Securities Fraud

Published on: April 8, 2014

Have You Been the Victim of Investment Scalping?

Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of a securities fraud related to scalping. Scalping occurs when a broker or financial advisor recommends a security and immediately sells the security to turn a profit. According to securities arbitration lawyers, when many investors purchase the security, the price rises, allowing the fraudster to gain financially.

Have You Been the Victim of Investment Scalping?

In one recent scalping scheme, securities fraud charges were filed by the Securities and Exchange Commission (“SEC”) against John Babikian, the promoter behind AwesomePennyStocks.com and PennyStocksUniverse.com. Both websites are affiliated microcap stock promotion websites and are known collectively as “ABS.” The SEC charges allege that Babikian engaged in scalping through the websites.

According to the SEC, on February 23, 2012, the websites sent emails to around 700,000 people, recommending investing in a particular penny stock, America West Resources Inc. (AWSRQ). However, the fact that Babikian held over 1.4 million shares of America West was not disclosed in the email, nor was the fact that he had positioned the shares for immediate sale via a Swiss bank.

Published on: March 27, 2014

Recovering Mortgage-backed Securities Losses

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses in mortgage-backed securities. The investigations are concerning full-service brokerage firms that may have failed to properly supervise their traders and/or gave false pricing information to investors.

Recovering Mortgage-backed Securities Losses

Recently, Jefferies LLC agreed to settle charges with the Securities and Exchange Commission (“SEC”) by paying $25 million for allegedly failing to adequately supervise traders regarding mortgage-backed securities. In addition, authorities believe some of the Jefferies staff may have lied to investors regarding pricing. The alleged supervisory failures took place between 2009 and 2011. An SEC investigation reportedly found that Jefferies had lied to customers about the prices that hte firm piad for certain mortgage-backed securities that it later sold to customers, thus misleading the customers concerning the “markups” or trading profits received by Jefferies in connection with the sales.

The SEC argued that supervisors at Jefferies could not properly supervise trading activity with what they were given by the investment bank, and that they did not find out what customers were being told regarding what prices were paid by the bank for certain securities and whether or not this information was accurate. While the bank’s policy required supervisors to view electronic conversations, Jefferies has been accused of failing to review conversations on Bloomberg terminals, and the SEC contends that even when conversations were reviewed, the policy did not ensure that misrepresentations in price would be identified.

Published on: March 25, 2014

Clients of 3 Rockwell Global Capital Financial Advisors Seek Damages for Churning, Unsuitable Recommendations

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses as a result of doing business with Douglas Guarino, Lawrence Lee or Robert E. Lee and Rockwell Global Capital. The investigations are regarding fraud, unsuitable recommendations and churning that the three men allegedly conducted while registered with Rockwell Global Capital as financial advisors.

According to stock fraud 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. Churning, on the other hand, is a form of broker misconduct in which the broker performs excessive trading to generate personal profit.

In addition, a firm has an obligation to properly supervise brokers and financial advisors while they are registered with the firm. If it fails in this duty, securities fraud attorneys say it may be held liable for customer losses. One Statement of Claim has already been filed with the Financial Industry Regulatory Authority against the firm, alleging that Douglas Guarino, Lawrence Lee and Robert E. Lee had churned a client’s account. The claim is seeking damages for excessive trading, churning, fraud and unsuitable recommendations.

Published on: March 20, 2014

Customers of James E. Neilsen Could Recover Promissory Note Losses

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of the customers of James E. Neilsen. These investigations are concerning Neilsen’s conduct and the sale of investment agreements and promissory notes while he was registered with Tradition Asiel Securities, Longship Alternative Asset Management, and Sound Securities.

Customers of James E. Neilsen Could Recover Promissory Note Losses

On January 9, 2014, Neilsen was put under an Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Rights to Hearing by the Banking Commissioner of the Connecticut Department of Banking. The order was amended on February 18. According to the allegations laid out in the order, to finance his partners’ business expenses, Neilsen individually and/or on behalf of his partners sold approximately $10 million in promissory notes and investment agreements that weren’t registered and weren’t exempt from being registered with the state. The conduct allegedly occurred between November 2005 and around September 2011. The order also states that though some investors have been partially repaid by Neilsen, $7 million remains outstanding.

Promissory notes are a type of debt sometimes used by companies in order to raise money. Through the note, the company promises to return the investor’s principal and pay fixed interest amounts. They have set terms and repayment periods that should be stated specifically in the note. According to stock fraud lawyers, some promissory notes are fraudulent from the beginning and exist only to convince investors they are entering into a contractual arrangement when, in reality, they are not. Others are real securities that, despite the fact that they should be registered with regulatory bodies, bypass registration and are sold as unregistered securities.

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: February 27, 2014

LaRue Customer Loss Recovery for Unsuitable Exchange-traded Fund Transactions Possible

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of doing business with William Wayne LaRue, a former Stephens Inc. stockbroker. The claims are regarding unauthorized and/or unsuitable trades in inverse and leveraged exchange-traded funds, or ETFs, as well as other products.

LaRue Customer Loss Recovery for Unsuitable Exchange-traded Fund Transactions Possible

Reportedly, in early 2012, one of LaRue’s clients made a complaint that LaRue had executed a series of unauthorized trades on her account prior to his departure. As a result of the complaint, the Arkansas Securities Department reportedly discovered similar problems in other customer accounts, as well as other violations.

“The unauthorized trading was occurring in margin accounts,” says Scott Freydl of the ASD. “In looking at this, we saw there were leveraged and inverse exchange traded funds. That’s when the issue of suitability came up.”

Published on: February 20, 2014

Have Your Loved Ones Been the Victims of Affinity Fraud?

by InvestorLawyers

Investment fraud lawyers continue to investigate claims on behalf of elderly individuals who have been the victims of affinity fraud. In many cases, it is up to the children and grandchildren of elderly individuals to discover and put a stop to the victimization of their loved ones by fraudsters.

Have Your Loved Ones Been the Victims of Affinity Fraud?

A recent article in Forbes examined why elderly parents are susceptible to scams that seem obvious to younger individuals. According to the article, there are three main reasons for this: isolation and loneliness, diminished cognition and feelings of financial insecurity. Fraudsters know how to talk to lonely elders in a way that garners trust and makes them feel engaged. In addition, Alzheimer’s Disease research indicates that the first kind of judgment to be impaired is financial judgment, which may go undetected in the beginning stages of Alzheimer’s.

In one example, Gary H. Lane, a former Bank of America financial advisor, pleaded guilty to five counts of tax evasion and 12 counts of fraud on September 3, 2013 and was sentenced to a 10-year prison sentence on February 10, 2014. Allegedly, Lane defrauded six investors of more than $2 million from January 2010 until March 2011. During that time, Lane was reportedly employed by Bank of America Investment Services. Allegedly, Lane convinced these clients to invest their money through an E-trade account instead of following normal bank procedures.

Published on: February 18, 2014

Oriental Financial Services Customers Could Recover Losses From Puerto Rico Closed-end Bond Funds

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses as a result of doing business with Oriental Financial Services. Allegedly, Oriental Financial Services, part of OFG Bancorp, was responsible for investor losses sustained in at least two Puerto Rico Closed-end Bond Funds: Puerto Rico Investors Tax Free Fund IV and Puerto Rico Income Fund II.

Oriental Financial Services Customers Could Recover Losses From Puerto Rico Closed-end Bond Funds

A claim was recently filed on behalf of one couple who wanted to invest the money from their matured CDs in conservative investments. However, Oriental Financial Services allegedly recommended they invest 65 percent in the Puerto Rico Closed-end Bond Funds. According to the claim, the couple was unaware that this significant portion of their $1 million investment would be put into investments that were illiquid, concentrated, high-risk and leveraged. Reportedly, when the Puerto Rico market declined, their investment value declined by around 60 percent. In addition, the couple is unable to get out of their declining investments because there is no secondary market readily available.

Under FINRA rules, 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. According to stock fraud lawyers, many of the investors who have suffered significant losses in Puerto Rico closed-end bond funds were unaware of the risks, and these investments were unsuitable given their risk tolerance.

Published on: February 4, 2014

Victims of Robert G. Bard Could Recover Losses

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of the customers of Robert G. Bard. Current claims against Bard on behalf of investors seek compensation for investment losses that resulted from securities laws violations in the amount of as much as $6 million.

Victims of Robert G. Bard Could Recover Losses

Current allegations against Bard include breach of contract, negligence, fraud through omission of material fact and violation of Financial Industry Regulatory Authority (FINRA) regulations and other securities laws, among others. Before incorporating his investment firm in December 2004, Bard was terminated from the investment firm where he worked for allegedly preparing and submitting investment documents with forged signatures of his customers. A FINRA investigation confirmed these charges and Bard signed a Letter of Acceptance, Waiver and Consent.

In August 2013, Bard was found guilty of 21 felony counts of offenses related to securities fraud. According to stock fraud lawyers, FINRA rules have established that firms must properly supervise brokers’ activities while they are registered with the firm. Reportedly, Scottrade, Ameritrade, Choice Investments and E-Trade have been named in an arbitration claim soon to be filed on behalf of some of Bard’s clients and these investment firms could be ordered to compensate clients for losses sustained for the period Bard was registered with the firms.