Private Placements

Published on: October 5, 2017

Investors in FS Energy and Power Fund May Have Arbitration Claims

Lawyers at Law Office of Christopher J. Gray, P.C. have handled many cases against stockbrokers and other investment professionals involving non-traded invesments such as REITs, hedge funds and private placements.

FS Energy and Power Fund (“FSEP” or the “Fund”) is a non-traded business development company that invests primarily in the debt of a portfolio of private U.S. energy and power companies. BDC’s have been around since 1980 when the U.S. Congress enacted legislation which ushered in certain amendments to federal securities laws allowing for BDC’s — which are simply types of closed-end funds — to make investments in developing companies and firms.

BDC’s are in the business of providing various debt and mezzanine financing solutions for typically small and medium-sized businesses that cannot access credit in the same way as larger, more established companies. By providing credit solutions to less established companies, BDC’s will frequently collect much higher than average interest income and seek to pass along such income to investors in the form of dividends.

Published on: July 27, 2017

Private Placements- Know the Risks Before Investing

by InvestorLawyers

With increasing frequency retail investors are encountering scenarios in which they are offered an opportunity to invest in a private placement. A private placement – often referred to as a non-public offering – is an offering of a company’s securities that are not registered with the Securities & Exchange Commission (“SEC”). Under the federal securities laws, a company may not offer or sell securities unless the offering has been registered with the SEC or an exemption from registration applies.

DISTINGUISHING A PRIVATE PLACEMENT FROM OTHER INVESTMENTS

When an investor decides to purchase shares in a publicly traded company, or for that matter purchase shares in a mutual fund or exchange traded fund (“ETF”), he or she will have the opportunity to first review a comprehensive and detailed prospectus required to be filed with the SEC. When it comes to a private placement, however, no such prospectus need be filed with the SEC – rather, these securities are typically offered through a Private Placement Memorandum (“PPM”).

Published on: October 13, 2016

Former NEXT Financial Broker Douglas P. Simanski Barred for Alleged Theft

by InvestorLawyers

Financial Industry Regulatory Authority (FINRA) records indicate that Douglas P. Simanski (Simanski), a former stockbroker who was associated with NEXT Financial Group, has been permanently barred from the brokerage industry. Simanski’s record also shows 4 currently pending customer disputes, 1 prior final customer dispute and a recent employment separation after allegations.

FINRA is the agency that licenses and regulates stockbrokers and brokerage firms. In response to FINRA charges, Simanski, without admitting or denying the findings, consented to a permanent bar from the securities industry and entry of findings that he failed to provide documents and information related to an investigation into allegations related to the conversion of funds.

Four customers of NEXT Financial have also filed arbitration claims involving Simanski, alleging sales of high risk investments, loans to customers, sale of unregistered securities and sale of fictitious investments as part of a scheme to steal money from a customer.

Published on: October 13, 2016

Platinum Partners Hedge Funds Under Scrutiny

by InvestorLawyers

Platinum Partners LP Funds are under scrutiny after federal agents reportedly raided the funds’ New York offices in July 2016. Hedge fund entities sponsored by Platinum Partners include the Platinum Partners Value Arbitrage Funds, the Platinum Partners Credit Opportunities Fund, Platinum Credit Holdings LLC, Platinum Credit Management LP, Platinum Partners Value Corp., and Platinum Management (NY) LLC.

In June, the New York-based hedge fund manager reportedly began liquidating its funds, after the firm’s longtime associate Murray Huberfeld (Huberfeld) was accused of arranging for a $60,000 bribe and kickback, in a Salvatore Ferragamo bag, to Norman Seabrook, President of the New York correctional officers’ union. Seabrook allegedly directed $20 million in union investments into the Platinum Partners Value Arbitrage Fund. Seabrook has denied that he is guilty of any charges.

Later, Cayman Islands Judge Andrew Jones reportedly ordered that a new advisor take control of the international arm of Platinum’s flagship fund, which is based in the Caymans, after an investor claimed he has not been able to gain access to his money since 2015.

Published on: June 10, 2015

Former Cadaret, Grant & Co. Broker Douglas William Findlay Suspended Over REIT Sales

by InvestorLawyers

Douglas William Finlay, Jr., a stockbroker formerly associated with Cadaret, Grant & Co., has entered into a Letter of Acceptance Waiver and Consent (AWC) with the Financial Industry Regulatory Authority (FINRA) to settle a case in which FINRA alleged that Finlay over-concentrated a customer’s assets in an unsuitable illiquid real estate investment trust (REIT).

In the AWC, in which Finlay neither admitted nor denied the FINRA charges, FINRA found that Finlay failed to adequately disclose information to the customer about the REIT and also allegedly falsified a firm document that misrepresented the customer’s net worth and income.

As a result of the charges, Finlay’s license was suspended for 18 months. FINRA also fined Finlay $15,000 and ordered him to pay disgorgement of $6,639. The case is FINRA Disciplinary Proceeding No. 2013035576601

Published on: February 23, 2015

Investors Over-Concentrated In Funds Exposed To Losses Due To Drops In Oil Prices May Have Viable Arbitration Claims

by InvestorLawyers

Oil prices have rapidly tumbled to under $50 a barrel, from well over $100 a barrel, leaving prices at their lowest level since 2009. As a result of the plummet in oil prices, some investors whose portfolios were concentrated in investments whose value is linked to the price of oil or other energy products have lost significant sums. Such investments may include private placements, stocks, and ETFs. On the private placement side alone the Securities Exchange Commission (SEC), has stated that since 2008, approximately 4,000 oil and gas private placements have attempted to raise nearly $122 billion in investor capital. However, research has shown that some of these oil and gas private placements pose enormous risks and, a significant majority of the oil and gas funds offered by some sponsors have lost money (even before the recent drop in oil prices).

Leveraged ETFs

In addition to the inherent risks of such investments, some investors’ portfolios may be over-concentrated in oil and gas stocks or ETFs. Some of these ETFs may be leveraged or non-traditional ETFs. These types of funds will tend to rise or fall in value even more rapidly than the price of oil and gas, due to internal leverage, or the borrowing of money by the funds to increase their exposure energy prices.

Published on: March 11, 2014

Investment Loss Recovery Regarding Florlena Cortez, Former Chase Broker

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of the customers of Florlena Cortez, a former broker for Chase Investment Services Corp. Cortez is also known as Florlena Cortez Alva and Florlena Cortez Guerrero, CRD No. 4339441. Cortez was registered with Chase from May 2002 to February 2012, and securities arbitration lawyers say that the firm could be held responsible for customer losses suffered during the time she was registered with the firm if Chase did not adequately supervise her activities.

Investment Loss Recovery Regarding Florlena Cortez, Former Chase Broker

Reportedly, Cortez entered into a Letter of Acceptance, Waiver and Consent in which the Financial Industry Regulatory Authority (FINRA) alleged that Cortez participated in private securities transactions from 2009 to 2010 “that were outside the regular course and scope of her association with Chase Investment Services. Cortez did not provide prior written notice to Chase Investment services describing in detail the proposed transactions and her proposed role in them, including whether she had received or would receive selling compensation in connection with the transactions.”

According to the letter, Cortez “informed FINRA that she will not appear to testify at an on-the-record interview” regarding whether she engaged in “undisclosed private securities transactions and outside business activities while registered with Chase Investment Services.” Cortez has been barred from association with any FINRA member.

Published on: March 4, 2014

Former VSR Financial Broker Allegedly Sold Unsuitable Alternative Investments

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses as a result of the unsuitable recommendation and sale of alternative investments. In one recent arbitration claim, filed in Texas, two VSR Financial Services clients are seeking $600,000 in damages that allegedly resulted from the unsuitable recommendation and sale of alternative investments. The investments named in the claim include:

NetREIT Common
Florida Capital Real Estate Partners 27

Published on: November 21, 2013

Alleged Unsuitable Recommendations of Non-Traded REITs by Surevest, Others

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of doing business with Surevest Capital Management and employees of the firm.

Alleged Unsuitable Recommendations of Non-Traded REITs by Surevest Others

Allegedly, Surevest invested some of its clients in high-risk portfolios, allocating very little of these accounts into traditionally low-risk investments. These high-risk investments allegedly included equities, non-traded REITs and other private placement securities. Some Surevest clients have raised allegations asserting that the high-risk investment recommendations were unsuitable and implemented regardless of the age, risk tolerance and other considerations of the investors.

According to securities arbitration lawyers, 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. Non-traded REITs are inherently risky and illiquid, which limits access of funds to investors and makes them unsuitable for many individuals with conservative risk tolerances as well as those who need easy access to funds. Other private placements and equities also carry significant risks.

Published on: October 22, 2013

Investors Could Recover Losses for Unsuitable Recommendation of Private Placements

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses because of their broker or advisor’s unsuitable recommendation of private placements. In September, a new investor alert was issued by the Financial Industry Regulatory Authority (FINRA) titled “Private Placements — Evaluate the Risks Before Placing Them in Your Portfolio.” Unfortunately, many individuals have already suffered significant losses because they trusted the unsuitable recommendation of their investment adviser.

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A private placement, as defined by FINRA, is “an offering of a company’s securities that is not registered with the Securities and Exchange Commission (SEC) and is not offered to the public at large.” According to stock fraud lawyers, private placements are generally only suitable for accredited investors. Accredited investors have a net worth exceeding $1,000,000 and an income of at least $200,000 (individually) or $300,000 (jointly with spouse).

“Investors should understand that many private placement securities are issued by companies that are not required to file financial reports, and investors may have problems finding out how the company is doing,” FINRA officials note. “Given the risks and liquidity issues, investors should carefully assess how private placements fit in with other investments they hold before investing.”