SEC Category Archives — Page 11 of 13 — Investor Lawyers Blog Published by New York, New York Investor Attorneys

Published on: January 19, 2012

Veolia Environment S.A. Investors May Have Claim

In the United States District Court for the Southern District Court of New York, a class action has been filed against Veolia Environment S.A. on behalf of its purchasers. The class action is regarding American Depositary Shares (ADSs) for the Class Period of April 27, 2007 through August 4, 2011. Veolia Environment S.A. allegedly violated federal securities laws.

Veolia Environment S.A. Investors may have Claim

According to the complaint, Veolia failed to disclose and/or misrepresented the following facts:
• The company was engaging in improper accounting practices and as a result materially overstated its financial results.
• Veolia could not determine its true financial condition as a result of its inadequate internal controls.
• The company did not record, in a timely manner, an impairment charge for its marine services business in the United States and Southern Europe, environmental services business in Egypt and transport business in Morocco.
• The renewal of some major concession contracts was hampering the company’s revenues.

When the company’s half-year results were announced on August 4, 2011, for the period ending June 30th of that year, Veolia American Depository Shares fell by 22 percent, or $4.66 per share as a result. The shares closed at $16.10 per share. The half-year results showed a consolidated revenue of EUR 16,286.7 million. In addition, defendants reported the operating income for Veolia to be EUR 252.2 million, a significant decline compared to the prior year which had an operating income of EUR 1,100.7 million. The change was due to “non-recurring write-downs amounting to EUR 686M (principally in Italy, Morocco and the United States).” Veolia also stated that it would exit businesses and geographies including for its marine services business in the United States and Southern Europe, environmental services business in Egypt and transport business in Morocco.

Published on: January 18, 2012

SEC Warning: Social Media Fraud

by InvestorLawyers

The Securities and Exchange Commission (SEC) has issued two investor alerts regarding the use of social media sites as a means for perpetuating investment fraud. Investors who have been the victims of fraud through social media are encouraged to seek the council of an investment attorney to find out about their legal rights and options for recovering their losses.

SEC Warning: Social Media Fraud

On January 4, 2012, the SEC charged an Anthony Fields with offering to sell fictitious securities. The Illinois-based investment adviser “offered more than $500 billion in fictitious securities through various social media websites,” according to an SEC press release. Fields’ two sole proprietorships are Anthony Fields & Associates (AFA) and Platinum Securities Brokers. “Fields provided false and misleading information concerning AFA’s assets under managements, clients, and operational history to the public through its website and in SEC filings.”

Furthermore, Fields claimed to be a broker-dealer but was not registered with the SEC, did not maintain proper books and records and did not have adequate compliance policies and procedures in place.

Published on: January 16, 2012

Investing with “Friends” Does NOT Protect from Fraud

by InvestorLawyers

Stock broker fraud attorneys are all too familiar with the idea that many people believe that investing with friends or members of their own community protects them against investment fraud. However, this is simply not the case. Investors are often swindled be fraudsters within their own community. They will swindle their family, friends, coworkers — even, as in a recent case emerging following a complaint to the Securities and Exchange Commission, members of their church congregation.

Investing With “Friends” does NOT Protect from Fraud

Wendell and Alan Jacobsen, members of the Church of Jesus Christ of Latter-Day Saints in Salt Lake City, used their membership in the church to gain the trust of around 225 investors and perpetuate a $220 million fraud. The scheme has been in operation since 2008 and was only recently halted by a SEC emergency order.

According to the SEC, victims of the fraud were offered the opportunity to participate in an investment that would receive 5 to 8 percent annual returns, with a guarantee of safety for their principal investment. The investors were told they would be investing in apartment communities that would be purchased at discounted rates and then, within 5 years, would be renovated and sold for a profit. However, the investments suffered losses, which were then covered up by the Jacobsons by using new money collected from investors to pay returns to previous investors. Furthermore, money collected from investments was used to pay personal business expenses and family expenses.

Published on: January 13, 2012

Investment News: “Accredited Investor” Net Worth Standard Definition Modified by SEC

by InvestorLawyers

Investment attorneys would like to make investors aware that the final rule declaring the net worth standard for “accredited investors” has been adopted by the Securities and Exchange Commission. The SEC still had to adjust its rules to the modification despite the fact that the modified definition was effective upon the enacting of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Investment News: “Accredited Investor” Net Worth Standard Definition Modified by SEC

According to the Securities Act of 1933, unless there is an exemption, such as “accredited investor” status, all U.S. securities sales and offers must be registered. Before the Dodd-Frank Act was enacted, an investor’s main residence, along with its fair market value and indebtedness, were included when calculating an investor’s net worth. In order to be an “accredited investor,” one’s net worth must be at least $1 million.

According to the Dodd-Frank Act’s Section 413(a), when determining if an individual is an “accredited investor,” the value of that person’s primary residence cannot be included. Determining if a person is an “accredited investor” is used to identify people who can withstand the economic risk of investing in unregistered securities. Securities that are unregistered for an indefinite timeframe can result in total investment losses. While personal residence cannot be included when determining an investor’s status, per the Dodd-Frank Act, if there is indebtedness associated with the residence, this amount can still lower the net worth of the investor. This rule will lower the number of individuals that receive “accredited investor” status. However, individuals that were previously considered “accredited investors,” but no longer meet the $1 million threshold because of the rule changes, will be given a limited grandfathering that allows them to continue to receive accredited status for certain “follow-on” investments.

Published on: December 29, 2011

Have You Been a Victim of Fraud Because of Celebrity Trust?

by InvestorLawyers

One troublesome form of stock broker misconduct involves the use of celebrity status in order to gain the trust and secure the business of investors. One major problem with this type of scam is that many investors don’t want to admit that they made an investment decision based on the celebrity status of the spokesperson. However, investment attorneys encourage victims of fraud — regardless of their motivations for investing — to seek reimbursement of their losses through securities arbitration.

Have you been a Victim of Fraud Because of Celebrity Trust?

While fraud cases that use the celebrity status of an individual to gain investor trust are nothing new, the most recent incident used the fame of a former Olympic sprinter and NFL wide receiver Willie Gault. Gault managed a California-based medical device company called Heart Tronics. Between 2006 and 2008, the company announced fake sales orders for heart-monitoring devices valued at millions of dollars.

The Securities and Exchange Commission filed a complaint on December 20, 2011, in the United States District Court in California. In addition, the SEC sued Mitchell Stein, who hired promoters to use the Internet to tout the company’s stock and controlled most of Heart Tronics’ business activities. Also named in the complaint were J. Rowland Perkins, Gault’s co-chief executive officer and founder of Creative Artists Agency LLC, and Martin Carter, Stein’s chauffer and handyman.

Published on: December 22, 2011

SEC Issues Wells Notices to Harbinger Capital; Investors Seeking Representation

by InvestorLawyers

Following the recent notices sent by the Securities and Exchange Commission to Harbinger Capital, Philip Falcone, Omar Asali and Robin Roger, some investors of Harbinger Capital are seeking representation for possible securities arbitration claims. Philip Falcone, 49, is the manager of the New York-based hedge fund Harbinger Capital Partners LLC, which was valued three years ago at $26 billion but has now fallen to a value of only $5.7 billion. Furthermore, a wireless technology venture that is being backed by Falcone, LightSquared LP, is facing regulatory and political roadblocks.

SEC Issues Wells Notices to Harbinger Capital; Investors Seeking Representation

A statement by Harbinger said the Wells Notices issued by the SEC are related to alleged “violations of the federal securities laws’ anti-fraud provisions in connection with matters previously disclosed and an additional matter regarding the circumstances and disclosure related to agreements with certain fund investors.” The firm also stated that, should an enforcement action be brought by the SEC, they “intend to vigorously defend against it.”

The SEC and the U.S. Attorney’s Office are investigating Harbinger over a loan that was paid to Falcone from one of his funds. The loan amounted to over $113 million and was allegedly used to pay personal taxes. The kicker? The transaction was completed without notifying investors. In addition, the SEC is investigating whether preferential treatment was given to some investors over others. According to a statement made by Harbinger, withdrawals from its main hedge fund are anticipated to be suspended December 30, 2011.

Published on: December 15, 2011

Investment Attorneys Seeking Victims of Inofin Fraud

by InvestorLawyers

The alleged $110 million Inofin fraud has investment attorneys looking for investors who suffered losses as a result of their investments with Inofin. According to the Class Action Complaint filed by the Securities and Exchange Commission in April, 2011, Inofin was in violation of the Massachusetts Uniform Securities Act. The complaint has been filed against Inofin, Inofin President Michael Cuomo, Inofin Chief Operating Officer Melissa George and Inofin Chief Executive Officer Kevin Mann, and alleges that the group sold unregistered securities and acted as a Massachusetts broker-dealer without being registered.

Investment Attorneys Seeking Victims of Inofin Fraud

Despite the fact that Inofin was never registered with the Massachusetts Securities Division of the Offices of the Secretary of the Commonwealth or the SEC, the company allegedly collected around $110 million by selling unregistered securities. Unregistered securities are securities that have not been registered with the Securities and Exchange Commission, and selling them violates the Securities Act of 1933. For more information on unregistered securities, please see the previous blog entry, “Investment Fraud: Unregistered Securities.”

According to the complaint, Inofin and its principal officers violated Section 10(b) (Rule 10b-5) of the Securities Exchange Act of 1934 and Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933. In addition to the selling of unregistered securities, the SEC alleges that material misrepresentations of financial reports were made from 2006 to 2011 in an attempt to hide a negative net worth and the company’s deteriorating financial conditions.

Published on: December 12, 2011

Investment Fraud: Unregistered Securities

by InvestorLawyers

A common form of investment fraud is the selling of unregistered securities. In many cases, investors can recover their losses in securities arbitration. In short, unregistered securities are securities that have not been registered with the Securities and Exchange Commission (SEC). Before a stock, bond or note can be sold to the public, it must be registered with the SEC. In fact, it must be registered before it can even be offered to the public. Any security is considered to be unregistered if it does not have an effective registration statement.

Investment Fraud: Unregistered Securities

While the offering of unregistered securities is a violation of Section 5 of the Securities Act of 1933, there are some exceptions. So when is it legal and when is it illegal? According to Section 5(c) of the Securities Act of 1933, “It shall be unlawful for any person, directly or indirectly, to make use of any means or instruments of transportation or communication in interstate commerce or of the mails to offer to sell or offer to buy through the use or medium of any prospectus or otherwise any security, unless a registration statement has been filed as to such security, or while the registration statement is the subject of a refusal order or stop order or (prior to the effective date of the registration statement) any public proceeding or examination under section 8.”

Seems fairly cut and dry, so when is it legal? Exemptions to the restriction of the sale of unregistered securities include:

Published on: December 8, 2011

Western Pacific Facing Charges of Hedge Fund Fraud

by InvestorLawyers

The Securities and Exchange Commission (SEC) has charged Western Pacific Capital Management LLC and its president, James O’Rourke, with securities fraud. The California-based firm allegedly materially represented the liquidity of a hedge fund and failed to disclose to clients a conflict of interest related to the fund. Stock fraud lawyers are watching this and other hedge fund fraud cases in which investors may be seeking to reclaim their losses.

Western Pacific Facing Charges of Hedge Fund Fraud

The conflict of interest occurred when O’Rourke and the firm urged their clients to invest in a security on which they would earn a 10 percent commission. In addition, they did not register as a broker, did not provide written disclosure, did not properly redeem the interest of one hedge fund investor before another, and omitted and misstated aspects of the hedge fund’s liquidity. The security in question was stock offered by Ameranth Inc. and sales took place in 2005 and 2006. Investments made by Western Pacific clients earned the firm $450,495 in “success fees.” In addition, from 2005 to 2008, O’Rourke and Western Pacific stated that their hedge fund, The Lighthouse Fund LP, consisted of only 25 percent illiquid assets when, in truth, it consisted of 90 percent illiquid securities.

One investor, who did not want the $800,000 of Ameranth stock he currently owned, was given his interest in cash by O’Rourke after Western Pacific used the Lighthouse Fund to resolve the dispute. This took place ahead of a different client that had requested a full redemption previously, thus the redemption of interest did not take place in the proper order.

Published on: December 2, 2011

Have You Been the Victim of Trading Seminar Investment Fraud?

by InvestorLawyers

Investment seminars have grown in popularity as a result of the rocky market and concern investors are feeling. While investment seminars can be a place to receive sound investment advice, some of them have only one purpose: to make you the victim of securities fraud. For this reason, a growing number of investors end up seeking the help of an investment attorney after losing money as a result of trading seminar investment fraud.

Have you been the Victim of Trading Seminar Investment Fraud?

The concern over these seminars is so great that an Investor Alert was recently issued by the SEC’s Office of Investor Education and Advocacy on the subject. If you made investments as a result of an investment seminar you attended and incurred losses as a result, the following warning signs may indicate that you were the victim of trading seminar investment fraud:

1. Did they claim that the trading strategies being presented were “simple” or “easy?” If so, there is a problem. The environment for securities transactions is a complex one and therefore transactions are not easy or simple.