securities arbitration lawyer

Published on: May 2, 2012

Investors Beware of Pre-IPO Fraud, Warns SEC

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 26, 2012

News: SEC Bars Penny Stock Promoter

by InvestorLawyers

On April 10, 2012, the United States Securities and Exchange Commission (SEC) announced its decision to enjoin Timothy Page of Malibu, Calif., Ryan Reynolds of Dallas, Phillip Offill Jr. of Dallas, Steven Fischer of Bonita Springs, Fla., Page Properties LP, RSMR Capital Group Inc. and ATN Enterprises LLC from violating Section 5 of the Securities Act of 1933. The decision was passed by the Honorable Sidney A. Fitzwater of the United States District Court for the Northern District of Texas.

News: SEC Bars Penny Stock Promoter

Stock fraud lawyers say that according to the SEC’s complaint, these individuals and entities allegedly violated securities laws. They did so by acting as underwriters in order to engage in a scheme that would allow them to evade securities registration requirements. This was accomplished by the selling and offering of securities to at least one of six companies where no registration statements were available to provide information to public investors.

Penny stocks are equity securities that are traded at a price that is less than five dollars per share. The six companies issued these stocks and, in the over-the-counter market, initiated public trading under the following: Ecogate Inc. (ECGT), American Television & Film Company (ATFT), Auction Mills Inc. (AUML), Vanquish Productions Inc. (VQPI), Media International Concepts Inc. (MEIC) and Custom Designed Compressor Systems Inc. (CUPY).

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 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.

Published on: April 9, 2012

Cornerstone Core Properties REIT Investors Could Recover Losses

by InvestorLawyers

According to investment fraud lawyers, investors who sustained significant losses because of their investment in Cornerstone Core Properties REIT may be able to recover losses through Financial Industry Regulatory Authority (FINRA) arbitration. Full-service brokerage firms who sold Cornerstone are now being investigated. Pacific Cornerstone Capital Inc., the sponsor of the Cornerstone REIT, is only one of the firms included in this investigation by securities arbitration lawyers.

Cornerstone Core Properties REIT Investors Could Recover Losses

Investors in the Cornerstone REIT received a letter in March which stated that the share price of their investment had suffered a 72 percent decline, dropping from $8.00 to $2.25. As a result of this decline, significant damages have been suffered by the investors of Cornerstone REIT.

Investment fraud lawyers have stated that as an illiquid, non-traded investment, Cornerstone REIT was not a suitable investment for all investors. FINRA rules have established that 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. Furthermore, brokerage firms must, before approving an investment’s sale to a customer, conduct a reasonable investigation of the securities and issuer.

Published on: April 6, 2012

Improper Variable Annuity Sales Practices Lead to Fine, Restitution Order by FINRA

by InvestorLawyers

The Financial Industry Regulatory Authority (FINRA) recently fined one of the United States’ largest independent broker-dealers, Cadaret Grant. Grant must pay a $200,000 fine in addition to restitution to investors because of improper sales practices of variable annuities to elderly investors. According to investment fraud lawyers, improper sales of variable annuities are a common cause for securities arbitration claims.

Improper Variable Annuity Sales Practices Lead to Fine, Restitution Order by FINRA

According to investment fraud lawyers, variable annuities are popular investment vehicles for retirement. Essentially, they are insurance contracts that are joined with an investment product. They have insurance-like properties but function as tax-deferred savings vehicles by providing a tax deferral using the insurance policy. The combination of the investment product and insurance contract provides four appealing features: a tax deferral on earnings, the ability to name a beneficiary for the account, the ability to use your life expectancy to receive payments for life and the ability to receive guarantees based on the insurance component. However, variable annuities are also a common vehicle for investment fraud, according to securities arbitration lawyers.

One of the registered representatives for Cadaret Grant sold 13 elderly clients unsuitable death benefit riders to variable annuities from 2006-2008, according to FINRA’s decision announcement. All 13 of the clients were age 77 or older. Apparently, the death benefit was only effective through age 80. Furthermore, despite the fact the death benefit did not apply beyond age 81, it cost the clients 25 additional basis points in fees for the duration of the policy. Apparently, four of the clients could not benefit from the rider in any way.

Published on: April 5, 2012

News: Citi International Fined by FINRA for Excessive Markups, Markdowns

by InvestorLawyers

On March 19, 2012, the Financial Industry Regulatory Authority (FINRA) announced its decision to fine Citi Financial Services LLC for charging excessive markups and markdowns and related supervisory violations. In addition to a $600,000 fine, FINRA ordered Citi Financial to pay $648,000 in restitution and interest to wronged customers. Over 3,600 customers were charged excessive markups and markdowns, according to FINRA. Securities fraud attorneys appreciate FINRA decisions such as this one, which hold firms responsible for the fees they charge their customers.

News: Citi International Fined by FINRA for Excessive Markups, Markdowns

According to FINRA’s findings, from July 2007 through September 2010, Citi International charged excessive markups and markdowns on corporate and agency bonds. These markups and markdowns, which were as low as 2.73 percent and as high as more than 10 percent, are considered excessive within the given market conditions, value of the services rendered and cost of transaction execution. Furthermore, from April to June 2009, reasonable diligence was not given to the purchase or sale of corporate bonds in order to present the most favorable price to customers. Citi International, a subsidiary of Citigroup Inc., neither confirmed nor denied the charges.

FINRA’s Executive Vice President of Market Regulation, Thomas Gira, stated, “FINRA is committed to ensuring that customers who purchase and sell securities, including corporate and agency bonds, receive fair prices. The markups and markdowns charged by Citi International were outside of appropriate standards for fair pricing in debt transactions, and FINRA will continue to identify and address transactions that violate fair pricing standards, regardless of whether a markup or markdown is above or below 5 percent.”

Published on: April 4, 2012

Victims of LPL Financial Advisor Could Recover Losses

by InvestorLawyers

Victims of Elliot Kravitz, an LPL Financial Corp. independent client investment representative, are seeking the help of investment fraud lawyers in recovering their losses. Kravitz pleaded guilty recently to one count of wire fraud, according to the Cincinnati Business Courier. The wire fraud was in connection with an investment scheme. In this scheme, nine of Kravitz’ customers were defrauded out of over $2 million.

Victims of LPL Financial Advisor Could Recover Losses

Kravitz sold securities through LPL Financial Corp., which was formerly Waterstone Financial Corp., according to the plea agreement. In accordance with Kravitz’ recommendation, a client pulled money out of the stock market in order to invest in a REIT, or real estate investment trust, in July 2007. In order to gain permission to move the money, Kravitz had the client sign a distribution form. However, Kravitz placed the money in an account under his control instead of investing it in the REIT. Kravitz then made 12 additional withdrawals from the client’s account, totaling $713,765. The client then received a year-end account portfolio statement from Kravitz that listed the fake REIT. Allegedly, Kravitz diverted funds from eight other clients as well, amounting to approximately $1.12 million, for personal use.

According to securities arbitration lawyers, a firm may still be held responsible for investment losses if it can be proved that they were negligent in the supervision of their brokers, even if the broker or advisor was conducting business without their knowledge. Therefore, victims of Kravitz’ fraud may be able to recover losses with the help of an investment fraud lawyer, through securities arbitration against LPL Financial.