Suitability

Published on: February 26, 2013

Paulson Hedge Fund, Full-service Brokerage Firm Feeder Fund Investors Could Recover Losses

Securities fraud attorneys are currently investigating claims on behalf of investors with full-service brokerage firms who suffered significant losses as a result of their investment in Paulson & Co.’s Advantage and Advantage Plus hedge funds. Reportedly, the Advantage Fund’s value declined 51 percent in 2011 and 19 percent in 2012. According to Securities and Exchange Commission filings, many major brokerage firms including Citigroup, Morgan Stanley, Merrill Lynch and UBS Financial Services used proprietary “feeder” funds to invest in the Paulson funds.

Paulson Hedge Fund and Full-Service Brokerage Firm Feeder Fund Investors Could Recover Losses

The feeder funds used by full-service brokerage firms to invest in Paulson’s Advantage and Advantage Plus Funds went by a variety of names, such as LionHedge Paulson, UBS Paulson Advantage Fund, Morgan Stanley HedgePremier Paulson, Paulson Advantage Access Fund and CAIS Paulson. Stock fraud lawyers say that all of the aforementioned funds invest in Paulson’s funds and that in some cases they may not have provided oversight or due diligence in the funds, despite representations made to investors.

Following the Advantage Fund’s decline, in May 2012 the fund was put on Morgan Stanley Wealth Management’s “watch list” and investors are now being advised to redeem. Three months later, Citigroup reportedly made a similar decision, pulling $410 million from Paulson’s funds. In light of the fact that the Paulson funds were sued by an investor in February 2012, many investors are contacting securities fraud attorneys about their losses. In the 2012 lawsuit, both Paulson & Co. and its funds were charged with deeply investing into SinoForest without conducting adequate due diligence and accused of breach of fiduciary duty.

Published on: February 19, 2013

Clock Ticking on KBS REIT I Claims

by InvestorLawyers

Securities arbitration lawyers are encouraging investors who suffered significant losses in KBS REIT I to act quickly if they believe they have a securities arbitration claim. According to the Financial Industry Regulatory Authority, “If too much time has elapsed between a broker’s conduct and your complaint to FINRA, the investigation may be hindered.” The initial public offering for KBS REIT I closed on May 31, 2008, so this May will mark five years since many investors were unsuitably recommended the KBS REIT I.

Clock Ticking on KBS REIT I Claims

With a new estimated value of $5.16 per share, the per share price has dropped drastically since its original offering price of $10 per share. However, investment fraud lawyers say that if investors need to liquidate for cash, they may receive even less for their shares. Because investors must resort to selling on a private secondary market, some investors may receive only 80 percent or less of the investment’s already-reduced estimated value.

According to securities arbitration lawyers, in many cases investors received unsuitable recommendations of KBS REIT I. Many were led to believe that the investment was a safe investment that would produce regular, dependable distributions while the investment’s value remained constant or increased. In addition, many were not made aware of the illiquidity of the investment that resulted from the fact that it was a non-exchange-traded investment.

Published on: February 15, 2013

Investors in Equity Linked Structured Products Tied to Apple Could Recover Losses

by InvestorLawyers

Stock fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses in Equity Linked Structured Products which were tied to the Apple stock price. Apple stock has suffered a significant decline since last year, falling from more than $700 per share to less than $440 per share. While many Apple shareholders suffered losses as a result of this price decline, Equity Linked Structured Products, or ELSPs, that were tied to Apple’s stock price also suffered significant losses. Essentially, ELSPs are bonds that have a feature that allows them to be converted into other companies’ stocks.

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Features of ELSPs include high interest payments for a year or less. If the stock price of the company that the ELSPs are tied to remains close to the price of the stock at the time the bonds were issued, or increases, ELSP investors will get their money back when the investment comes due. However, if the stock price suffers a decline of more than 20 percent, the ELSPs can become shares of the stock — in this case, Apple — and the investor has no choice but to hold the investment until maturity.

Securities arbitration lawyers say that when Apple’s stock price increased substantially in 2012, full-service brokerage firms like Morgan Stanley, JPMorgan Chase and Barclays sold more than $722 million in ELSPs. In 2012, around 450 of the new structured products issued were tied to Apple, 75 percent of which suffered an estimated 15 percent decline in just one week. Most of these products are now underwater. In addition, many believe that investment banks were using ELSPs as an inexpensive hedging strategy against Apple’s stock price and benefited from these investments while investors were losing.

Published on: February 14, 2013

LPL to Pay Up to $2.5 Million to Settle Claims; Customers Continue to Explore Options

by InvestorLawyers

On February 6, 2013, securities fraud attorneys announced that LPL Financial has settled claims brought by the State of Massachusetts by agreeing to pay up to $2.5 million. The claims against LPL alleged that it failed to supervise registered representatives related to the sales of non-traded REITs, or real estate investment trusts.

LPL to Pay Up to $2.5 Million to Settle Claims, LPL Customers Continue to Explore Options

The following non-traded REITs were the focus of this complaint: Dividend Capital Total Realty, Inland American, Wells REIT II, Cole Credit Property Trust II, Cole Credit Property Trust III, Cole Credit Property 1031 Exchange and W.P. Carey Corporate Property Associates 17. Investment fraud lawyers encourage investors who suffered significant losses as a result of their investment in these non-traded REITs to explore all of their legal rights and options.

LPL was charged in December 2012 with unethical and dishonest business practices related to the sale of REITs. These charges are in connection with the sales of $28 million in non-traded REITs between 2006 and 2009, which were sold to nearly 600 clients. According to the Securities Division, 569 of those transactions had regulatory violations. According to Massachusetts’ findings, LPL’s REIT sales included violations of the State’s 10 percent concentration limits, prospectus requirements and LPL compliance practices. Furthermore, Massachusetts alleged that representatives of LPL received limited REIT training.

Published on: February 5, 2013

More Trouble for TNP Strategic Retail Trust Inc. REIT, TNP 12% Notes Program

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered losses in the TNP Strategic Retail Trust Inc., a non-traded REIT, and the TNP 12% Notes Program. Both of these products come from Tony Thompson’s company, Thompson National Properties LLC. Reportedly, Thompson National Properties’ January Securities and Exchange Commission filings stated that TNP Strategic Retail Trust Inc. has two loans on which it is in danger of defaulting.

In addition to the difficulty with the non-traded REIT, stock fraud lawyers say that a new lawsuit has been filed in the U.S. District Court for the District of Colorado relating to the TNP 12% Notes Program LLC. According to the allegations, TNP “has failed to make required interest payments on the note.” In 2008, the plaintiffs purchased a $100,000 note, the principal of which TNP was obligated to repay by 2011. A guarantee signed by Thompson is an attachment to the lawsuit and states that TNP “hereby unconditionally guarantees the performance of all the company’s obligations under the notes, including, without limitation, the payment of principal and interest.” However, TNP allegedly missed the 2011 deadline to repay the principal and then ceased making interest payments the following year. A similar suit was filed in September, 2012.

According to an InvestmentNews article, Thompson downplayed the financial difficulties at his companies in e-mail messages to InvestmentNews. When asked specifically about TNP’s growing financial problems, Thompson reportedly wrote, “You are wrong.” For more information on securities fraud attorneys’ investigations into TNP investments, see the previous blog posts, “TNP Strategic Retail Trust Investors Could Recover Losses” and “Thompson National Properties 12 Percent Note Investors Could Recover Losses.

Published on: January 31, 2013

Bambi Holzer Still Trading Despite Numerous Customer Complaints

by InvestorLawyers

Stock fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of doing business with Bambi Holzer. According to a Forbes article, Holzer’s investment advice has resulted in securities settlements amounting to more than $12 million. Despite this article, which appeared three years ago, her trades are still being cleared by brokerage firms.

Bambi Holzer Still Trading Despite Numerous Customer Complaints

Currently a broker at Newport Coast Securities, Holzer has also worked with a number of other firms, including UBS, Brookstreet Securities Corporation, AG Edwards, Wedbush Morgan Securities Inc. and Sequoia Equities Securities. Holzer and UBS have already been compelled to pay to settle securities claims amounting to $11.4 million. These claims alleged that Holzer misrepresented variable annuities through misrepresentation of guaranteed returns. Holzer was fired from AG Edwards in 2003 for allegedly engaging in business practices that did not coincide with the firm’s policies. Further allegations against Holzer include misrepresentations while at Brookstreet. These misrepresentations allegedly occurred in 2005 at a Beverly Hills presentation at which Holzer allegedly stated that a fictional couple was able to make $9 million by deferring $732,000 in taxes through the use of trusts. In another claim, a customer of Wedbush Morgan Securities alleged breach of fiduciary duty, account mishandling, and breach of contract that allegedly resulted in damages of $824,000.

According to securities fraud attorneys, allegations against Holzer include fraud, churning, unsuitable investments, misrepresentations of fees, Securities Act violations, private placement-related fraud, negligent representations related to variable annuities, inadequate supervision, variable annuity-related fraud, negligent recommendation and sale of Provident Royalties LLC, negligent sale and recommendation of Behringer Harvard Security trust and other unsafe products as well as elder abuse.

Published on: January 31, 2013

Losses Resulting from Unsuitable Recommendation of ETFs Could be Recoverable

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of investors who have suffered significant losses in exchange traded funds, or ETFs. Exchange traded funds are similar to stocks in that they are investment funds traded on stock exchanges. These types of investments hold stocks, bonds, commodities or other assets. Throughout the trading day, an ETF trades close to its net asset value and most of these investments track a stock or bond index.

Losses Resulting from Unsuitable Recommendation of ETFs Could be Recoverable

Securities arbitration lawyers say that because of the low-cost, stock-like features and tax efficiency, ETFs are attractive to many investors. However, there are risks associated with ETFs that may make them unsuitable for some investors. In 2012, many ETFs suffered declines that resulted in investor losses. According to investment fraud lawyers, investors suffered losses anywhere from 22-90 percent in exchange traded funds.

The following is a list of ETFs that declined in 2012:

Published on: January 24, 2013

UBS Willow Fund Declines 80%, Investors Could Recover Losses

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses in the UBS Willow Fund, sold by UBS Financial Services. Formed in 2000, the UBS Willow Fund is a private hedge fund. Reportedly, investors were notified in October 2012 that the Willow Fund had sustained substantial losses and would be liquidated.

Allegedly, UBS may have offered and sold the UBS Willow fund to investors — particularly customers with low risk tolerance seeking stable income, such as retirees — while marketing it as a safe, reliable investment. However, the fund has suffered a decline of around 80 percent. Investigations are also underway to determine if UBS Financial Services adequately disclosed or misrepresented the material risks of this investment to clients.

In some cases, securities fraud attorneys say that investors’ portfolios may have been over-concentrated in the UBS Willow Fund. If so, these portfolios may have been mismanaged, given that risk management strategies were available that would have offered investors protection for the value of their portfolio.

Published on: January 17, 2013

Attorney Christopher Gray Interviewed By Lawyersandsettlements.com Concerning Non-Traded REIT Cases

by InvestorLawyers

Attorney Christopher J. Gray of Law Office of Christopher J. Gray, P.C. was recently interviewed by a reporter from legal news website Lawyersandsettlements.com concerning investor claims arising out of unsuitable recommendations of non-traded REITs by stockbrokers. The interview is accessible via the link below.

www.lawyersandsettlements.com/articles/securities/interview-securities-fraud-lawsuit-stock-2-18372.html?opt=b&utm_expid=3607522-0&ref=newsletter_pcf#.UPhW5WceeM8

Published on: January 17, 2013

Full-service Brokerage Customers Who Were Overconcentrated in Citigroup Stock Could Recover Losses

by InvestorLawyers

In light of Citigroup Inc. Securities Litigation, Case No. 07 Civ. 9901, a settled class action suit against Citigroup, Citigroup shareholders are encouraged to contact an investment fraud lawyer in order to explore all their legal rights and options for recovering substantial losses that resulted from holding a concentrated position in the stock. Investors with full-service brokerage firms, excluding Citigroup and its related parties, may be able to recover their losses through Financial Industry Regulatory Authority securities arbitration.

Full-service Brokerage Customers Who Were Overconcentrated in Citigroup Stock Could Recover Losses

Many claims related to the overconcentration in Citigroup stock in full-service brokerage accounts focus on the fact that many of these portfolios were mismanaged, given that risk management strategies were available that would have offered investors protection for the value of their portfolio. Securities arbitration lawyers say that protective puts and collars, stop loss and limit orders, “zero cost” collars and other “hedge” strategies are risk management strategies that could have been used to protect clients’ portfolios.

Protective puts, limit orders and stop loss orders are a way to give an account an exit strategy and downside protection in the event that a stock declines in value. A “zero cost” collar is a hedging strategy that creates a range of value, allowing the portfolio to maintain its value, irrespective of the direction and fluctuation of the price of the underlying stock. In many cases, investment fraud lawyers say that investors’ concentrated positions were directly exposed to fluctuations in the securities markets because of a failure of full-service brokerage firms to utilize these risk management strategies.