Securities Fraud

Published on: August 16, 2012

Penneco Drilling Associates Investors Could Recover Losses

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses as a result of their investment in a private placement offered by Penneco Drilling Associates. Penneco Drilling Associates is, according to its Form D filing with the Securities and Exchange Commission, an oil and gas development company.

Penneco Drilling Associates Investors Could Recover Losses

Penneco Drilling Associates began offering the private placements as a means to raise capital. Certain broker-dealers registered with the Financial Industry Regulator Authority then sold the private placements. Reportedly, the following private placements have been offered and sold:

Penneco Drilling Associates 2009-1

Published on: August 15, 2012

Private Placement Loss Recovery: Cypress Leasing

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses as a result of their investments in Cypress Leasing private placements. Based in San Francisco, California, Cypress Financial Corporation is an equipment leasing company. The company’s website states that Cypress’s investments are in long-lived core equipment assets and that these assets are vital to the energy, industrial and transportation sectors.

Private Placement Loss Recovery: Cypress Leasing

Private placements have been offered by Cypress Leasing, which were then offered and sold by certain broker-dealers registered with the Financial Industry Regulatory Authority. Reportedly, the market decline of 2008 impacted the equipment leasing business and, as a result, many of the Cypress Leasing private placements may have experienced a decline in value. It is believed that the following offerings are included in these criteria:

CypressEquipment Fund 13

Published on: August 13, 2012

Investors of Bradford Exploration, Bradford Drilling Could Recover Losses

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered losses as a result of their investment in Bradford Drilling or Bradford Exploration. Bradford Exploration is, according to its Form D filing with the Securities and Exchange Commission, an oil and natural gas development company based in Buffalo, New York. Bradford Drilling Associates filed a Form D Notice of Sale of Securities with the SEC to raise capital. This type of filing is a limited offering exemption that allows small companies to use private placements to raise funds. This private placement was then sold by broker-dealers registered with the Financial Industry Regulatory Authority.

Investors of Bradford Exploration and Bradford Drilling Could Recover Losses

According to stock fraud lawyers, private placements allow smaller companies to use the sale of debt securities or equities to raise capital without it becoming necessary for them to register these securities with the Securities and Exchange Commission. Because these investments are typically more complicated and carry more risk than other traditional investments, they are usually only suitable for sophisticated, high-net-worth investors.

Securities fraud attorneys say that because the creation and sale of private placements often carry high commissions, these investments continue to be pushed by brokerage firms despite the fact that they may be unsuitable for investors. 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 that those recommendations must be suitable for the individual investor receiving the recommendation given their age, investment objectives and risk tolerance.

Published on: August 10, 2012

Recovery of Private Placement Losses: Mewbourne Oil

by InvestorLawyers

Stock fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of their investment in Mewbourne Energy Partners or Mewbourne Oil. Based in Tyler, Texas, Mewbourne Energy Partners is, according to its Securities and Exchange Commission Form 10-Q filing, an oil and gas development company.

Recovery of Private Placement Losses: Mewbourne Oil

Beginning May 1, 2007, Mewbourne Energy Partners has offered the public private placements, which certain Financial Industry Regulatory Authority registered broker-dealers then offered and sold, in order for Mewbourne to raise capital. The private placement offering consisted of general and limited partner interests and was a part of the Mewbourne Energy Partners ’07 Drilling Program. When the offering concluded on August 13, 2007, the total investor contributions, originally sold to accredited investors, amounted to $70,000,000. Of this total, accredited investors as limited partner interests amounted to $4,290,000 and accredited investors as general partner interests amounted to $65,710,000.

According to securities arbitration lawyers, private placements allow smaller companies to use the sale of debt securities or equities to raise capital without it becoming necessary for them to register these securities with the Securities and Exchange Commission. Because these investments are typically more complicated and carry more risk than other traditional investments, they are usually only suitable for sophisticated, high-net-worth investors.

Published on: August 9, 2012

Investors of Whitestone REIT Could Recover Losses

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of investors who suffered losses as a result of their investment in Whitestone REIT. Whitestone REIT was previously known as Hartman Commercial Properties REIT, and was a non-traded, publicly offered REIT. Shares of Hartman REIT were first offered to investors in 2004 through stock brokerage firms. A 2009 statement informed investors that Whitestone REIT’s value had declined by around 50 percent. Many investors were unaware of any problems with their investment until this 2009 announcement.

Investors of Whitestone REIT Could Recover Losses

Whitestone REIT started trading on the New York Stock Exchange in 2010, but securities arbitration lawyers say the shares are still trading at significantly lower prices than what most investors paid. Non-traded REIT investments like the Whitestone REIT typically offer commissions between 7-10 percent, which is significantly higher than traditional investments like mutual funds and stocks. In some cases, the commission generated by these investments can be as high as 15 percent. This higher commission can explain why brokerage firms are motivated to recommend these investments despite their possible unsuitability.

Investment fraud lawyers are investigating the possibility that brokerage firms may be held liable for the recommendation of Whitestone REIT. 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 like this one are illiquid and inherently risky and, therefore, not suitable for many investors.

Published on: August 8, 2012

SEC Charges Mizuho Securities USA; CDO Investors Could Recover Losses

by InvestorLawyers

Stock fraud lawyers are currently investigating claims on behalf of investors who suffered losses as a result of their investment in a collateralized debt obligation (CDO) from Mizuho Securities USA. Mizuho Securities USA and three of its former employees were recently charged by the Securities and Exchange Commission with misleading investors in a CDO through the use of “dummy assets” which inflated the credit ratings of the deal.

SEC Charges Mizuho Securities USA; CDO Investors Could Recover Losses

According to the complaint filed by the SEC, Mizuho Securities made around $10 million in marketing and structuring fees through the deal. The firm has agreed to settle the SEC’s charges by paying $127.5 million. The SEC’s allegations state that Mizuho marketed and structured a CDO, Delphinus CDO 2007-1, which was backed by subprime bonds, when signs of severe distress were being exhibited by the housing market. Allegedly, when Mizuho employees realized the CDO would not be able to satisfy a rating agency’s criteria meant to protect investors of CDOs from rating downgrade uncertainties, they submitted a portfolio which contained dummy assets amounting to millions of dollars. This portfolio inaccurately reflected the CDO’s collateral. Once this inaccurate portfolio was rated, the transaction was closed and Mizuho sold the notes to investors. The CDO defaulted in 2008 and was liquidated in 2010.

“This case demonstrates once again that bankers and market participants who embrace a ‘get the deal done at all costs’ strategy will be identified, charged and punished,” says the director of the SEC’s Division of Enforcement, Robert Khuzami.

Published on: August 6, 2012

Investors of Chase Strategic Portfolio, other JPMorgan Chase Proprietary Mutual Funds Could Recover Losse

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of the customers of JPMorgan Chase, specifically investors of Chase Strategic Portfolios and JPMorgan Chase proprietary mutual funds. Reportedly, when JPMorgan acquired Washington Mutual, the firm’s advisors may have engaged in improper mutual fund switching.

Investors of Chase Strategic Portfolio, other JPMorgan Chase Proprietary Mutual Funds Could Recover Losses

Last month, the Financial Industry Regulatory Authority, the Securities and Exchange Commission and other regulators reportedly initiated inquiries into the fund sales practices of JPMorgan. A recognized fund researcher, Morningstar, reported that around 42 percent of JPMorgan’s funds did not surpass the average performance of similar funds over the past three years. Furthermore, a New York Times article published last month stated that JPMorgan financial advisors were allegedly “encouraged, at times, to favor JPMorgan’s own products even when competitors had better-performing or cheaper options.” Investment fraud lawyers’ investigations will establish whether the firm or its advisors can be held responsible for investor losses that resulted because of improper sales practices.

The Chase Strategic Portfolio is reportedly one of the main products that has been pushed by JPMorgan. The investment is made up of a combination of around 15 mutual funds. Some of these funds are developed by JPMorgan. Securities fraud attorneys say the Chase Strategic Portfolio is designed to allow ordinary investors access to holdings in stocks and bonds, with varying levels of risk, accomplished through the use of six main models. The fund was launched in 2008 and reportedly has around $20 billion in assets. Chase Strategic Portfolio carries an annual fee on assets of 1.6 percent, but also includes a fee on underlying JPMorgan funds. The aforementioned New York Times article also stated that the actual annual return of the fund after fees was 13.87 percent per year, which trailed the hypothetical 15.39 percent return included in the marketing materials.

Published on: August 3, 2012

FINRA Alert: Exchange-traded Notes

by InvestorLawyers

Stock fraud lawyers encourage investors to read the Financial Industry Regulatory Authority (FINRA)’s new Investor Alert, which was announced on July 10. This alert, titled “Exchange-traded Notes — Avoid Unpleasant Surprises,” is meant to help investors become more informed of the risks and features of exchange-traded notes, or ETNs. This investor alert can help investors make smart decisions about investing in ETNs. And if you’ve already invested in an ETN, it can also help you determine if you were unsuitably recommended exchange-traded notes by your broker or adviser.

FINRA Alert: Exchange-traded Notes

ETNs are, according to the FINRA alert, a type of debt security that trades on exchanges and promises a return that is linked to a market index or some other benchmark. Unlike exchange-traded funds (ETFs), however, exchange-traded notes don’t replicate or approximate the performance of that index through the purchase or holding of assets. According to stock fraud lawyers, brokers have been known to sell ETFs and ETNs as conservative ways to track a sector of the market or the market as a whole. However, complicated trading strategies are necessary to accomplish this, and using these investments to track a sector of the market, even if valid, may or may not be a conservative trading strategy. FINRA wants investors to be aware of the fact that an ETN’s market price can deviate from its indicative value, and in some cases this deviation is significant.

FINRA’s Vice President for Investor Education, Gerri Wals, stated that “ETNs are complex products and can carry a raft of risks. Investors considering ETNs should only invest if they are confident the ETN can help them meet their investment objectives and they full understand and are comfortable with the risks.”

Published on: August 2, 2012

Investors Beware: Structured Products Not Suitable for All Investors

by InvestorLawyers

Securities fraud attorneys are currently investigating potential claims on behalf of investors who suffered losses in a variety of structured product investments. Wall Street has marketed structured notes and other products as safe and secure, but what does that really mean? One thing is certain, safe and secure does not mean risk-free. According to a study recently conducted by the nonpartisan policy center Demos and The Nation Institute, $113 billion has been lost by investors as a result of purchasing these “safe” instruments.

Investors Beware: Structured Products Not Suitable for All Investors

Furthermore, the study concluded that over $52 billion in structured notes were sold in 2010 alone. Investment fraud lawyers are concerned about what this increase in structured product sales means. Structured products have previously been sold only to sophisticated institutional investors. However, recent years have seen a repackaging of these products as a principal protection tool that is then sold to retail investors, who are often senior citizens. The study also stated that these products are among the most popular for pitching to income-oriented investors.

Structured products combine a zero-coupon bond and an option with a payoff that is linked to an index, benchmark, basket of benchmarks or an underlying asset. The notes can provide upside potential and reasonable returns when they pay off based on the linked index’s performance. Securities fraud attorneys say that this method of payoff can be very attractive given today’s market, but structured products can be extremely complex. A Financial Industry Regulatory Authority (FINRA) and Securities and Exchange Commission alert warned investors that these products often come with low guarantees, confusing terms and, in some cases, can keep money tied up in the investment for up to a decade.

Published on: August 1, 2012

Woodlark Capital Investment Private Placement Investors Could Recover Losses

by InvestorLawyers

Stock fraud lawyers are currently investigating potential claims on behalf of investors who suffered losses as a result of their investment in Woodlark Capital. Woodlark Capital LLC is, according to its Securities and Exchange Commission Form D filing, a real estate company based in New York. In 2007, the company applied for a Form D Notice of Sale of Securities in order to generate capital. Certain Financial Industry Regulatory Authority (FINRA)-registered broker-dealers offered and sold these private placements.

Woodlark Capital Investment Private Placement Investors Could Recover Losses

According to securities arbitration lawyers, private placements allow smaller companies to use the sale of debt securities or equities to raise capital without it becoming necessary for them to register these securities with the Securities and Exchange Commission. Because these investments are typically more complicated and carry more risk than other traditional investments, they are usually only suitable for sophisticated, high-net-worth investors.

Stock fraud lawyers say that because the creation and sale of private placements often carry high commissions, these investments continue to be pushed by brokerage firms despite the fact that they may be unsuitable for investors. FINRA 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.