Suitability

Published on: August 8, 2013

GenSpring Clients Could Recover Losses

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses in their accounts with GenSpring Family Offices LLC, a firm owned by a wholly-owned SunTrust subsidiary. Reportedly, arbitration cases have already been filed on behalf of ultra-high-net-worth investors which allege mishandling of investment accounts by GenSpring.

GenSpring Clients Could Recover Losses

In one case, the investors’ trust interviewed multiple money managers and investment firms including Credit Sussie, CitiGroup, Deutsche Bank, LaSalle Bank and Goldman Sachs. All of these firms recommended diversification across traditional asset classes, such as bonds and equities, as well as selective investments in alternative products for special situations.

However, the claim asserts that GenSpring stood out because of its unique approach which would provide better downside protection and better returns through the use of Multi-Strategy Hedge Funds, such as Silver Creek Funds, instead of the bond or fixed income portion of client portfolios. Allegedly, GenSpring officials claimed that their approach, which had been tested thoroughly, would behave like traditional bonds in terms of asset class correlation and volatility while providing returns across all market cycles that were superior to traditional bonds. The trust invested approximately $10 million and stated its primary goal as capital preservation.

Published on: August 1, 2013

100 Percent Principal Protected Note Investors Could Recover Losses

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of customers of UBS Financial Services who were sold 100 Percent Principal Protected Notes. 100 Percent Principal Protected Notes were bonds or structured notes issued by Lehman Brothers Inc. Lehman Brothers declared bankruptcy in September of 2008, resulting in disastrous losses for many investors.

100 Percent Principal Protected Note Investors Could Recover Losses

Recently, a Financial Industry Regulatory Authority arbitration claim was filed on behalf of a Texas investor against UBS Financial Services. According to the Statement of Claim, UBS Financial Services allegedly sold the investor, who was a brokerage customer of the firm at the time, $300,000 of the 100 Percent Principal Protected Notes.

According to the claim’s allegations, UBS was aware of the deteriorating financial condition of Lehman Brothers, but concealed its views from brokerage customers who owned the notes. Furthermore, UBS customers were allegedly kept unaware that the Lehman Brothers notes could quite possibly default and become worthless. In addition, the claim alleges that the sales of Lehman notes were halted twice by UBS Financial Services because of concerns regarding credit risk, but UBS did not disclose these halts to thousands of its customers who were already invested in Lehman notes.

Published on: July 30, 2013

Investors Could Recover ATP Oil and Gas Note Losses

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses in ATP Oil and Gas 11.875 Percent Senior Second Lien Exchange Notes. The investigation is regarding whether customers received unsuitable recommendations of the ATP Notes from their full service brokerage firm or advisor.

Reportedly, a class action lawsuit was filed on May 24, 2013, on behalf of investors who acquired ATP Notes that can be traced to the company’s exchange of $1.6 billion in notes that occurred on December 16, 2010. According to the complaint, the company allegedly concealed two moratoriums while issuing the ATP Notes. These moratoriums were issued by the U.S. Department of Interior and regarded deep water drilling. Reportedly, the drilling devastated the revenues of the company, which filed for bankruptcy on August 17, 2012.

According to stock fraud lawyers, ATP Oil and Gas 11.875 Percent Senior Second Lien Exchange Notes were speculative investments that carried a very high risk. As a result, they were not suitable for investors with conservative portfolios, low risk tolerances or those seeking fixed income.

Published on: July 18, 2013

UBS Allegedly Made Unsuitable Recommendation of Lehman Structured Products

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of the unsuitable recommendation of Lehman structured products. Recently, a securities arbitration claim was filed on behalf of a couple who did business with UBS Financial Services Inc. The FINRA arbitration was filed against UBS Financial Services and alleges the improper and unsuitable sale of Lehman structured products.

UBS Allegedly Made Unsuitable Recommendation of Lehman Structured Products

According to the Statement of Claim, the couple was nearing retirement and, therefore, wanted to preserve and protect their savings. Allegedly, they were presented with a written financial plan by UBS Financial Services that recommended an allocation of 52 percent equities and 46 percent fixed income for their “moderate” objectives and risk tolerance.

However, securities arbitration lawyers say the claim alleges that UBS disregarded the recommended allocation and concentrated the couple’s accounts in structured products and notes and equities for the “fixed income” portion. These investments allegedly included Lehman structured products, which UBS was aware carried significant default risk.

Published on: July 10, 2013

UPS Employees with Leveraged, Concentrated Positions Could Recover Losses

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of UPS employees who suffered significant losses as a result of their concentrated position in UPS stock. A recent securities arbitration claim was filed with the Financial Industry Regulatory Authority’s Office of Dispute Resolution on behalf of one investor against Wells Fargo Advisors, seeking damages of $4,000,000.

The claim alleges that the claimant, a 40-year employee of UPS, acquired more than 234,000 shares of UPS stock through the company’s Employee Stock Purchase Plan and Manager’s Incentive Program. A Hypothecation Loan was allegedly opened to facilitate the purchase of the stock, which was used as collateral for the loan. Reportedly, the investor reached a Note and Security Agreement with Wells Fargo when he moved his hypo loan to the firm.

Allegedly, Wells Fargo did not recommend a risk management strategy, such as a protective put and/or collar in order to protect the investor’s leveraged, concentrated position. Meanwhile, Wells Fargo used the UPS stock as collateral for loans to the investor. When UPS’ stock suffered a significant decline that dropped its value well below the loan-to-value ratio, the collateral call on the loan could have been prevented by a protective put option or collar. However, Wells Fargo allegedly facilitated borrowing against the investor’s concentrated stock position, while it was unprotected by a risk management strategy, in an effort to make money.

Published on: July 9, 2013

Clients of Barry George Hartman, Rocky Mountain Financial, Could Recover Losses for Alleged Unsuitable Recommendations of REITs

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses as a result of doing business with Rocky Mountain Financial LLC, FSC Securities Corporation and Barry George Hartman. Some of Hartman’s clients have alleged that he made unsuitable recommendations of high-risk securities, such as AIG stock, and committed sales practice violations regarding non-traded REITs, or Real Estate Investment Trusts.

According to stock fraud lawyers, some non-traded REITs may have carried a high commission, which in the past has motivated brokers to recommend the product to investors despite the investment’s unsuitability. The commission on a non-traded REIT is often as high as 15 percent. Many non-traded REITs carry a relatively high dividend or high interest, making them attractive to investors. However, non-traded REITs are inherently risky and illiquid, which causes them to be unsuitable for many investors.

Financial Industry Regulatory Authority rules have established that 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 his or her age, investment objectives and risk tolerance. Furthermore, securities fraud attorneys say brokerage firms must, before approving an investment’s sale to a customer, conduct a reasonable investigation of the securities and issuer.

Published on: July 4, 2013

Merrill Lynch Fined for Agent’s Unsuitable Trading

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses as a result of doing business with Matthew Becker and Merrill Lynch. Consent orders against Becker and Merrill Lynch were recently announced by the New Hampshire Bureau of Securities Regulation. According to the orders, Matthew Becker was not properly supervised by Merrill Lynch and, as a result of this failure, he was able to engage in short-term trading that was unsuitable for his clients.

Merrill Lynch Fined for Agents Unsuitable Trading

According to stock fraud lawyers, the investigation began when one of Becker’s clients filed a complaint with the bureau. The complaint alleged unsuitable and excessive trading by Becker in the client’s account. Reportedly, it wasn’t until five months after the complaint was received by Merrill Lynch, in September 2010, that Merril Lynch required heightened supervision of Becker.

“After a thorough investigation and review by Bureau auditor William Masuck, we determined that there was a basis for the client’s complaint of excessive trading, especially with regard to mutual funds and structured products,” says Deputy Director of Enforcement Jeff Spill. “These kinds of investments are not suitable for frequent, short-term trading.”

Published on: June 20, 2013

JP Morgan Policy Allegedly Conflicted with Best Interest of Customers

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of customers of JP Morgan Securities LLC. At issue is whether the customers received recommendations that were unsuitable or not in their best interest because of a JP Morgan policy that conflicted with brokers’ responsibilities to their customers.

JP Morgan Policy Allegedly Conflicted with Best Interest of Customers

According to a securities arbitration claim filed by a former JP Morgan broker, the firm allegedly “had a policy to only recommend in-house product to customers, irrespective of whether that product was the best choice for customers to meet their investment objectives.” Furthermore, the firm continued to discourage the selling of outside products by allegedly making it difficult for brokers to collect commissions and fees for those products. In addition, the claim alleges that the firm’s continuing insistence on the sales of proprietary mutual funds created a perpetual conflict between the firm’s policies and a broker’s responsibility to his or her clients.

Financial Industry Regulatory Authority rules have established that 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 alleged practices of JP Morgan would have discouraged and/or made it difficult for brokers to act in the best interest of their clients.

Published on: June 18, 2013

Investors Could Recover Losses for Unsuitable Recommendation of Floating-rate Bank Loan Funds

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses as the result of an unsuitable recommendation of floating-rate bank loan funds. Earlier this month, the Financial Industry Regulatory Authority announced that it ordered Banc of America and Wells Fargo to pay a fine and restitution for the improper and unsuitable recommendation and sale of floating-rate bank loan funds.

Investors Could Recover Losses for Unsuitable Recommendation of Floating-rate Bank Loan Funds

Wells Fargo Advisors LLC was ordered to pay a $1.25 million fine and restitution of approximately $2 million for losses sustained by 239 customers. As Banc of America’s successor, Merrill Lynch, Pierce, Fenner & Smith was ordered to pay a $900,000 fine and restitution of approximately $1.1 million for losses sustained by 214 customers.

Floating-rate bank loan funds can be illiquid and carry significant risks because they invest in loans to entities with below-investment-grade ratings. According to FINRA’s findings, Banc of America and Wells Fargo made recommendations of concentrated purchases of these investments to customers for whom the recommendation was unsuitable. Stock fraud lawyers say that most investors with conservative risk tolerances or who want to conserve principal should not have received a recommendation to invest in a floating-rate bank loan fund.

Published on: June 13, 2013

Customers of Blake B. Richards, Ameriprise, LPL Could Recover Losses

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of Ameriprise Financial and LPL Financial customers. Recently, the U.S. Securities Exchange Commission charged Blake B. Richards, a former LPL and Ameriprise Advisor Services advisor, with fraud. Allegedly, Richards misappropriated funds from a minimum of six individuals, amounting to around $2 million.

According to the SEC, at least two of Richards’ victims are elderly and most of the allegedly misappropriated funds were life insurance proceeds and/or retirement savings.

“Since at least 2008, on occasions when investors informed Richards that they had funds available to invest (such as from an IRA rollover or proceeds from a life insurance policy), Richards instructed the investors to write out checks to an entity called ‘Blake Richards Investments,’ a d/b/a entity, or another d/b/a used by Richards, ‘BMO Investments,'” the SEC’s complaint states. “Richards represented to the investors that he would invest their funds through his investment vehicle in life insurance, fixed income assets, variable annuities, or household-name stocks. Richards misappropriated much of the funds.”