Suitability

Published on: May 9, 2012

Ameriprise Financial Investors Filing Claims Over REIT Losses

Securities arbitration lawyers are currently investigating possible claims on behalf of investors who suffered losses as a result of their purchases of Inland Western Real Estate Investment Trust, which is now known as Retail Properties of America. Many of the investors who suffered losses as a result of Retail Properties of America were purportedly customers of Ameriprise Financial. Some Ameriprise customers have already come forward with potential claims.

Ameriprise Financial Investors Filing Claims Over REIT Losses

In April 2012, Retail Properties of America was converted to a publicly-traded New York Stock Exchange company from a non-traded REIT. Last June, the value of the REIT was reported at $6.95 per share. Some brokers advised investors to remain invested in the REIT, given the decline, and asserted that it should rebound following the IPO. At the IPO, Retail Properties was expected to be offered at $10 to $12, but its actual offering of $8 was well below this expectation. Furthermore, the offering price of $8 resulted from a reverse stock split and the actual value of Retail Properties was around $3.20.

As a public non-traded REIT, the Inland Western REIT may have carried a high commission which motivates brokers to make the recommendation to investors despite the investment’s unsuitability. The commission on a non-traded REIT is often as high as 15 percent. Non-traded REITs, such as Inland Western REIT, carry a relatively high dividend or high interest, making them attractive to investors. However, non-traded REITs are inherently risky and illiquid, which limits access of funds to investors, according to stock fraud lawyers. If Ameriprise made unsuitable recommendations to clients to invest in Inland Western, this is a stark contrast to its claim that the company takes the “time to understand your dreams and goals, recommend strategies and product solutions to help you make progress toward those dreams and goals and help you implement these solutions and monitor progress.”

Published on: May 7, 2012

KBS REIT I Investors Could Recover Losses

by InvestorLawyers

Because of the recent decline in value of KBS Real Estate Investment Trust I, investment fraud lawyers are investigating claims on behalf of investors who suffered significant losses as a result of their investments. Full-service brokerage firms who sold this particular REIT could be held responsible for investor losses.

KBS REIT I Investors Could Recover Losses

In April, investors of KBS REIT were informed that the value of KBS REIT had declined to $5.16 per share from $7.32 per share. While this represents a 29 percent decline since the last value cut of the REIT’s shares, it also represents a decline of nearly 50 percent since the original investment offering at $10 per share. The reduction in share price has resulted in significant losses for investors but, according to securities fraud attorneys, investors may be able to recover losses through securities arbitration.

KBS is a non-traded Real Estate Investment Trust (REIT). According to investment fraud lawyers, REITs typically carry a high commission which motivates brokers to make the recommendation to investors despite the investment’s unsuitability. The commission on a non-traded REIT is often as high as 15 percent. Non-traded REITs, such as the KBS REIT, carry a relatively high dividend or high interest, making them attractive to investors. However, non-traded REITs are inherently risky and illiquid, which limits access of funds to investors. For more information on REITs, see the previous blog post, “FINRA Investor Alert: Public Non-Traded REITs.”

Published on: May 3, 2012

RMC Medstone Capital Promissory Note Investors Could Recover Losses

by InvestorLawyers

RMC Medstone Capital promissory note investors who suffered significant losses may have a valid securities arbitration claim, according to investment fraud lawyers. Investors of RMC Medstone Capital apparently received a Notice of Default in September 2011. The Notice of Default informed investors that their RMC Medstone Capital investment is now worthless.

RMC Medstone Capital Promissory Note Investors Could Recover Losses

According to securities arbitration lawyers, approximately $18 million in promissory notes were issued by RMC Medstone Capital and owners of these promissory notes should be seeking recovery of their losses. 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. Brokerage firms and broker-dealers offering the RMC Medstone Capital promissory notes will most likely be unable to demonstrate that the necessary due diligence was performed, based on what attorneys know about the investment.

Specifically, investment fraud lawyers are investigating recovery options for investors who suffered losses in RMC Medstone Capital V and VI promissory notes. Both of these notes were apparently sold under the Regulation D private offerings exemption. This exemption applies to certain private offerings and exempts the investment from normal SEC filing requirements.

Published on: May 2, 2012

Investors Beware of Pre-IPO Fraud, Warns SEC

by InvestorLawyers

The Securities and Exchange Commission (SEC) recently posted an alert on its website which warns investors about scams that offer shares of popular tech companies, like Facebook and Twitter, that have not yet been released to the public. According to investment fraud lawyers, while some pre-IPO shares offerings are legitimate, and are not uncommon, they are typically limited only to sophisticated investors.

Investors Beware of pre-IPO fraud, Warns SEC

According to the SEC, the U.S. security regulator is “aware of a number of complaints and inquiries about these types of frauds, which may be promoted on social media and Internet sites, by telephone, email, in person or by other means.” In recent years, pre-IPO schemes have been a cause for concern, according to the SEC. According to securities arbitration lawyers, investors may be tempted by offerings that capitalize on the popularity of media sites like Facebook.

An order in a bid to stop allegedly fraudulent securities sales of an investment vehicle was issued by the U.S. District Court for the Southern District of Florida in Miami in early April 2012. The investment vehicle claimed to hold pre-IPO shares of Facebook.

Published on: April 30, 2012

REIT Investors: Don’t be Fooled by a New Name

by InvestorLawyers

Recently, several non-traded REITs have attempted name changes in order to put some distance between themselves and the negative news that has been associated with their previous name. A March 2012 letter to investors indicates that Cornerstone Healthcare REIT has done this. Cornerstone REIT is now known as Sentio Healthcare Properties Inc. The funds and REITs sold under Cornerstone Ventures Inc.’s Cornerstone Real Estate Funds have been under investigation by securities fraud attorneys for more than a year.

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Sentio Healthcare Properties, or Healthcare REIT, appears to be one of the most troubled Cornerstone REITs. According to securities arbitration lawyers, the REITs value may have suffered a significant decline.

Typically, REITs carry a high commission which motivates brokers to make the recommendation to investors despite the investment’s unsuitability. The commission on a non-traded REIT is often as high as 15 percent. Non-traded REITs, like the Cornerstone REITs, carry a relatively high dividend or high interest, making them attractive to retired investors. However, non-traded REITs are inherently risky and illiquid, which limits access of funds to investors. This becomes a major problem for investors, especially retired individuals, who may need to access their funds when the need arises.

Published on: April 27, 2012

FINRA Cracking Down on Leveraged and Inverse ETFs

by InvestorLawyers

According to investment fraud lawyers, the Financial Industry Regulatory Authority (FINRA) will bring enforcement cases related to the selling of exchange-traded funds (ETFs) that were not appropriate for customers, against certain brokerages. Bradley Bennett, FINRA’s enforcement chief, said this month that the cases will involve leveraged and inverse exchange-traded funds, and the unsuitable sales of said funds. Furthermore, allegations of inadequate or improper training for brokers who sell exchange-traded funds will be involved in the cases.

FINRA Cracking Down on Leveraged and Inverse ETFs

Securities fraud attorneys say that leveraged and inverse ETFs amplify short-term returns. They do so by using derivatives and debt. These investments are more suitable for professional traders and are usually unsuitable for long-term retail investors. These investments only make up $29.3 billion of the $1.15 trillion United States ETF market. FINRA has raised concerns that these products are being sold to long-term retail investors, despite the risk involved when holding leveraged and inverse ETFs for more than one day.

“We don’t have a qualm with the product,” Bennett says. “We just want to make sure that people who are selling them understand them.”

Published on: April 25, 2012

Inland Western REIT Investors Could Recover Losses

by InvestorLawyers

According to securities arbitration lawyers, investors who suffered losses as a result of their investments in the Inland Western REIT may have a valid securities arbitration claim. As a result of the company’s recent move to go public, for the first time, investors have had the opportunity to evaluate, at a publicly set price, the performance of their investment. Because this is the first time they have had this opportunity, many investors are just now realizing that they have suffered significant losses as a result of their investment in this fund.

Inland Western REIT Investors Could Recover Losses

Inland Western REIT, also known as Retail Property of America Inc. REIT, is a non-traded REIT. According to investment fraud lawyers, REITs typically carry a high commission, which motivates some brokers to make the recommendation to investors despite the investment’s unsuitability. The commission on a non-traded REIT is often as high as 15 percent, securities arbitration lawyers say. Non-traded REITs like this one carry a relatively high dividend or high interest, which also helps make them attractive to investors. However, they are inherently risky and illiquid, which limits access of funds to investors. This can become a major problem for investors, especially retired individuals who may need to access their funds when the need arises. In addition, frequent updates of the investment’s current price are not required of broker-dealers, causing misunderstandings about the financial condition of the investment. Because frequent updates are not required, investors may believe the REIT is doing much better than it actually is. For more information on REITs, see the previous blog post, “FINRA Investor Alert: Public Non-Traded REITs.”

If you suffered losses as a result of your investment in the Inland Western REIT (also known as Retail Properties of America Inc. REIT), you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact an investment fraud lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

Published on: April 18, 2012

Investors Who Sustained Losses as a Result of Retail Property of America Inc. REIT May Have Claim

by InvestorLawyers

According to securities arbitration lawyers, investors who sustained losses as a result of Retail Properties of America Inc. Real Estate Investment Trust (REIT) may be able to recover losses through Financial Industry Regulatory Authority (FINRA) arbitration. Formerly known as Inland Western REIT, Retail Properties of America is the third-largest shopping center REIT in the nation. The investment’s recent IPO offering had some disastrous results for investors.

Investors Who Sustained Losses as a Result of Retail Property of America, Inc. REIT May Have Claim

Recent reports show that the $8 offering price of Retail Properties came only as a result of reverse-stock-split engineering. Furthermore, this price is significantly less than the $10 to $12 expected pre-offering price. Investors who originally paid $10 per share for the REIT are actually receiving a split-adjusted value of $3 per share. Investment fraud lawyers say this 70 percent decline may result in significant losses that could be recovered through securities arbitration.

Retail Properties is a non-traded REIT. According to investment fraud lawyers, REITs typically carry a high commission, which motivates some brokers to make the recommendation to investors despite the investment’s unsuitability. The commission on a non-traded REIT is often as high as 15 percent. Non-traded REITs like this one carry a relatively high dividend or high interest, which also helps make them attractive to investors. However, they are inherently risky and illiquid, which limits access of funds to investors. This becomes a major problem for investors, especially retired individuals, who may need to access their funds when the need arises. In addition, frequent updates of the investment’s current price are not required of broker-dealers, causing misunderstandings about the financial condition of the investment. Because frequent updates are not required, investors may believe the REIT is doing much better than it actually is. For more information on REITs, see the previous blog post, “FINRA Investor Alert: Public Non-Traded REITs.”

Published on: April 16, 2012

Wells Fargo Clients May Have Securities Arbitration Claim

by InvestorLawyers

According to stock fraud lawyers, clients of Wells Fargo Advisors LLC may be able to recover losses through Financial Industry Regulatory Authority arbitration. A claim was recently filed with on behalf of a Wells Fargo client because of the sales practices of one or more of its brokers. Allegedly, the client suffered significant losses, which amounted to a substantial part of his life savings, due to an unsuitable recommendation by a Wells Fargo broker. The client was persuaded to invest in several “penny stocks.” The client purchased shares of Camac Energy, Tombstone Exploration and Blue Earth.

Wells Fargo Clients May Have Securities Arbitration Claim

The claim states that clients purchased the penny stocks based upon statements that the stocks were recommended by Wells Fargo. Furthermore, the stocks were represented, even to unaggressive investors, as good investments. However, the stocks were actually very high risk and, when the stocks fell, large sums of money were lost by investors. In addition, the stocks were recommended by the broker because of research done by Liviakis, a third-party analyst, and not because of Wells Fargo’s research or recommendation. According to stock fraud lawyers, Liviakis is not currently facing any charges or claims of misconduct.

Securities fraud attorneys believe that many investors could have been defrauded in this manner, based upon the broker’s sales methods. High risk investments, such as penny stocks, are unsuitable for investors with a conservative portfolio and low risk tolerance. Prior to recommending an investment to a client, brokers are required to perform the necessary due diligence to establish whether or not the investment is suitable for the client, given their age, investment objectives and risk tolerance.

Published on: April 13, 2012

Investors Who Suffered Municipal Bond Losses May Have Valid Securities Arbitration Claim

by InvestorLawyers

Investment fraud lawyers are investigating potential claims on behalf of investors who suffered losses as a result of municipal bond purchases. Two of the bonds currently being investigated are the TW Tax Advantage Fund and Harrisburg.

Investors Who Suffered Municipal Bond Losses May Have Valid Securities Arbitration Claim

The TW Tax Advantage Fund, created by First Republic Investment Management, is a complicated, high-risk municipal arbitrage bond. Investment fraud lawyers are attempting to determine whether the necessary due diligence was performed by brokerage firms prior to the offering the investment for sale to their clients. Furthermore, broker-dealers may not have properly disclosed the features and risks of this complicated product. Shortly after the fund’s creation, it collapsed. As a result, investors of the fund suffered significant losses.

Securities arbitration lawyers are also investigating Harrisburg municipal bond. The general-obligation bond payments were missed for the first time by Harrisburg’s insolvent capital. Furthermore, its receiver is seeking approval for an asset sales plan. Reportedly, Harrisburg’s debt load is five times more than its general-fund budget and it missed bond payments amounting to $5.27 million. The bond payments were due on March 15. These payments were for bonds issued in 1997, amounting to $51.5 million.