LPL Financial

Published on: June 4, 2013

Non-traded REITs: Five Firms to Pay $7 Million in Massachusetts Settlement

On May 22, 2013, secretary of the Commonwealth of Massachusetts William Galvin announced settlements with five major independent broker-dealers. According to the settlements, Ameriprise Financial Services Inc. will pay $2.6 million in restitution to investors and a $400,000 fine, Commonwealth Financial Network will pay restitution of $2.1 million and a fine of $300,000, Royal Alliance Associates Inc. will pay restitution of $59,000 and a fine of $25,000, Securities America Inc. will pay restitution of $778,000 and a fine of $150,000 and Lincoln Financial Advisors Corp. will pay restitution of $504,000 and a fine of $100,000. Securities fraud attorneys are currently investigating claims on behalf of investors who purchased Real Estate Investment Trusts (REITs) from these or any other independent broker-dealers.

Non-traded REITs: Five Firms to Pay $7 Million in Massachusetts Settlement

According to a statement made by Mr. Galvin, “Our investigation into the sales of REITs, triggered by investor complaints, showed a pattern of impropriety on the sales of these popular but risky investments on the part of independent brokerage firms where supervision has historically been difficult to monitor.”

According to stock fraud lawyers, this settlement follows the February decision in which LPL Financial LLC was required to pay restitution to investors of $2 million and fines totaling $500,000 regarding non-traded REIT sales.

Published on: May 14, 2013

Broker-dealers’ Info Regarding Non-traded REITs is Inadequate, FINRA Says

by InvestorLawyers

Earlier this month, the Financial Industry Regulatory Authority (FINRA) issued a notice to broker-dealers stating that in some cases, they have not provided adequate service to investors in several areas, including the distribution of materials containing inaccurate and misleading statements related to non-traded real estate investment trusts, or REITs. Many securities arbitration claims have been filed by stock fraud lawyers on behalf of investors that cite similar claims.

The way in which investors receive dividends, or distributions, is one matter that is of concern to securities arbitration lawyers. One of the most attractive reasons for many investors to purchase non-traded REITs is the fact that they begin paying distributions immediately after sale. According to the FINRA notice, however, communications from broker-dealers to investors “have emphasized the distributions paid by a real estate program and failed to adequately explain that some of the distribution constitutes return of principal.”

FINRA also stated that “some communications have not provided sufficient discussions of the risks associated with investing in the products in order to balance the presentation of benefits.” Numerous claims have, in fact, been made alleging independent broker-dealers such as Ameriprise Financial Services Inc. and LPL Financial LLC did not adequately disclose the risks of non-traded REITs to investors prior to purchase. According to stock fraud lawyers, some investors are also not made aware that distribution payments can stop at any time.

Published on: April 23, 2013

REIT Investors May be Unaware They Suffered Significant Losses

by InvestorLawyers

According to securities fraud attorneys, many investors may be unaware of the fact that they have suffered losses in non-traded real estate investment trusts, or REITs. Financial statements for REITs usually reflect the investment’s initial purchase price, not the current value of the REIT; this can mislead investors into believing that their investment’s value is stable when, in fact, they have actually suffered significant losses.

Because these investments are unregistered securities, they do not have to follow the same rules that regulated investments must follow. As a result, investors may be subject to high fees both to get in and get out of the investment. Furthermore, non-traded REITs are inherently risky and illiquid, causing them to be difficult to value. Stock fraud lawyers say the nature of these investments makes them difficult to sell, which can cause problems for investors who need access to cash (such as retirees), making REITs clearly unsuitable for such investors.

Unfortunately, even diligent investors who carefully review their financial statements can’t depend on this information to reflect the true value of their non-traded REIT investment. Instead, investors will have to do some research to determine their investment’s value. Securities fraud attorneys are currently investigating many non-traded REITs sold by LPL Financial, Ameriprise Financial and other full-service brokerage firms, including KBS REIT, Inland American, Dividend Capital Total Realty, Cole Credit Property Trust II and III, Wells Real Estate Investment Trust II, Cole Credit Property 1031 Exchange and W.P. Carey Corporate Property Associates 17. For more information on these investigations, see the previous blog posts, “Ameriprise REIT Sales Under Investigation” and “LPL Financial Faces New Complaint Regarding Non-traded REIT Sales.”

Published on: April 4, 2013

LPL Financial Faces New Complaint Regarding Non-traded REIT Sales

by InvestorLawyers

Securities fraud attorneys say LPL Financial LLC is facing another complaint regarding its sale of REITs to unsophisticated investors. The complaint was filed by the State of Montana Auditor’s Department and was reported in The New York Times and Investment News. LPL Financial faced the Montana Auditor’s Department last year as well for allegedly failing to properly supervise one of its brokers. Reportedly, the new case involves multiple brokers and questions how sophisticated the broader compliance efforts of LPL Financial are.

A spokesman for the Montana Auditor’s Department would not make comments regarding any investigation into LPL Financial but did confirm that the state has more complaints about LPL Financial’s advisers than other firms.

Stock fraud lawyers say this case follows a complaint filed against LPL Financial by the Massachusetts Securities Division, which alleged shortcomings in the firm’s compliance practices with respect to the sales of non-traded REITs, or real estate investment trusts. That complaint, which was filed in December of 2012, alleged that the firm did not adequately supervise its registered representatives in the sales of non-traded REITs, which violated the company’s rules and state limitations. In February, Massachusetts ordered LPL Financial to pay a fine of $500,000 and restitution to clients of up to $2 million.

Published on: March 7, 2013

Fromer Merrill Lynch and LPL Financial Advisor Greg Campbell Charged With Fraud

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of the customers of Gregory John Campbell, a former advisor for Merrill Lynch and LPL Financial. A Petition for Order to Cease and Desist, which was related to Greg Campbell of Ladue, Missouri, was recently issued by the State of Missouri.

Merrill Lynch, LPL Financial Could be Held Responsible for Advisor’s Investor Fraud

Missouri stated that “from 2008 to 2012, Respondent Greg John Campbell made unauthorized transfers in excess of $1,500,000 from at least five client accounts. A majority of the transferred funds from these client accounts were used for Campbell’s benefit.” According to Missouri, a portion of the funds went to payments on a BMW lease and two of Campbell’s properties.

Campbell’s activity reportedly went undetected because clients stopped receiving account statements from LPL Financial and Merrill Lynch. The addresses used by the firms for mailing account statements were changed without authorization from the clients. When questioned about the changes in address, Campbell reportedly stated that “they were the result of administrative errors.”

Published on: February 14, 2013

LPL to Pay Up to $2.5 Million to Settle Claims; Customers Continue to Explore Options

by InvestorLawyers

On February 6, 2013, securities fraud attorneys announced that LPL Financial has settled claims brought by the State of Massachusetts by agreeing to pay up to $2.5 million. The claims against LPL alleged that it failed to supervise registered representatives related to the sales of non-traded REITs, or real estate investment trusts.

LPL to Pay Up to $2.5 Million to Settle Claims, LPL Customers Continue to Explore Options

The following non-traded REITs were the focus of this complaint: Dividend Capital Total Realty, Inland American, Wells REIT II, Cole Credit Property Trust II, Cole Credit Property Trust III, Cole Credit Property 1031 Exchange and W.P. Carey Corporate Property Associates 17. Investment fraud lawyers encourage investors who suffered significant losses as a result of their investment in these non-traded REITs to explore all of their legal rights and options.

LPL was charged in December 2012 with unethical and dishonest business practices related to the sale of REITs. These charges are in connection with the sales of $28 million in non-traded REITs between 2006 and 2009, which were sold to nearly 600 clients. According to the Securities Division, 569 of those transactions had regulatory violations. According to Massachusetts’ findings, LPL’s REIT sales included violations of the State’s 10 percent concentration limits, prospectus requirements and LPL compliance practices. Furthermore, Massachusetts alleged that representatives of LPL received limited REIT training.

Published on: January 17, 2013

Attorney Christopher Gray Interviewed By Lawyersandsettlements.com Concerning Non-Traded REIT Cases

by InvestorLawyers

Attorney Christopher J. Gray of Law Office of Christopher J. Gray, P.C. was recently interviewed by a reporter from legal news website Lawyersandsettlements.com concerning investor claims arising out of unsuitable recommendations of non-traded REITs by stockbrokers. The interview is accessible via the link below.

www.lawyersandsettlements.com/articles/securities/interview-securities-fraud-lawsuit-stock-2-18372.html?opt=b&utm_expid=3607522-0&ref=newsletter_pcf#.UPhW5WceeM8

Published on: January 2, 2013

Cole Credit Property Trust II, Dividend Capital Total Realty Named in Complaints Against LPL Financial

by InvestorLawyers

Securities fraud attorneys continue to investigate claims on behalf of investors who suffered losses in nontraded real estate investment trusts purchased from LPL Financial between 2006 and 2009. The recent announcement that LPL is being sued by the State of Massachusetts over sales practices related to nontraded REITs has helped inform investors about the issues concerning the sales of these risky, illiquid products.

Cole Credit Property Trust II and Dividend Capital Total Realty Named in Complaints Against LPL Financial

Cole Credit Property Trust II and Dividend Capital Total Realty were named in the list of complaints filed by investors, in addition to REIT giant Inland American Real Estate Trust. Shares of these nontraded REITs were purchased through LPL-affiliated financial advisors. Currently, there are 13,170 financial advisors who are LPL-affiliated advisors. Stock fraud lawyers say Wells Real Estate Investment Trust II, Cole Credit Property III, 1031 Exchange and W.P. Carey Corporate Property Associates 17 were also named.

LPL compliance documents state that the broker-dealer “cannot make exceptions to prospectus suitability requirements or the regulatory imposed limit of 10 percent of net worth in public managed futures.” However, the state regulator alleges that advisors affiliated with LPL “frequently made transactions in violation of product prospectus and Massachusetts requirements.” In addition, the complaint alleges that a LPL supervision employee was “completely unaware of Massachusetts’ requirements concerning the sale of non-traded REITs” for a minimum of two years.

Published on: December 20, 2012

Massachusetts Regulator Sues LPL Financial Alleging Violations in Sales of Non-traded REITs

by InvestorLawyers

On December 12, 2012, Massachusetts securities regulators announced that they are suing LPL Financial in connection with sales of risky investments known as non-traded REITs. LPL Financial has been charged with improper sales practices and inadequate supervision of registered representatives who sold non-traded REITs.

The Fight Against LPL Financial Nontraded REIT Fraud Continues

These charges are in connection with the sales of $28 million in non-traded REITs between 2006 and 2009, which were sold to nearly 600 clients in Massachusetts. According to the Massachusetts Securities Division, 569 of those transactions had regulatory violations, including violations of prospectus requirements, violations of Massachusetts concentration limits and violations of LPL’s compliance practices.

Inland American Real Estate Trust Inc. accounted for the largest amount of sales of all the REITs listed in the complaint. With real estate assets amounting to $11.2 billion, this REIT was the largest non-traded REIT in the industry.

Published on: November 26, 2012

Clients of Jeffrey A. Cashmore, LPL Financial Could Recover Losses

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses as a result of their financial investments with Jeffrey A. Cashmore and LPL Financial. According to the Financial Industry Regulatory Authority allegations against him, Cashmore prepared and distributed sales literature to prospective and current customers that was misleading. Furthermore, he allegedly failed to retain copies of the misleading sales literature, a violation of NASD Conduct Rules. The alleged misconduct reportedly occurred between November 1994 and October 2012, while Cashmore was registered with LPL.

Clients of Jeffrey A. Cashmore and LPL Financial Could Recover Losses

According to FINRA’s findings, Cashmore distributed “Power Optimizer” packages during the relevant period, which is at least from January 2006 through December 2010. These packages consisted of documents that contained investment information and portfolio recommendations and typically included a Cash Flow Report, a Power Optimizer Report, a Portfolio Recommendations/Asset Allocation page, a Fee and Asset Summary Report and Morningstar Reports for each recommended mutual fund. These packages were distributed to at least 100 clients and potential clients. However, according to stock fraud lawyers and FINRA, these packages contained misleading information. Specifically, FINRA says the documents provided incomplete and oversimplified information which did not provide a sound basis for investors to be able to evaluate facts about the information provided by the package.

Reportedly, the Cash Flow Report’s cash flow summary was based on only one projected rated of return, rather than including alternate cash flow scenarios, and did not include any possible cash flows that would illustrate a negative rate of return. Furthermore, the Morningstar Reports allegedly included in the package all addressed Class A investments while Cashmore recommended and sold Class C investments almost exclusively. Securities fraud attorneys say that Class A and C investments have differing rates of return, surrender charges and fees, despite being similar investments when in the same mutual fund.