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Published on: May 20, 2013

Gray Firm Files Arbitrations Against LPL Financial Alleging Unsuitable Sales of Non-Traded REITs

Law Office of Christopher J. Gray, P.C., a New York City law firm handling arbitration claims on behalf of investors throughout the United States, has filed multiple Financial Industry Regulatory Authority (“FINRA”) arbitration proceedings on behalf of investors who allege that registered representatives of LPL Financial Holdings, Inc.’s (Nasdaq:LPLA) brokerage subsidiary recommended unsuitable investments in non-traded REITs.

Suitability claims arise when stockbrokers or investment advisors recommend investments that are not appropriate for an investor’s financial circumstances, risk tolerance, or investment goals. FINRA Conduct Rule 2310 requires that Members and their Representatives have a reasonable basis to recommend a transaction or investment strategy suitable for the customer, based on information obtained through reasonable diligence and the customer’s investment profile. A customer’s investment profile includes, but is not limited to, the customer’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, time horizon, liquidity needs, and risk tolerance.

Cases filed by the Gray Firm allege that in certain circumstances, LPL lacked a reasonable basis to recommend certain non-traded REITs, including Inland Western REIT (now known as Retail Properties of America. As a private unlisted investment, Inland Western was a Non-Conventional Investment (“NCI”). FINRA’s Notice to Members 03 71 states that “since NCIs often have complex terms and features that are not easily understood,” there exists the potential for customer harm or confusion since investors do not understand the risks involved. Members must conduct appropriate due diligence/reasonable basis suitability before offering these investments to the public. Specifically the Notice states that when offering NCI investments, FINRA Members are required to:

Published on: May 17, 2013

CommonWealth REIT Reappoints Board Member Who Was Ousted In Shareholder Vote

by InvestorLawyers

Shareholders of CommonWealth REIT forced the resignation of a trustee on the company’s board, Joseph Morea, by failing to give him a majority of votes. Undaunted by this rare binding vote by shareholders to force out a board member, the other membesr of Commonwealth’s board simply voted Mr. Morea back into his board seat the very next day.

CommonWealth’s bylaws required Mr. Morea to resign because he did not get a majority of votes. However, the bylaws apparently didn’t specifically prohibit the director from being reappointed AFTER resiging. CommonWealth’s board stated that the shareholder vote resulting in Mr. Morea’s resignation “appeared not to be directed at any personal failings…but rather to be the result of the positions taken by the board to oppose the hostile takeover efforts.”

Some CommonWealth shareholders have also complained that the company’s fee structure is rife with conflicts of interest that have led to poor performance, and one analyst has argued that CommonWealth’s management fee structure encourages the company to concentrate on growing its assets as opposed to improving rents and vacancy.

Published on: January 2, 2013

Investors of C-Tracks ETN Citi Volatility Index Total Return Could Recover Losses Through Securities Arbitration

by InvestorLawyers

Investors who suffered losses as a result of their broker’s recommendation of C-Tracks ETN Citi Volatility Index Total Return are seeking the help of investment attorneys in recovering those losses. Reportedly, a unique methodology has caused a severe decline in the Volatility ETFdb Category. The C-Tracks ETN Citi Volatility Index Total Return combines short exposure to the S&P 500 Total Return Index to directional exposure of large cap stocks through third and fourth month futures contracts positions on the CBOE Volatility Index. When volatility spiked over the summer, this strategy worked well. However, CVOL has struggled over the long-term. Reportedly, the C-Tracks ETN Citi Volatility Index Total Return is down 48 percent, the most severe decline year-to-date.

Investors of C-Tracks ETN Citi Volatility Index Total Return Could Recover Losses Through Securities Arbitration

Luckily, investors who suffered significant losses may have a valid securities arbitration claim.

Brokers, and brokerage firms, have a fiduciary duty to their clients. They must research an investment prior to making a recommendation to an investor in order to establish that the investment is suitable. It must be appropriate for each individual investor, taking into consideration the investor’s investment objectives, investment experience, net worth and age. The Financial Industry Regulatory Authority has a dispute resolution form where investors can settle disputes with their brokerage firms relating to unsuitability and other forms of stock broker fraud.

Published on: December 3, 2012

CFTC Charges Online Betting Market Intrade With Violations of Commodities Exchange Act, seeks Refunds for Customers

by InvestorLawyers

The U.S. Commodity Futures Trading Commission (CFTC) has filed a lawsuit in the U.S. District Court for the District of Columbia alleging that online betting market Intrade and associated companies violated the Commodities Exchange Act by facilitating illegal off-exchange trading in options contracts. The complaint is accessible below.

Intrade operates an online “prediction market” trading website through which customers buy or sell what are technically options contracts enabling customers to wager whether certain events will occur. The subject matters of the wagers range from political elections to whether NASA will announce the discovery of extraterrestrial life. Certain of the Intrade contacts, including

Bettors who predict that an event will occur buy shares in Intrade, and those who predict the event will not occur sell shares. If the event occurs, bettors who bought shares receive $10. If the event does not occur, bettors who sold shares must pay $10. The “price” of each share represents the percentage likelihood of an event occurring based on the collective wisdom of all bettors in a particular options contract or wager.

Published on: November 1, 2011

Gray Firm Advises Investors of Possible Claims Arising From Implosion of MF Global

by InvestorLawyers

The torrent of disturbing information arising from the implosion of futures commission merchange MF Global, Inc. continued today when it was revealed that MF Global was “not in compliance” with rules that prohibit brokerage firms from commingling client funds with their own monies. The head of the Chicago Mercantile exchange said Tuesday confirmed that MF Global was not in compliance and stated as follows: “While we are unable to determine the precise scope of the firm’s violation at this time, we are investigating the circumstances of the firm’s failure.”

This new disturbing information has given rise to rampant speculation that MF Global diverted customer funds in order to meet margin calls arising from its own losing proprietary trades in European debt instruments.

This news came only one day after the Securities Investor Protection Corporation (SIPC) initiated the liquidation of MF Global Inc., under the Securities Investor Protection Act (SIPA) and filed an application with the United States District Court for the Southern District of New York for a declaration that the customers of MF Global Inc. are in need of the protections available under the SIPA.

Published on: October 31, 2011

Markets, Employees Scurry After Implosion of MF Global

by InvestorLawyers

MF Global, a commodities brokerage firm that filed for Chapter 11 bankruptcy today, reportedly was brought down by highly risky bets on debt securities issued by European governments. Once regulators reportedly forced it to disclose the bets on debt issued by countries including Italy, Portugal and Spain, the firm rapidly unraveled with no buyers willing to step in.

MF Global’s bankrupty filing is reportedly the seventh-largest bankruptcy by assets in U.S. history.

Regulators had expressed “grave concerns” about the viability of MF Global, which filed for bankruptcy only after “no viable alternative was available in the limited time leading up to the regulators’ deadline,” the company’s COO, Bradley Abelow, said in a court filing. The Company’s board reportedly worked all weekend attempting to find a buyer for the firm, in an episode remniscent of the collapse of the former Lehman Brothers Holdings.

Published on: October 6, 2011

Fisher Investments Reportedly Has Faced Multiple Arbitration Claims Alleging Over-Concentration in Stocks

by InvestorLawyers

A recent arbitration decision against Fisher Investments is reportedly not the first time JAMS arbitration has heard Fisher Investments complaints. At least two other actions concerning Fisher Investments performance have been filed against the firm in recent years, alleging the company put too much of an investor’s account in equities, which resulted in massive losses when the market collapsed.

In 2009, at least two investor claims were reportedly filed against Fisher Investments alleging breach of fiduciary duty. One was a lawsuit, filed by investor Maurine Ford, who says that Fisher Investments purchased her assets in 2008; prior to that, her living trust was managed by Lighthouse Capital Management LLP. According to the plaintiff, when the account was transferred to Fisher Investments, it was 27 percent cash, 41 percent equities and 32 percent fixed income. Ford alleges once Fisher took over the account, it recommended reallocation so that it could be 100 percent invested in equities.

When the market collapsed, Ford reportedly lost a substantial amount from her living trust.

Published on: October 5, 2011

Merrill Lynch Fined $1 Million For Ex-Broker’s Ponzi Scheme Run Out Of Merrill Office

by InvestorLawyers

Bank of America’s Merrill Lynch brokerage unit agreed to pay $1 million for supervisory failures that allowed a former broker to use a Merrill Lynch account to run a Ponzi scheme, FINRA said on Tuesday.

The Financial Industry Regulatory Authority (“FINRA”), which oversees the U.S. brokerage industry, found that the brokerage failed to have an adequate supervisory system to monitor employee accounts for potential misconduct.

The wayward broker, Bruce Hammonds, has been sentenced to 57 months in federal prison for convincing 11 people to invest more than $1 million in a Ponzi scheme he ran as a Merrill branch representative in San Antonio, Texas.

Published on: October 3, 2011

InvestorLawyers.net Handling Cases Against UBS Lehman Brothers Principal Protected Notes

by InvestorLawyers

InvestorLawyers.net’s founder Christopher J. Gray is presently handling cases against UBS on behalf of investors who sustained losses various purportedly “Principal Protected Note” debt securities sold by brokerage firm UBS to its customers.

Brokerage houses, including UBS (UBS), Merrill Lynch (MER), Barclays (BCS) and Wachovia (WB) reportedly engaged in sales practices violations in which they compared Lehman Brothers principal protected notes and/or other structured investments to ultra-safe certificates of deposit and (in the case of UBS) reportedly assured investors that Lehman notes had a “guarantee” to repay all of her principal amount. Investors have reportedly won at least seven FINRA arbitration awards against UBS in these cases, and have reportedly not lost a single case in which the investor filing the claim was represented by an attorney.

Arbitration panels have agreed with attorneys advocating for defrauded investors on one key point: The stockbrokers’ assurances that the investments were safe, similar to certificates of deposit or “principal protected” were simply false. When an issuer goes bankrupt, as Lehman Brothers did, holders of structured notes are left standing at the back of the line with the other unsecured creditors and may recover little, if anything, of their original investment. Such is the case in the Lehman Brothers bankruptcy, in which structured notes investors are still waiting for payouts of a fraction of their initial investments.

Published on: October 3, 2011

David Lerner Associates Accused of Sales Practice Violations Concerning Apple REITs

by InvestorLawyers

News commentators and regulators alike have called into question the sales practices of David Lerner Associates, which solicited many of its customers to invest in illiquid real estate investment trusts (“REITs”) called Apple REITs.

The Financial Industry Regulatory Authority (“FINRA”) announced in March 2011 that it filed a complaint against David Lerner Associates, charging the firm with soliciting investors to purchase shares in Apple REIT Ten without conducting a reasonable investigation to determine whether it was suitable for investors, and with providing misleading information on its website regarding Apple REIT Ten. According to FINRA’s allegations, David Lerner Associates has sold and continues to sell Apple REIT Ten targeting unsophisticated and elderly customers with unsuitable sales of the illiquid security.

Since January 2011, as sole underwriter for Apple REIT Ten, David Lerner Associates has allegedly sold over $300 million of an open $2 billion offering of the REIT’s shares. Therefore, there may be hundreds of David Lerner Associates customers affected by these alledgely unlawful sales practices.