investment fraud lawyers

Published on: March 28, 2013

Customers of Merrill Lynch, Phil Scott Group Could Recover Losses

Investment fraud lawyers are currently investigating claims on behalf of customers of the Phil Scott Group and Merrill Lynch regarding the unsuitable recommendation of investments. Walter Schlaepfer, also known as Phil Scott, and the Phil Scott Group reportedly worked out of the Merrill Lynch branch office in Bellevue, Washington.

At least six customer complaints have been filed against Scott since 2008, according to the Phil Scott Group’s securities license. All of these complaints allege that Scott made misrepresentations and/or unsuitable recommendations of investments.

Financial Industry Regulatory Authority rules have established that brokers and 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. In addition, securities arbitration lawyers say firms like Merrill Lynch have a duty to properly supervise their brokers and can be held liable for broker misconduct if they fail to do so.

Published on: March 19, 2013

Dividend Capital REIT Investors Could Recover Losses

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses in the non-traded Dividend Capital Total Realty Trust Inc. Potential claims related to the Dividend Capital REIT include unsuitable recommendations, misrepresentation and overconcentration of investment funds. Dividend Capital REIT invests in diverse real estate-related securities and debt as well as real properties.

Dividend Capital REIT Investors Could Recover Losses
The 8-K form filed by Dividend Capital Diversified Property Fund on February 1, 2013 stated that its current NAV, or net asset value, is $6.72 per share. However, this “book value” may not reflect what investors can actually get for their shares. Because the Dividend Capital REIT is non-traded, investors are forced to sell through a relatively illiquid secondary market, in which there may be no buyers of Dividend Capital shares at prices at or near the REIT’s book value.

Securities fraud attorneys say new investor concerns are being raised about Dividend Capital REIT’s redemption plan. According to the company’s 10-Q form, during the quarter ending September 30, 2012, the REIT has not redeemed any Class I, Class W or Class A shares. Furthermore, at any time, Dividend Capital can terminate, suspend or modify the share redemption program.

Published on: March 12, 2013

Hines REIT Investors Could Recover Losses

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses in the non-traded Hines REIT. Potential claims related to the Hines REIT include unsuitable recommendations, misrepresentation and overconcentration of investment funds. The Hines REIT was launched in 2004; as of September 20, 2012, it comprised 55 properties in 24 geographic markets. As of December 2009, Hines suspended its share redemption plan except when in connection to the disability or death of a stockholder.

Hines REIT Investors Could Recover Losses

Unfortunately, Hines REIT investors have found themselves in a tight spot when they want to sell their investment. Because the Hines REIT is non-traded, investors are forced to sell through a secondary market, through an auction or privately. Investors who sell through a secondary marketmay be forced to accept a price far below their purchase price. Investors also may choose to hold onto their shares in the hopes that the real estate investment trust will decide to make a public offering and register with the Securities and Exchange Commission or pursue another liquidity event such as a merger with a publicly traded company.

Investment fraud lawyers are investigating the possibility that full-service brokerage firms may be held liable for the recommendation of the Hines REIT. Financial Industry Regulatory Authority rules have established that brokers and 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. Non-traded REITs like this one are illiquid and inherently risky and, therefore, not suitable for many investors.

Published on: March 5, 2013

CommonWealth REIT Announcement More Bad News for Investors

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses in CommonWealth REIT. CommonWealth REIT recently announced that it would commence a public offering intended to pay down as much as $450 million in senior notes. The public offering would be for 27 million shares of stock, which would dilute its outstanding share count by almost 30 percent.

CommonWealth REIT Announcement More Bad News for Investors

The CommonWealth real estate investment trust primarily owns and operates real estate, such as industrial buildings, office buildings and leased industrial land. Following the announcement for CommonWealth REIT’s fourth-quarter earnings results and the 27 million share offering, the REIT’s price dropped by as much as 11 percent. According to the fourth-quarter report, a loss of $1.96 million was reported by the company as a result of a $168.6 million asset impairment.

Furthermore, between January 10, 2012 and August 8, 2012, CommonWealth allegedly issued false and misleading statements regarding its financial standing and prospects which, if proved to be true, would be a violation of the Securities Exchange Act of 1934. Furthermore, in an announcement on August 8, 2012, CommonWealth stated that it would likely be reducing its dividend payment. Investment fraud lawyers also note that from 2008 to 2011, the company’s net income fell from $244.65 million to $109.98 million, a decline of $134.67 million. For more information on this issue, see the previous blog post, “CommonWealth REIT Investors Could Recover Losses.”

Published on: February 28, 2013

Recovery of Grubb & Ellis REIT Losses Possible

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of their investment in Grubb & Ellis REITs. For the period ending March 21, 2011, Grubb & Ellis Company reported an $18.3 million net loss. The company included charges of $2.3 million for bad debt, $3.5 million for depreciation and amortization, $1.7 million for amortization of signing bonuses, $1.7 million in share-based compensation and $0.5 million for intangible asset impairment.

Recovery of Grubb & Ellis REIT Losses

Grubb & Ellis is an investment and commercial real estate services firm. Grubb & Ellis Healthcare REIT acquired Oklahoma City Medical Portfolio in 2008, which consisted of two medical office buildings. Grubb & Ellis Healthcare REIT II acquired four properties comprising five medical office buildings in 2011. Grubb & Ellis Apartment REIT made arrangements to acquire Bella Ruscello Luxury Apartment Homes in 2010.

Securities arbitration lawyers say non-traded REIT investments like the Grubb and Ellis REITs typically offer commissions between 7-10 percent, which is significantly higher than traditional investments like mutual funds and stocks. In some cases, the commission generated by these investments can be as high as 15 percent. This higher commission can explain why brokerage firms are motivated to recommend these investments despite their possible unsuitability.

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 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: 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 22, 2013

CommonWealth REIT Investors Could Recover Losses

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses in CommonWealth REIT. Allegedly, between January 10, 2012, and August 8, 2012, CommonWealth issued false and misleading statements regarding its financial standing and prospects which, if proved to be true, would be a violation of the Securities Exchange Act of 1934.

CommonWealth REIT Investors Could Recover Losses

The CommonWealth real estate investment trust primarily owns and operates real estate, such as industrial buildings, office buildings and leased industrial land. Allegations currently being investigated by securities arbitration lawyers are that CommonWealth failed to disclose certain facts, including the fact that leased office spaces had fallen below expectations, existing tenants were receiving concessions which were eroding CommonWealth’s income and, as a result, CommonWealth’s positive statements about its occupancy rate, dividend payout and leverage ratio were not reasonably founded.

An announcement on August 8, 2012, stated that CommonWealth would likely be reducing its dividend payment. Among the reasons cited for this reduction were that its available cash for distribution payout ratio had increased and its occupancy rate had decreased. Following this announcement, the per share price of CommonWealth fell $1.57, or 9 percent, closing at $16.48 that day. Investment fraud lawyers say that by October 26, 2012, shares were trading at $13.58, a 52-week low. Furthermore, while CommonWealth REIT’s annual revenue increased from 2008 to 2011, its net income fell in that same period from $244.65 million to $109.98 million, a decline of $134.67 million.

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.