have been filed on behalf of Lehman note holders in the Lehman bankruptcy proceedings, but there are many more investors who must take action if they wish to recover these losses. Though many investors hope to recover losses through the class action that has been filed, individual securities arbitration claims may prove to return a larger percentage of losses to investors. Based on the Third Amended Joint Chapter 11 Plan of Lehman Brothers, it appears that investors will only receive about 21 cents on the dollar through the class action lawsuit. Therefore, investors should attempt to recover losses by any means available to them, including securities arbitration. Furthermore, investors should act immediately due to potential statutes of limitations.

Customers of UBS Financial Services who suffered losses as a result of their investments in Lehman Brothers 100 Percent Principal Protection Notes are encouraged to contact a stock fraud lawyer immediately for more information about filing a securities arbitration claim with the Financial Industry Regulatory Authority’s Office of Dispute Resolution. One way to do this is to look for an attorney who is experienced at representing clients with these kinds of claims. You will want someone who knows the history of rulings relative to these claims, as well as someone who understands how to recover as much money as possible for his or her clients.