SEC Category Archives — Page 6 of 13 — Investor Lawyers Blog Published by New York, New York Investor Attorneys

Published on: September 21, 2012

Customers of Ray Lucia Sr. Could Recover Losses Through Arbitration Following SEC Allegations

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses as a result of their investment with Ray Lucia Sr. and his affiliated broker-dealers. Reportedly, the Securities and Exchange Commission has charged Lucia and his company, formerly known as Raymond J. Lucia Companies Inc. (RJL), for using misleading information at a series of investment seminars when soliciting for his “Buckets of Money” strategy.

Customers of Ray Lucia, Sr. Could Recover Losses through Arbitration, Following SEC Allegations

According to the allegations issued by the SEC’s Division of Enforcement, Lucia claimed that this wealth management strategy had been thoroughly “backtested” over real bear market periods. He allegedly made these claims while promoting Buckets of Money at seminars where he presented a lengthy slideshow indicating that retires would receive inflation-adjusted income while protecting and increasing savings through his wealth management program. In truth, however, despite publicly made claims, little, if any, backtesting was done by RJL and Lucia on the Buckets of Money strategy.

These seminars were held in hopes of obtaining advisory clients, according to the SEC’s order which instituted administrative proceedings against RJL and Lucia. These clients would then be charged advisory services fees. Lucia’s radio show and personal and company website promoted the seminars.

Published on: September 20, 2012

JOBS Act for Hedge Fund Advertising Faces Criticism from Investor Protection Groups

by InvestorLawyers

In a recent 4-1 vote, SEC commissioners decided to invite public comment related to a proposal for how to put an end to decades of limits imposed on startups and private funds in their pursuit of investors. Together with the mutual fund industry and investor protection groups, stock fraud lawyers look upon the new JOBS Act with criticism. The Act will essentially, as part of an effort to increase fledgling companies’ funding options, end the advertising ban on hedge funds. Reportedly, hedge funds will possibly be able to conduct wide advertising campaigns, as opposed to the current strategy of closed-door solicitation to individual investors.

JOBS Act for Hedge Fund Advertising Faces Criticism from Investor-Protection Groups

According to securities arbitration lawyers, concern related to the JOBS Act comes from the possibility that a restriction-free lift of the ban could result in some private funds exposing investors to misleading advertisements. Securities laws have previously only allowed firms to solicit non-public securities to “accredited” investors, who were usually wealthy, frequent investors. Furthermore, these investors would have needed an existing relationship with the firm.

While individuals who qualify for the investments will still need to have over $1 million in assets or a minimum income of $200,000 a year, a lack of advertising restrictions would still expose individuals for which these investments are unsuitable to misleading solicitation. Furthermore, those individuals may not have the investment sophistication required to understand the risks of these products. According to stock fraud lawyers, this could be a situation that leaves investors susceptible to securities fraud.

Published on: September 19, 2012

Louis V. Schooler, Western Financial Planning Accused of Investment Scam by SEC

by InvestorLawyers

Investment fraud lawyers are currently investigating potential claims on behalf of the investors of Western Financial Planning Corp., based in San Diego. Reportedly, Western Financial Planning has been accused by the Securities and Exchange Commission of running a real estate investment scam. The alleged scam raised around $50 million from hundreds of investors around the nation.

Louis V. Schooler and Western Financial Planning Accused of Investment Scam by SEC

Early this month, a temporary asset freeze against the financial planning firm and Louis V. Schooler, the firm’s owner, was obtained by the SEC. Securities arbitration lawyers say the SEC’s allegations state that Schooler and Western Financial sold units in partnerships, organized by Western, for the purchase of vacant land located in Nevada. Reportedly, the land would then be held to be sold at a later date for a profit.

According to the SEC’s claims, Western neglected to tell investors that they (the investors) would be paying outrageous mark-ups on the land. Investment fraud lawyers say that in some cases, mark-ups amounted to over five times the fair market value of the land. Furthermore, allegations state that Schooler failed to tell investors that the initial land purchase was financed by mortgages, which later encumbered the property.

Published on: September 6, 2012

CNL Lifestyle Properties REIT Investors Could Recover Losses

by InvestorLawyers

Stock fraud lawyers are currently investigating claims on behalf of investors who have suffered significant losses as a result of their investment in CNL Lifestyle Properties Inc. Reportedly, a recent announcement from CNL Lifestyle Properties stated that its per share value estimate has dropped from its original share price of $10 to $7.31. This decline represents a drop of 27 percent, which could mean significant losses for many investors. Furthermore, the REIT is reportedly cutting investor dividends, or distribution.

CNL Lifestyle Properties REIT Investors Could Recover Losses

Financial Industry Regulatory Authority rules have established that brokers and 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.

The CNL Lifestyle Properties REIT is, according to investment fraud lawyers, another in a long line of non-traded REITs currently under investigation. REITs typically 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 CNL Lifestyle Properties REIT, carry a relatively high dividend or high interest, making them attractive to investors. However, these investments 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. For more information on REITs, see the previous blog post “FINRA Investor Alert: Public Non-Traded REITs.”

Published on: August 31, 2012

Victims of Lewis J. Hunter’s Fraud Could Recover Losses

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of individuals who invested with Lewis J. Hunter, a former broker in Michigan. A cease-and-desist and administrative proceedings order was recently instituted by the Securities and Exchange Commission against Hunter, who allegedly misappropriated money from his brokerage customers and, in turn, used the funds to pay personal expenses. The amount of money allegedly misappropriated is estimated to be around $300,000.

Victims of Lewis J. Hunter’s Fraud Could Recover Losses

The SEC’s Division of Enforcement’s allegations of misappropriation of funds state that Hunter promised guaranteed returns in both domestic and foreign bank investments while registered with HD Vest Investment Securities Inc. Further, the SEC’s claims allege that Hunter paid personal and business expenses with the funds and made false and misleading representations to conceal his actions from his clients. Reportedly, these misrepresentations included fabricating bank documents.

Based on the SEC’s allegations, securities arbitration lawyers believe that Hunter was a registered representative for HD Vest Investment Securities Inc. from November 15, 2006 through October 19, 2011. HD Vest Investment Securities is headquartered in Texas and is a registered broker-dealer. While registered there, Hunter reportedly became a partner in National Business Concepts LLC, purportedly in bookkeeping, accounting, business consulting, management and tax preparation.

Published on: August 30, 2012

Unregistered Securities: Inofin Investors 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 investment in an Inofin promissory note or Inofin offering. A recent announcement by the Securities and Exchange Commission (SEC) stated that on July 23 and 24, final judgments were entered in a civil injunctive action against Michael J. Cuomo and Kevin Mann Sr. This action was filed in the United States District Court of Massachusetts.

Unregistered Securities: Inofin Investors Could Recover Losses

Allegations included in the SEC complaint were that Inofin and Inofin executives illegally raised money from investors in 25 states and the District of Columbia totaling at least $110 million. These funds were raised through unregistered note sales. Furthermore, Inofin allegedly materially misrepresented the company’s financial performance as well as how it was using investors’ money. Thomas K. Keough and David Affeldt, two sales agents, were also charged by the SEC. Allegations against Affeldt and Keough stated that they offered and sold the aforementioned unregistered securities.

Stock fraud lawyers say Keough’s FINRA Broker Report stated that he was registered with FINRA during a significant portion of the time that he sold these unregistered securities. As a result, investors who, in accordance with Keough’s recommendation, purchased an Inofin investmentvcould be able to recover losses through securities arbitration.

Published on: August 27, 2012

Retail Properties of America, Formerly Inland Western, Faces More Problems

by InvestorLawyers

For quite some time now, securities fraud attorneys have been investigating claims on behalf of investors who suffered significant losses as a result of their investments in Retail Properties of America REIT, formerly known as Inland Western. Reportedly, the chief executive of Inland Real Estate Group of Cos. Inc., Daniel Goodwin, recently expressed criticism about the Retail Properties of America Inc.’s IPO timing. A new lawsuit states that in January 2011, the REIT told investors before the offering that they could expect a value of $17.25 per share. However, at the time of the offering, the REIT’s shares, adjusted for the stock split, were actually only valued at $3.20 a share. This also was significantly lower than the $10 price which the majority of investors paid per share.

Retail Properties of America, Formerly Inland Western, Faces More Problems

According to Goodwin, Inland Real Estate Group of Cos. Inc. has no control over Retail Properties of America. Furthermore, when asked if Inland would join in the lawsuit filed in the U.S. District Court for the Northern District of Illinois — which is seeking class action status — Goodwin said, “We have discussed various potential actions but haven’t reached a conclusion. Our interests are clearly aligned with the shareholders.”

Investment fraud lawyers say Retail Properties of America is the third-largest shopping center REIT in the nation. In April 2012, Retail Properties of America was converted to a publicly traded New York Stock Exchange company from a non-traded REIT.

Published on: August 24, 2012

Charles Schwab, Fidelity Investors Who Opted Out of Class Actions Could Recover Losses Through Securities Arbitration

by InvestorLawyers

Following settlements with the Financial Industry Regulatory Authority (FINRA), stock fraud lawyers say Charles Schwab and Fidelity investors could recover losses through securities arbitration. Fidelity reportedly has agreed to pay a $375,000 fine in a settlement with FINRA over allegations that the firm committed sales violations from December 2006 through December 2008 involving the Fidelity Ultra Short Bond Fund.

According to FINRA’s allegations, Fidelity Investments Institutional Services Co. Inc. and Fidelity Brokerage Services LLC, two Fidelity broker-dealers, failed to provide adequate supervisory procedures and produced misleading advertising and sales materials for the fund. Apparently when the subprime crisis unfolded, the fund began losing value in June 2007, but the sales materials for Fidelity continued to purport fixed-income securities of “high credit quality” being held by the fund. The fund’s net asset value fell to $8.25 per share by April 2008, from $10 per share before June 2007, according to investment fraud lawyers.

In a separate ruling in May, a settlement was approved by a federal court in a class action filed against Fidelity units in 2008. In that settlement, Fidelity paid $7.5 million to investors of the bond fund. The Charles Schwab Corp. settled a similar case last year in which they paid almost $119 million over its YieldPlus bond fund. A separate class action claim saw Schwab pay another $235 million to investors in 2010. However, stock fraud lawyers believe that not all investors were compensated.

Published on: August 23, 2012

Following KBS Class Action Withdrawal, Investors Can Still Recover Losses Through Arbitration

by InvestorLawyers

According to securities arbitration lawyers, investors who suffered significant losses as a result of their losses in the KBS REIT still may recover those losses through securities arbitration following the withdrawal of a class action against KBS REIT. Plaintiff George Steward led investors in suing KBS REIT in May. Allegations stated that misrepresentations about the REIT were made by KBS. These alleged misrepresentations included the dividend payment policy, investment objects and the REIT’s investments value. Reportedly, a voluntary dismissal was filed by the plaintiffs in the U.S. District Court in Fort Myers, Florida last month.

Following KBS Class Action Withdrawal, Investors Can Still Recover Losses Through Arbitration

In March, KBS REIT I investors were notified that the investment’s value would drop from $7.32 to $5.16 per share, representing a 29 percent decline in value. The investment’s offering price was $10 per share. Furthermore, KBS also stated it would cease distributions to investors. An investor presentation filed with the SEC in March stated that KBS REIT I raised $1.7 billion in equity during its initial offering. The investment holds loans and other debt of $2.3 billion and property assets of $3.4 billion.

Financial Industry Regulatory Authority rules have established that brokers and 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 illiquid and inherently risky and, therefore, not suitable for many investors. According to securities fraud attorneys, because of the high-commissions these investments generally offer, many brokers make unsuitable recommendations of REITs to investors. Based on information now known about KBS REIT, many of the firms that sold this investment will be unable to prove the adequate due diligence was performed before recommending this product to investors.

Published on: August 22, 2012

Dividend Capital REIT Restructuring Could be a Sign of Trouble

by InvestorLawyers

Since the writing of the previous blog post “Dividend Capital Total Realty Trust Non-traded REIT Investors Could Recover Losses,” investment fraud lawyers have received communication from investors related to their concerns about the value of their shares. Reportedly, the quarterly dividend rate of these shares is 5.23 percent and the new price of each share is $6.69. The investment’s prospectus for Dividend Capital shares and its recent Securities and Exchange Commission filing indicate new terms for repurchase plans and a major restructuring of the investment. In addition, Dividend Capital Total Realty Trust appears to be going by a new name, Dividend Capital Diversified Property Fund.

Dividend Capital REIT Restructuring Could be a Sign of Trouble

This new offering is purportedly a means for the company to offer liquidity, securities fraud attorneys say. Generally, non-traded REIT shares are illiquid but, when the REIT is liquidated, are sold to another REIT, or goes public, the shares are sold. The SEC filing states that the offering is intended to replenish the capital of their fund shares. As a result, they will not have to list a termination date, should one of the aforementioned events occur. This new plan is scheduled to go into effect on October 1, 2012 and purportedly allows investors to liquidate shares at any time. The price of the shares at liquidation is determined by the company’s Net Asset Value’s daily calculation. However, restrictions on this plan include the following:

While Class A, W or I shares may be redeemed at any time, a “Quarterly Cap” has been instituted by Dividend Capital, which will limit redemptions equal to 5 percent of the total Net Asset Value of all shares set upon completion of the prior calendar quarter.