Suitability

Published on: July 5, 2012

More Trouble for Investors of Behringer Harvard

Stock fraud lawyers have been investigating claims on behalf of investors of Behringer Harvard Holdings LLC for several months, but recent news shows even more trouble may be ahead for these investors. Apparently, Behringer Harvard is having significant difficulty making loan payments on two of its offerings. As a result, Behringer is losing real estate assets.

More Trouble for Investors of Behringer Harvard

Securities fraud attorneys say that earlier this month, several properties related to the nontraded Behringer Harvard Opportunity REIT I went into bankruptcy protection after negotiations over debt, amounting to $48.3 million, failed. Furthermore, the Behringer Harvard Short-term Opportunity Fund I LP, a private placement, entered into a “deed in lieu of foreclosure agreement.” This agreement was entered into in June 2012 and transferred properties to the lender.

At the end of 2011, Behringer Harvard Opportunity REIT I suffered an estimated value decline of 46 percent. According to stock fraud lawyers, this decline represents a reduction from $7.66 per share a year earlier to $4.12 at the end of 2011. In addition, as of December 31, 2011, Behringer Harvard Short-term Opportunity Fund I LP investors saw their investment drop in value from $6.48 per share on December 31, 2010 to a staggering 40 cents per share. The Short-term Opportunity Fund I had total assets amounting to around $130 million. To make matters worse, the Opportunity REIT I has total assets amounting to $524.4 million, with an additional $68.4 million in debt that will mature this year.

Published on: July 2, 2012

Investors of Bank of America Structured Products Could Recover Losses

by InvestorLawyers

Securities fraud attorneys are currently investigating potential claims on behalf of customers who suffered losses as a result in their investment in a Bank of America-created structured product or products. In some cases, Financial Industry Regulatory Authority-registered brokerage firms may be held liable for having improperly sold structured products to their clients, such as those created by Bank of America.

Investors of Bank of America Structured Products Could Recover Losses

Typically, structured products are notes or debt instruments created by investment sponsors. These products are linked to assets such as stock, which are linked to another asset or assets. These investments are extremely complex and, as a result, are not appropriate for unsophisticated investors who are not capable of understanding the risks and complexity of the investment.

Because an income component is typically offered with structured products, they are appealing to fixed income individuals, such as retirees. Despite the fact the investment is not suitable for many individuals, they continue to be pushed by brokerage firms because of the high commissions offered in association with their creation and sale. 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. Furthermore, securities arbitration lawyers say that brokerage firms must, before approving an investment’s sale to a customer, conduct a reasonable investigation of the securities and issuer.

Published on: June 28, 2012

Investors Beware Retirement Account Fraud

by InvestorLawyers

Investment fraud lawyers are currently investigating potential claims on behalf of investors who suffered losses as a result of a breach of fiduciary duty related to their retirement accounts.

Investors Beware Retirement Account Fraud

Cofounder and director of Results One Financial LLC, Steven Salutric, was recently ordered to restore $1,211,902.25 to clients who held pension plans with him. The money was allegedly withdrawn from four pension plans between 2005 and 2009. This action violated the Employee Retirement Income Security Act. Allegations against Salutric stated that he misdirected client assets to entities such as a restaurant, a film distribution company, a real estate partnership and the church at which he served as treasurer. Salutric had a personal interest in all these entities, according to stock fraud lawyers.

“It is particularly egregious when those entrusted with protecting workers’ retirement assets jeopardize them by committing illegal acts for personal gain,” Hilda L.Solis, secretary of the U.S. Department of Labor, said.

Published on: June 27, 2012

Mountain V Oil and Gas Investors Could Recover Losses

by InvestorLawyers

Investment fraud lawyers currently are investigating potential claims on behalf of investors who suffered significant losses as a result of their investment in a Mountain V Oil and Gas investment, or other similar investments. In many cases, broker-dealers improperly recommended these risky investments to clients for whom the investment was unsuitable.

Mountain V Oil and Gas Investors Could Recover Losses

Mountain V’s headquarters are in Bridgeport, West Virginia. Steve and Mike Shaver founded Mountain V Oil & Gas Inc. in March of 1994. It was founded in order to acquire and develop gas and oil reserves located in the Appalachian Basin.

According to investment fraud lawyers, oil and gas investments are not suitable for unsophisticated investors because of the substantial risks involved. These investments should only be recommended to sophisticated investors.

Published on: June 25, 2012

Paladin Realty Income Properties REIT, Wells REIT Investors Could Recover Losses

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who have suffered significant losses as a result of their investment in Wells or Paladin Realty Income Properties REITs.

Paladin Realty Income Properties REIT and Wells REIT Investors Could Recover Losses

Reportedly, investors were recently told by Paladin Reality Income Properties Inc. that its stock would cease to be sold next month because its current scale cannot cover expenses. This comes after it raised, in more than four years, $78.7 million. Reports about Wells Real Estate Funds state that, in an attempt to cut costs, the firm laid off its executive sales staff recently. This is not a good sign for investors, who are hoping their investment will rebound after dividend cuts and price drops.

Securities fraud attorneys have stated that as illiquid, non-traded investments, many REITs are not a suitable investment for all 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. Furthermore, brokerage firms must, before approving an investment’s sale to a customer, conduct a reasonable investigation of the securities and issuer.

Published on: June 14, 2012

BNI Investors Could Recover Losses Through Securities Arbitration

by InvestorLawyers

Stock fraud lawyers are investigating potential claims on behalf of investors who suffered losses as a result of their investment in BNI Equities LLC, BNI TIC (tenant-in-common) or BNI Notes. In many cases, brokers improperly recommended the purchase of risky real estate and TIC investments offered by BNI. Many brokers were motivated to make these improper recommendations because of the high commission paid to them by real estate private placements. This commission is frequently as high as 10 percent.

BNI Investors Could Recover Losses Through Securities Arbitration

FINRA arbitrations involving real estate investments, such as TICs, are not uncommon. In many cases, securities arbitration lawyers were able to prove that the financial professionals that recommended the investments did not perform the necessary due diligence before they made the recommendation to their clients.

According to stock fraud lawyers, a major problem with structured real estate investments is that they often involve liquidity restrictions and high risks. To make matters worse, these risks are often misrepresented by brokerage firms. Instead, many firms focus on the investments’ promised income streams. Retired investors are often attracted to these income streams but don’t realize that because of the high risks involved, the investment could be unsuitable for them. 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. Furthermore, brokerage firms must, before approving an investment’s sale to a customer, conduct a reasonable investigation of the securities and issuer.

Published on: June 13, 2012

Investment Fraud Red Flags for Elderly Investors

by InvestorLawyers

According to securities fraud attorneys, elderly and retired individuals are frequently the targets of securities fraud. While this is not likely to change, elderly investors can be aware of red flags that could indicate fraud has occurred. Some of these red flags include recommendations for investments that are typically unsuitable for elderly investors, unsolicited investment offers, unrealistically high return promises, promises of little or no risk, request for up-front payments, high pressure tactics, direct mail offerings and Internet offerings.

Investment Fraud Red Flags for Elderly Investors

In regards to suitability, FINRA Rule 2111 will replace NASD Rule 2310 on July 9, 2012. Factors determining an investment’s suitability for each investor will now include the customer’s age, tax status, financial situation and needs, liquidity needs, investment experience, investment objectives, risk tolerance, investment time horizon and other investments. A broker or adviser must consider these factors before making a recommendation after July 9.

According to securities fraud attorneys, because of an elderly investor’s age, asset allocations that are weighted in investments with a long time horizon or higher risk investments are often considered inappropriate. Potentially unsuitable investment products for elderly investors include:

Published on: June 11, 2012

Is Healthcare Trust of America Following in Inland Western’s Footsteps

by InvestorLawyers

According to stock fraud lawyers, a recent announcement by Healthcare Trust of America Inc. stated that the company will be advised by Wells Fargo Securities LLC in connection with the listing, on the New York Stock Exchange, of its Class A common stock. Healthcare Trust of America will be guided through the listing processes by Wells Fargo, positioning it for its next move in becoming a publicly-traded REIT. Healthcare Trust of America expects to be listed on the NYSE on or around June 6, 2012, and this move is intended to provide current stockholders with staged, phased-in liquidity.

Is Healthcare Trust of America Following in Inland Western’s Footsteps

Healthcare Trust of America is hoping for an IPO price of $10.10 per share minimum, but considering Inland Western REIT’s recent IPO and the fact that it was set much lower than was anticipated, stock fraud lawyers are monitoring the situation with Healthcare Trust of America as it unfolds to see if its investors will suffer the same kinds of losses experienced by Inland Western’s investors. Healthcare Trust of America investors should pay close attention to what happens with the investment’s IPO because if it follows in the footsteps of Inland Western, they could have a valid securities arbitration claim.

Securities fraud attorneys have stated that as illiquid, non-traded investments, many REITs are not a suitable investment for all 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. Furthermore, brokerage firms must, before approving an investment’s sale to a customer, conduct a reasonable investigation of the securities and issuer.

Published on: June 8, 2012

Retired, Unsophisticated Investors Targeted Again: Brookstone Found Responsible

by InvestorLawyers

A Financial Industry Regulatory Authority (FINRA) announcement dated June 4, 2012, stated that a hearing panel ruled in favor of claimants against Brookstone Securities of Lakeland, Florida, along with one of its brokers, Christopher Kline, and its owner and CEO, Antony Tuberville. Brookstone, Kline and Tuberville apparently made fraudulent sales of CMOs, or collateralized mortgage obligations, to elderly, retired and unsophisticated investors. Brookstone was fined $1 million in addition to an order of restitution payment of more than $1.6 million to customers. Of that amount, $1,179,500 was imposed jointly with Kline and the remaining $440,600 was imposed jointly with Tuberville. Securities arbitration lawyers say Kline and Tuberville were also barred by the panel from working again in the securities industry. In addition, David Locy, former chief compliance officer of Brookstone, was barred from acting in any principal or supervisory capacity. Locy was also fined $25,000 and was barred for two years from acting in any capacity.

Retired, Unsophisticated Investors Targeted Again: Brookstone Found Responsible

According to the panel’s findings, from July 2005 through July 2007, Kline and Tuberville made intentional fraudulent misrepresentations and omissions regarding the risks associated with CMOs. The affected customers were all retired investors seeking an alternative to equity investments that was safer. Despite the fact that the negative effects that increasing interest rates were having on the CMOs by 2005 were evident to Kline and Tuberville, they failed to explain these conditions to their customers. The clients were instead led to believe that the CMOs were “government-guaranteed bonds” that would generate 10 to 15 percent returns and preserve capital.

For a long time, investment fraud lawyers have been warning investors that retired and elderly investors are often the targets for investment fraud, and this was certainly the case here. Of the seven customers named in the original complaint, all were retired, elderly and/or unsophisticated investors. Furthermore, two were elderly widows who were convinced to put their retirement savings in the risky CMOs and then told that because they were “government-guaranteed bonds,” their money could not be lost. However, in total, the seven investors lost $1,620,100 while Brookstone racked up $492,500 in commissions.

Published on: June 7, 2012

Sun 1031 TIC Investors Could Recover Losses

by InvestorLawyers

Stock fraud lawyers are currently investigating potential claims on behalf of investors who purchased Sun 1031 TICs or other risky tenant-in-common investments. In many cases, broker-dealers improperly recommended these investments to clients for whom the investment was unsuitable.

Sun 1031 TIC Investors Could Recover Losses

TICs became popular in 2002, following a ruling by the Internal Revenue Service that allowed capital gains to be deferred by investors. In this property ownership, a fractional interest is owned by two or more parties. However, following the real estate crisis, TICs saw a significant decline in value. According to stock fraud lawyers, liquidity problems and high risks are not uncommon with TICs and, in many cases, these risks are misrepresented to the clients. Instead, brokers often focus on the promised income stream when persuading clients to purchase TICs. Because of the potential income stream associated with TICs, these investments can be attractive to retired investors who are not informed of the risks involved.

According to investment fraud lawyers, prior to recommending an investment to a client, brokers and firms are required to perform the necessary due diligence to establish whether the investment is suitable for the client, given their age, investment objectives and risk tolerance. This investment was clearly unsuitable for many of the investors who received the recommendation to purchase the TIC and, in some cases, the necessary due diligence likely went unperformed. Because TICs usually pay a high commission — often as much as 10 percent — many brokers recommend TICs to investors despite their unsuitability.