With crude oil trading in the range of $45 a barrel, down from over $100 a barrel in the past year, investments linked to the value of crude oil extraction such as royalty trusts have also seen their share prices plummet.
The ten largest royalty trusts traded on the U.S. exchanges are:
BP Prudhoe Bay Royalty (BPT)
The Financial Industry Regulatory Authority has charged broker Thomas Sharp with making misleading communications to customers concerning non-traded REITs. FINRA alleges that Sharp violated NASD Rule 2210(d) by sending customers e-mails recommending the REITs that were not fair and balanced and failed to provide a sound basis for evaluating the facts. Sharp was associated with Ameriprise as a financial advisor from 1987 through September 2013.
Non-traded REITs have given rise to an increasing number of investor claims in recent years. These REITs are largely illiquid, carry a risk of substantial loss of principal, and often result in commissions and fees of over 10% of the amount invested.
FINRA rules require that all financial advisor communications with customers be based on principles of fair dealing and provide a sound basis for evaluating an investment. In sanctioning Sharp, FINRA found that Sharp sent e-mails regarding non-traded REITs to two potential customers that were not consistent with these rules.
During October 2014, LPL Financial agreed to reimburse nearly $550,000 to investors to resolve a Massachusetts claim that LPL had allowed its brokers to engage in “annuity switching” in the accounts of senior investors. “Annuity switching” means that a broker advises an investor to sell one annuity in order to purchase another for no legitimate reason, which often results in significant fees and/or commissions being incurred by the customer.
In an agreement with the Massachusetts Securities Division,, LPL Financial admitted that certain annuity switch transactions were conducted without fully disclosed surrender charges. LPL had previously been investigated by the State of Illinois for similar practices. The Massachusetts case reportedly involved 157 variable annuity switching transactions.
In the course of 2014, LPL Financial has already been fined for various supervisory issues. In March FINRA fined LPL Financial $950,000 for supervisory issues related to the sale of alternative investment products, REITs, oil and gas partnerships, hedge funds and other illiquid investments. Earlier this summer, Illinois regulators ordered LPL Financial to pay a $2 million fine and $820,000 in restitution for failing to maintain accurate records related to variable annuity exchanges, also known as 1035 exchanges.
FINRA suspended Herbert Leonard Kaye, formerly a First Allied Broker, for four months beginning September 2015 and fined him $25,000, including a $11,000 in disgorgement of commissions charged to a customer. According to FINRA, Kaye carried out 2,000 discretionary trades in the account of a sole customer between June 2010 and April 2013. Kaye’s customer had allegedly given him verbal authority to use his discretion in executing trades after suffering a significant loss on the unsolicited sale of equities that she had inherited from her deceased husband. However, Mr. Kaye did not obtain written authority to trade in her account. Moreover, First Allied’s written policies and procedures prevented discretionary trading except in limited circumstances. Nonetheless, between June 2010 and April 2013, Mr. Kaye executed over 2,000 discretionary trades generating over $173,000 in commissions.
FINRA alleged that this conduct violated industry rules. FINRA Rule 2010 states that “A member, in the conduct of its business, shall observe high standards of commercial honor and just and equitable principles of trade.” Further, FINRA Rule 2510(b) provides “No member or registered representative shall exercise any discretionary power in a customer’s account unless such customer has given prior written authorization to a stated individual or individuals and the account has been accepted by the member, as evidenced in writing by the member or the partner, office or manager, duly designated by the member, in accordance with Rule 3010.” And lastly, FINRA Rule 2310 provides that when recommending the purchase, sale, or exchange of any security to a customer, a registered representative must have reasonable grounds for believing that the recommendation is suitable for the customer taking into consideration facts disclosed by the customer as to their other security holdings, financial situation, and investment needs. FINRA alleged that by executing 2,000 trades in the customer’s account without obtaining her prior written authorization, Kaye violated all of the above rules.
If you have suffered significant losses as a result of your investment with Herbert Leonard Kaye or another firm that may have violated securities industry rules, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a securities fraud attorney atLaw Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.
FINRA has filed a complaint against registered reprensentative Darrell W. Mikulencak alleging forgery and failing to appear to testify in Kansas City.
FINRA alleges that Mikulencak forged a bank employee’s signature as well as that of a notary public in order to transfer the registration of stock certificates. Mikulencak allegedly did not have authority or permission to notarize the documents. As a consequence of this alleged forgery, Mikulencak was discharged from First Brokerage America LLC during August 2013. Mikulencak had previously been discharged from Chase Investment Services during December 2010 for violations of firm procedures.
If you have suffered significant losses as a result of your investment with Darrell W. Mikulencak or another firm that violated securities industry rules or securities laws, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a securities fraud attorney at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.
The U.S. District Court for the Northern District of Illinois sentenced Oscar Donald Overbey, Jr. to 3.5 years in federal prison for defrauding more than 30 people out of $4 million. The court found that he had defrauded his clients to pay for personal expenses and fund a gambling habit.
Overbey allegedly convinced his victims that they were actually invested in short-term, government backed investments that paid approx.10% interest.
Overbey was registered with Ameriprise Financial Services in Northfield, Illinois as well as IDS Life Insurance Company.
During August 2014, Financial Industry Regulatory Authority (FINRA) filed a complaint against Steven L. Stahler, formerly a broker with VSR Financial Services, for making unsuitable recommendations to his customers. Allegedly, Stahler recommended high concentrations of private placements and real estate investment trusts (REITs) that exceeded his clients’ stated risk tolerance and investment objectives.
His recommendations included the following:
• AmREIT Monthly Income & Growth Fund
FINRA has barred Jo Ellen Fisher, a former Raymond James broker who allegedly set up a scheme to steal nearly $1 million from her 95 year old client. By forging a godparent certificate, Fisher’s daughter was set to receive the money upon turning 21.
Raymond James has sought to recoup the money but it is unclear if Fisher has spent it all on personal expenses.
Fisher also worked with Peoples Bankcorp in Gallipolis, Ohio.
In August 2014, the Financial Industry Regulatory Authority (FINRA) filed a complaint against Jeffrey Meyer for allegedly participating in 37 private securities transactions, totaling over $1.5 million in violation of firm policies and FINRA Rules.
Meyer was affiliated with Waddell & Reed and WRP Investments, Inc. FINRA singled out the following private securities transactions in their complaint against Meyer: United Private Capital, Strategic Lending Solution and, K &M Oil Company.
If you have suffered significant losses as a result of your investment with Waddell & Reed, WRP Investments, Inc., Jeffrey Meyer or another firm, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a securities fraud attorney at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.
The Securities and Exchange Commission (SEC) charged Donna Jessee Tucker with stealing $730,000 from her elderly clients in order to finance her luxurious lifestyle. The SEC alleges that Tucker purposefully arranged for her clients’ statements to be delivered electronically although some might not be able to access the internet due to their advanced age. Furthermore, some of her clients were blind and were unable to track how she maneuvered their accounts.
Tucker, now permanently barred, was registered with UBS Financial Services from 2007 – 2013 and with A.G. Edwards & Sons from 2003 until 2007.
Tucker, 58, has also pleaded guilty to federal crimes including a single count each of wire fraud and tax evasion. Sentencing is set for November 12, 2014 in the U.S. District Court for the Western District of Virginia.
Investor Lawyers Blog