securities fraud attorney

Published on: June 6, 2012

Fidelity Investors Could Recover Losses Resulting from Facebook Stock

Securities fraud attorneys are currently investigating potential claims on behalf of investors who suffered losses as a result of their Facebook Inc. investments with Fidelity Investments. Allegedly there may have been execution problems at Fidelity Investments in regards to the Facebook stock. Reportedly, following Facebook’s initial public offering, “thousands” of clients of Fidelity were affected by trading issues.

Fidelity Investors Could Recover Losses Resulting from Facebook Stock

According to investment fraud lawyers, many Fidelity investors have learned that their Facebook stock orders were not executed at previously expected prices. In addition, some Fidelity investors decided to cancel their Facebook stock orders prior to the time it began trading, on May 18 at 11:30 am, but the stock was allegedly assigned to their accounts anyway. Many investors were confronted with margin calls that were unexpected because of Fidelity’s failure to honor the canceled orders. Securities fraud attorneys say this exacerbated the situation.

In a related case, Facebook Inc., Morgan Stanley and other banks are being sued by Facebook’s shareholders. The shareholders claimed Facebook’s weakened growth forecasts were hidden by the defendants prior to its $16 billion IPO. According to the complaint filed in the U.S. District Court in Manhattan, changes in the business forecast during the IPO process were only “selectively disclosed by defendants to certain preferred investors.” The complaint alleges that “the value of Facebook common stock has declined substantially and plaintiffs and the class have sustained damages as a result.” A similar lawsuit was filed by another investor in a California state court. In the first three days of trading, Facebook shares declined 18.4 percent, reducing the stock’s value by more than $2.9 billion.

Published on: May 31, 2012

Investors of SCI Real Estate Investment TICs Could Recover Losses

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of investors who suffered losses as a result of their purchases of SCI Real Estate Investments LLC’s TICs. In some cases, brokerage firms may be held liable for their recommendation of the investment to their clients.

Investors of SCI Real Estate Investment TICs Could Recover Losses

According to securities fraud attorneys, TICs became popular in 2002, following a ruling by the Internal Revenue Service that allowed capital gains to be deferred by investors. In this property ownership, a fractional interest is owned by two or more parties. However, following the real estate crisis, TICs saw a significant decline in value. For more information on TICs, see the previous blog post, “TICs Dangerous for Many Investors.”

SCI Real Estate Investments is a United States real estate company that acquires retail and multi-family properties. It offers co-ownership interests in these United States properties as investments to individual buyers of real estate and 1031 exchanges. SCI is based in Los Angeles and was founded in 1994. A voluntary petition for reorganization was filed by SCI on February 11, 2011, under Chapter 11 in the U.S. Bankruptcy Court for the Central District of California. The firm’s liquidation plan confirmation hearing is scheduled for June 13, 2012.

Published on: May 30, 2012

Healthcare Trust of America Investors Could Recover Losses

by InvestorLawyers

Securities fraud attorneys are investigating potential claims on behalf of investors who purchased the Healthcare Trust of America REIT and suffered significant losses as a result of their investment. In many cases, brokers improperly recommended the purchase of Healthcare Trust of America to investors for which the REIT was unsuitable, and marketed it as safe and secure despite its risky nature.

Healthcare Trust of America Investors Could Recover Losses

Healthcare Trust of America is a non-traded Real Estate Investment Trust (REIT). According to stock fraud lawyers, REITs typically carry a high commission which motivates brokers to make the recommendation to their clients despite the investment’s unsuitability. The commission on a non-traded REIT is often as high as 15 percent. Non-traded REITs, like Healthcare Trust of America, carry a relatively high dividend or high interest, making them attractive to investors. However, non-traded REITs are inherently risky and illiquid, which limits access of funds to investors.

Healthcare Trust of America is, according to its website, a “fully integrated, self-administered, self-managed real estate investment trust.” The REIT has invested around $2.5 billion, since it was formed in 2006, in real estate projects. According to a recent SEC filing, the REIT is seeking a $10.10 per share IPO price. However, it is possible that Healthcare Trust of America’s initial IPO share price will be lower than that, in light of what recently happened with Inland Western REIT’s IPO, in which the actual share price was considerably lower than the anticipated share price.

Published on: May 25, 2012

TVIX ETF Investors Could Recover Losses

by InvestorLawyers

Stock fraud lawyers are investigating claims on behalf of investors who suffered losses as a result of their investment in the TVIX ETF. It is possible that brokerage firms who recommended this high-risk, complicated product could be held liable for their clients’ losses.

TVIX ETF Investors Could Recover Losses

Traditional, conservative ETFs have become very popular and, as a result, some unsophisticated investors may have invested in the very risky TVIX ETF, believing it to be a traditional ETF. However, TVIX, the VelocityShares Daily 2x VIX Short-Term ETN, is linked to an index that is made up of front month futures and offers leveraged exposure to VIX contracts.

The total share price of TVIX went down 29.3 percent on March 22, 2012. Following this drop, investors frantically sold off their positions and the next trading day saw 29.8 percent losses. At that time, TVIX was trading at $7.16 per share, a dramatic decline from the closing price before the initial drop, which was $14.43 per share. After closing on the second day, net losses amounted to a little over 50 percent. According to securities fraud attorneys, many investors suffered significant losses in a matter of hours.

Published on: May 23, 2012

Securities Arbitration Claims Could Help Inland Western Investors Recover Losses

by InvestorLawyers

Securities fraud attorneys are continuing to file claims on behalf of investors who suffered losses as a result of their investments with Inland Western REIT. Inland Western, which is now known as Retail Properties of America Inc., is the third-largest shopping center REIT in the nation.

Securities Arbitration Claims Could Help Inland Western Investors Recover Losses

Inland Western’s recent IPO offering resulted in some disastrous effects on investors. Recent reports indicate that Inland Western’s $8 offering price was the result of reverse-stock-split engineering. This price is significantly less than the expected pre-offering price, which was $10 to $12. In actuality, investors who paid $10 per share for the REIT originally are receiving a split-adjusted value of only $3 per share. This 70 percent decline could result in staggering losses. However, it may be possible for investors to recover their losses through FINRA securities arbitration.

Inland Western is a non-traded Real Estate Investment Trust (REIT). According to stock fraud lawyers, REITs typically carry a high commission which motivates some brokers to make the recommendation to their clients despite the investment’s unsuitability. The commission on a non-traded REIT is often as high as 15 percent. Non-traded REITs, like Inland Western, carry a relatively high dividend or high interest, making them attractive to investors. However, non-traded REITs are inherently risky and illiquid, which limits access of funds to investors.

Published on: May 16, 2012

Investors Could Recover Losses from Inverse ETF, ETN Investments

by InvestorLawyers

ETFs (exchange traded funds) and ETNs (exchange traded notes) have recently gained a significant amount of attention in the securities industry. Securities fraud attorneys have been filing arbitration claims on behalf of investors who were unsuitably recommended ETFs or ETNs and suffered significant losses as a result. The Financial Industry Regulatory Authority (FINRA) has started to increase its efforts in regulating inverse ETFs and ETNs, hoping to ensure that unsophisticated investors are not being sold these complicated products.

Investors Could Recover Losses from their Inverse ETF and ETN Investments

In connection with FINRA’s efforts, UBS Financial Services, Morgan Stanley, Wells Fargo and Citigroup Global Markets Inc. have agreed to pay $7.3 million in fines and $1.8 million in restitution, totaling $9.1 million. This will settle allegations that they sold inverse and leveraged ETFs to clients for which the investment was unsuitable. According to FINRA, these four firms did not have a “reasonable basis” for the recommendation of the securities to certain clients and also failed to provide adequate supervision. For more than a year, from January 2008 through June 2009, $27 billion in inverse ETFs were bought and sold by the firms.

With ETFs and ETNs now being recognized as a significant problem, we are likely to see more sanctions leveled by FINRA. According to stock fraud lawyers, the SEC ceased approving applications for ETFs in March 2010, when those ETFs used derivatives. Furthermore, the SEC indicated that it wanted to determine if leveraged and inverse ETFs warranted additional investor protection. There is concern, from both FINRA and the SEC, that inverse and leveraged ETFs are being confused with traditional, less risky ETFs.

Published on: May 11, 2012

News: Lawsuit Against Morgan Keegan Regarding Auction Rate Securities Reinstated

by InvestorLawyers

Recently, it has been reported that the SEC lawsuit against Morgan Keegan & Co. has been reinstated by the U.S. Court of Appeals in Atlanta. According to stock fraud lawyers, Morgan Keegan allegedly mislead investors regarding its auction-rate securities liquidity risk. According to the federal appeals court, a trial judge previously incorrectly sided with Morgan Keegan that the verbal comments made by brokers to four Morgan Keegan customers were not “material” omissions or misrepresentations that would, under U.S. Securities law, make the company liable.

News: Lawsuit Against Morgan Keegan Regarding Auction Rate Securities Reinstated

Morgan Keegan’s office based in Memphis, Tennessee, was accused of securities fraud and sued by the SEC in 2009. According to securities fraud attorneys, the SEC alleged that from late 2007 through the ARS market collapse in February 2008, Morgan Keegan brokers told customers the auction-rate securities “were as good as cash” in an effort to increase sales.

Stock fraud lawyers know that auction-rate securities are tax-exempt, long-term and taxable bonds and their interest rates are connected to the short-term market. Through ARS, issuers can acquire lower short-term rates on long-term financing. Auction-rate securities were marketed as liquid cash alternatives and considered safe before the global credit crunch severely affected the market. As a result, many investors were left with securities that couldn’t be sold.

Published on: May 7, 2012

KBS REIT I Investors Could Recover Losses

by InvestorLawyers

Because of the recent decline in value of KBS Real Estate Investment Trust I, investment fraud lawyers are investigating claims on behalf of investors who suffered significant losses as a result of their investments. Full-service brokerage firms who sold this particular REIT could be held responsible for investor losses.

KBS REIT I Investors Could Recover Losses

In April, investors of KBS REIT were informed that the value of KBS REIT had declined to $5.16 per share from $7.32 per share. While this represents a 29 percent decline since the last value cut of the REIT’s shares, it also represents a decline of nearly 50 percent since the original investment offering at $10 per share. The reduction in share price has resulted in significant losses for investors but, according to securities fraud attorneys, investors may be able to recover losses through securities arbitration.

KBS is a non-traded Real Estate Investment Trust (REIT). According to investment fraud lawyers, REITs typically 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, such as the KBS REIT, carry a relatively high dividend or high interest, making them attractive to investors. However, non-traded REITs are inherently risky and illiquid, which limits access of funds to investors. For more information on REITs, see the previous blog post, “FINRA Investor Alert: Public Non-Traded REITs.”

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 27, 2012

FINRA Cracking Down on Leveraged and Inverse ETFs

by InvestorLawyers

According to investment fraud lawyers, the Financial Industry Regulatory Authority (FINRA) will bring enforcement cases related to the selling of exchange-traded funds (ETFs) that were not appropriate for customers, against certain brokerages. Bradley Bennett, FINRA’s enforcement chief, said this month that the cases will involve leveraged and inverse exchange-traded funds, and the unsuitable sales of said funds. Furthermore, allegations of inadequate or improper training for brokers who sell exchange-traded funds will be involved in the cases.

FINRA Cracking Down on Leveraged and Inverse ETFs

Securities fraud attorneys say that leveraged and inverse ETFs amplify short-term returns. They do so by using derivatives and debt. These investments are more suitable for professional traders and are usually unsuitable for long-term retail investors. These investments only make up $29.3 billion of the $1.15 trillion United States ETF market. FINRA has raised concerns that these products are being sold to long-term retail investors, despite the risk involved when holding leveraged and inverse ETFs for more than one day.

“We don’t have a qualm with the product,” Bennett says. “We just want to make sure that people who are selling them understand them.”