investment fraud lawyers

Published on: November 1, 2012

Recovery of Behringer Harvard Opportunity REIT I Losses

Many investors have suffered significant REIT losses as a result of their investment in the Behringer Harvard Opportunity REIT I. The investment’s $10 per share offering price in 2009 fell significantly to an approximate value of $4.12 per share at the end of last year, representing a 58 percent loss. This figure includes the 46 percent drop experienced at the end of 2010, when it was valued at around $7.66 per share.

Recovery of Behringer Harvard Opportunity REIT I Losses

In the period beginning in December 2010 and ending in September 2011, Behringer Harvard Opportunity REIT I’s assets declined to $580 million from $697.6 million. The REIT reported an $83 million net loss.

According to investment fraud lawyers, many investors believed their non-traded REIT’s share price was stable. However, it only appeared stable because the manager reports the par value, which does not necessarily take into account the underlying assets deterioration. Furthermore, typically the initial pricing does not include fees and other expenses, which can result in a loss because these dollars are not actually invested.

Published on: October 25, 2012

Investors Allegedly Overcharged Customers $18.7 Million; Four Brokers Facing Charges

by InvestorLawyers

According to stock fraud lawyers, four brokers were recently charged by the Securities and Exchange Commission with securities fraud. The SEC’s allegations state that the four brokers illegally overcharged their customers $18.7 million. Reportedly they perpetuated their fraud by keeping a portion of profitable trades executed in customer accounts and using hidden markups and markdowns. The brokers named in the charges are Henry Condron, Benjamin Chouchane, Marek Leszczynski and Gregory Reyftmann.

Investors Allegedly Overcharged Customers $18.7 Million; Four Brokers Facing Charges

The clients of these brokers may have thought they were getting a great deal as, according to the SEC’s complaint, the brokers purported incredibly low commissions, often fractions of pennies or pennies per transaction. However, in actuality, when executing customers’ purchase and sell orders, they were reporting false prices. Reportedly, the hidden markups and markdowns were intentionally charged at times when the market was volatile. Investment fraud lawyers say this made the fraud particularly difficult to detect. The markups and markdowns occurred over a period of four years, involved over 36,000 transactions and ranged from only a few dollars up to $228,000. This resulted in fees that were sometimes altered from what had been reported to customers by over 1,000 percent.

In another part of the scheme, a customer sought to buy shares and specified a limited price. The brokers allegedly filled the order at the maximum price, but sold part of the order in order to obtain a profit for their firm. Next, they informed the customer that they were unable to complete the order at the maximum price set. During this time, millions of dollars were being made by these brokers through performance bonuses based on fraudulent earnings. In total, the brokers received over $15.6 million in performance bonuses, part of which resulted from earnings related to fraud.

Published on: October 24, 2012

Domin-8 Private Placement Investors Could Recover Losses

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses as a result of their investment in a Domin-8 private placement. Domin-8 is a provider of “advanced enterprise software applications and related services to the U.S. multi-family housing property management industry” based out of Ohio, according to its filing with the Securities and Exchange Commission.

Domin-8 Private Placement Investors Could Recover Losses

Because private placements like Domin-8 are typically more complicated and carry more risk than other traditional investments, they are usually only suitable for sophisticated, high-net-worth investors, according to investment fraud lawyers. Private placements allow smaller companies to use the sale of debt securities or equities to raise capital without it becoming necessary for them to register these securities with the Securities and Exchange Commission. One Domin-8 private placement, Domin-8 7 percent Series C Senior Subordinated Convertible Dentures, began its attempt to raise $10,000,000 in the latter part of 2007.

FINRA Executive Vice President and Chief of Enforcement, Brad Bennett, has stated that, “FINRA continues to look closely at sales of private placements to determine whether the selling firms are fulfilling their responsibilities to customers.”

Published on: October 19, 2012

Geneva Organization TIC 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 a Geneva Organization tenant-in-common, or TIC.

Geneva Organization TIC Investors Could Recover Losses

A real estate investment company founded by Duane Lund in 2003, the Geneva Organization specializes in pooling individual investors into larger groups to buy commercial real estate. According to investment fraud lawyers, many broker-dealers’ may have improperly recommended Geneva Organization TIC investments to investors. Specifically, these TIC investments granted investors interests in One Southwest Crossing, a building in Eden Prairie.

TICs are complicated deals that allow real estate sellers to avoid capital-gains tax by rolling their proceeds into other properties, receive a regular income from the investment — and, in the event of the investor’s death, the asset can be bequeathed to heirs. TICs are also known as 1031 exchanges and, despite these attractive benefits, they are not appropriate for many investors but, rather, are only suitable for some specialized clients.

Published on: October 17, 2012

First Midwest Securities, Scott & Stringfellow Customers Could Recover Losses

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of the customers of First Midwest Securities Inc. and Scott & Stringfellow LLC in light of recent fines and censures by the Financial Industry Regulatory Authority. Both firms were censured; in addition, First Midwest Securities was fined $75,000 and Scott & Stringfellow was fined $350,000. Both firms submitted a Letter of Acceptance, Waiver and Consent but did not admit or deny FINRA’s findings.

First Midwest Securities and Scott & Stringfellow Customers Could Recover Losses

In the case of First Midwest Securities, securities arbitration lawyers say FINRA’s findings indicated that the firm failed to provide an adequate supervisory system and enforce adequate supervisory procedures to prevent excessive trading and ensure the suitability of equity transactions. Furthermore, the firm allegedly failed to utilize exception reports that would help in detecting excessive and unsuitable trading. Instead, according to the allegations, the firm relied on turnover ratio reports and daily trade blotter reviews that were prepared manually. However, these reports failed to address accounts’ cost-to-equity ratios.

Investment fraud lawyers are also investigating claims against Scott & Stringfellow based on FINRA’s findings that indicated the firm failed to maintain an adequate supervisory system related to the sale of Non-Traditional ETFs, or Non-Traditional Exchange Traded Funds. In addition, the firm allegedly allowed the recommendation of a Non-Traditional ETF by its registered representatives to customers without performing adequate due diligence. FINRA stated that some of the firm’s customers received unsuitable recommendations of the investment. The firm’s supervisory system, according to FINRA, was not reasonably designed for compliance with applicable FINRA and NASD rules and did not provide adequate guidance, tools, or adequate formal training to educate the firm’s supervisors and registered representatives about these investments.

Published on: October 10, 2012

FINRA Targets Non-traded REITs

by InvestorLawyers

According to stock fraud lawyers, the Financial Industry Regulatory Authority has and will continue to relentlessly target non-traded real estate investment trusts, or REITs. Specifically, the regulatory authority is focusing on how broker-dealers sell these investments and potential shortcomings in their strategies. According to the Executive Vice President of Member Regulation Sales Practices at FINRA, Susan Axelrod, examiners at FINRA have been scrutinizing “numerous retail sellers of non-traded REITs.” Axelrod also stated that, “In several instances, FINRA examiners have found that firms selling these products failed to conduct reasonable diligence before selling a product and failed to make a determination that the product was suitable for investors.”

FINRA Targets Non-traded REITs

Investment fraud lawyers note that independent broker-dealers have a responsibility to perform adequate due diligence when selling any investment, especially complex, illiquid products. Since the 2008 market collapse, FINRA has been aggressive with broker-dealers who failed to do so. Axelrod stated to the Securities Industry and Financial Markets Association’s Complex Products Forum that, “FINRA examiners have noted that in the instances of REITs that have experienced financial difficulties, red flags existed and should have been considered by firms prior to the product being offered to firm clients.”

Another problem with non-traded REITs, according to Axelrod, is that “non-traded REITs may also borrow funds to make distributions if operating cash flow is insufficient, and excessive borrowing may increase the risk of default or devaluation. In addition, non-traded-REIT distributions may actually be a return on principal.”

Published on: October 5, 2012

News: Arbitration Panel Rules in Favor of Investor, Citigroup to Pay $1.4 Million

by InvestorLawyers

Securities fraud attorneys scored a win for investors in FINRA arbitration against a unit of Citigroup Inc. in a FINRA ruling on September 5. The arbitration panel ordered Citigroup to pay investors losses amounting to $1.4 million. These losses were associated with a municipal bond steeped in derivative securities that were very risky — yet the bond was, allegedly, marketed as “safe” to the investor.

News: Arbitration Panel Rules in Favor of Investor, Citigroup to pay $1.4 Million

New York City investor Margaret Hill filed the case in 2011 and requested over $3.5 million in damages. Her losses were a result of Citi’s Rochester Municipal Fund. Investment fraud lawyers say Hill’s case alleged that she was sold unsuitable investments by Citigroup Global Markets Inc. which, in addition, misrepresented facts.

According to the allegations against Citigroup, Hill bought the Rochester Fund as an alternative to her individual municipal bond funds because Citigroup said it would pay more interest and would be a “safe” alternative to her funds at that time. However, the Rochester Fund reportedly consisted primarily of tobacco bonds and risky derivative securities. After purchasing the bond in 2007, Hill sold the funds in 2009, suffering losses amounting to $2.9 million.

Published on: October 1, 2012

Winex Investments LLC Investors Could Recover Losses

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of their investment in Winex Investments LLC. Winex Investments is a foreign currency investment. In many cases, broker-dealers may have improperly recommended Winex Investments to their clients. Furthermore, securities arbitration lawyers believe some broker-dealers misrepresented the risks associated with Winex.

Winex Investments, LLC Investors Could Recover Losses

Recent anxiety about the devaluation of the dollar and rising U.S. government debt has made some investors turn to foreign currency investing. However, because this type of investment is relatively unknown to many investors, it is essential that the risks are adequately disclosed before any decisions are made. Trading in foreign currency involves the purchasing of debt of foreign countries. Exchange-traded funds, or ETFs, can either buy options and future contracts or purchase the currencies directly.

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. 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. Furthermore, brokerage firms must, before approving an investment’s sale to a customer, conduct a reasonable investigation of the securities and issuer.

Published on: September 27, 2012

Victim of Stephen B. Blankenship Fraud Could Recover Losses

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of individuals who invested with Stephen B. Blankenship and were, as a result of Blankenship’s actions, victims of securities fraud. A recent announcement by the Securities and Exchange Commission stated that it has charged Blankenship and his company with stealing from customers. These customers, who were persuaded by Blankenship to make withdrawals from their brokerage accounts to invest directly with him, lost at least $600,000 to his fraud. The accounts from which they withdrew these funds were managed by Blankenship but were held at other firms.

Victim of Stephen B. Blankenship Fraud Could Recover Losses

According to the SEC’s allegations, Blankenship lured customers in with assurances of greater rates of return if they would transfer their money to Deer Hill Financial Group, Blankenship’s firm. Furthermore, he claimed to be investing in publicly-traded mutual funds and other established securities but, instead, made no such investments and transferred his customer’s money to his personal bank account. The money was then allegedly used to pay various personal expenses, including travel, grocery bills and mortgage payments.

“Blankenship took advantage of fellow churchgoers and senior citizens who relied on their savings for retirement and placed their trust in him,” says David P. Bergers, director of the SEC’s Boston Regional Office. “He betrayed that trust by using their money to make personal credit card payments and home improvements.”

Published on: September 24, 2012

Lehman Brothers PPN Investors to Explore Every Option

by InvestorLawyers

Investment fraud lawyers are encouraging investors who suffered significant losses as a result of their investment in Lehman Brothers 100% Principal Protection Notes to thoroughly explore all their options for recovering losses. These notes, which have also been called “Principal Protected” notes, are not the only Lehman Brothers structured products being investigated by securities arbitration lawyers. Auto-call Notes and Return Optimization Notes are also being investigated on behalf of investors who suffered losses in these Lehman Brothers products.

Lehman Brothers PPN Investors to Explore Every Option

While many investors have filed claims in Lehman’s bankruptcy proceedings, it now appears that these individuals will receive only about 20 cents on the dollar for their investment losses. Investors must consider alternate methods of loss recovery, including filing a Financial Industry Regulatory Authority securities arbitration claim. Furthermore, investors will have to determine if any statute of limitations issues exist relating to their case.

Despite the fact that a class action lawsuit related to these notes has been filed, investors should be aware that they may only recover a nominal amount as a part of a class action lawsuit. It may, therefore, be in investors’ best interest to acquire a securities arbitration lawyer to file an arbitration claim on their behalf.