securities fraud attorney

Published on: April 23, 2012

“Retirement Plan Management: Compliance, Reporting and Ethics” Author Charged with Fraud

Recently, Matthew D. Hutcheson, a financial advisor and radio personality, reportedly was indicted on federal charges. Investment fraud lawyers say Hutcheson, who is well known in the securities industry, has been indicted for funding his home renovations and purchasing interest in a golf and ski resort with his clients’ retirement plan funds. Hutcheson authored the “Retirement Plan Management: Compliance, Reporting and Ethics” course and hosted “The Retirement Hour with Matt Hutcheson” radio show.

“Retirement Plan Management: Compliance, Reporting and Ethics” Author Charged with Fraud

Hutcheson was a trustee and fiduciary to three multiple employer plans, according to the Boise U.S. Attorney’s Office. These plans were the National Retirement Security Plan 401(k), the Retirement Security Plan & Trust and the G Fiduciary Retirement Income Security Plan. According to the allegations against Hutcheson, he directed the G Fiduciary Plan’s record keeper to send $2,031,688 from the plan’s account via 12 wire transfers in 2010. The plan’s account was kept at Charles Schwab & Co. Inc., and the accounts that received the funds were for Hutcheson’s personal benefit or under his control.

Furthermore, in 2010 Green Valley Holdings was set up by Hutcheson, an entity that was used to acquire a ski lodge and golf course at Idaho’s Tamarack Resort. According to the complaint, he also allegedly funneled plan assets from Retirement Security Plan & Trust to help purchase an interest in the resort, amounting to $3 million.

Published on: April 20, 2012

News: FINRA Fines Goldman Sachs Over ‘Trading Huddles’

by InvestorLawyers

According to an announcement on April 12, 2012, from the Financial Industry Regulatory Authority (FINRA), Goldman Sachs & Co. has been fined $22 million for “failing to supervise equity research analyst communications with traders and clients and for failing to adequately monitor trading in advance of published research changes to detect and prevent possible information breaches by its research analysts.” A related settlement with Goldman was announced by the Securities and Exchange Commission on the same day. Securities fraud attorneys say Goldman will pay $11 million each to the SEC and FINRA.

News: FINRA Fines Goldman, Sachs over “Trading Hurdles”

Goldman established “trading huddles” as a business process in 2006, according to FINRA’s statement. These “trading huddles” were designed to allow weekly meetings for research analysts, in which they would share trading ideas with traders for the firm. These traders worked with clients and, occasionally, equity salespersons. In addition, analysts apparently discussed specific securities while they were considering changing the conviction list status or published research rating of the security. Clients had access to the “trading huddle” information and were not restricted from direct participation through calls placed by analysts to high priority clients of the firm.

Unsurprising to investment fraud lawyers, a significant risk was created by trading huddles: material non-public information could be disclosed by analysts. Such information includes conviction list status and rating changes. Despite this risk, Goldman failed to have adequate controls to monitor communications before and after the trading huddles. Furthermore, an adequate monitoring system was not in place to detect possible trading in advance of conviction list and research rating changes in proprietary or employee training, institutional customer or client-facilitation and market-making accounts. Had these practices been allowed to continue, insider trading could have resulted, according to securities fraud attorneys.

Published on: April 16, 2012

Wells Fargo Clients May Have Securities Arbitration Claim

by InvestorLawyers

According to stock fraud lawyers, clients of Wells Fargo Advisors LLC may be able to recover losses through Financial Industry Regulatory Authority arbitration. A claim was recently filed with on behalf of a Wells Fargo client because of the sales practices of one or more of its brokers. Allegedly, the client suffered significant losses, which amounted to a substantial part of his life savings, due to an unsuitable recommendation by a Wells Fargo broker. The client was persuaded to invest in several “penny stocks.” The client purchased shares of Camac Energy, Tombstone Exploration and Blue Earth.

Wells Fargo Clients May Have Securities Arbitration Claim

The claim states that clients purchased the penny stocks based upon statements that the stocks were recommended by Wells Fargo. Furthermore, the stocks were represented, even to unaggressive investors, as good investments. However, the stocks were actually very high risk and, when the stocks fell, large sums of money were lost by investors. In addition, the stocks were recommended by the broker because of research done by Liviakis, a third-party analyst, and not because of Wells Fargo’s research or recommendation. According to stock fraud lawyers, Liviakis is not currently facing any charges or claims of misconduct.

Securities fraud attorneys believe that many investors could have been defrauded in this manner, based upon the broker’s sales methods. High risk investments, such as penny stocks, are unsuitable for investors with a conservative portfolio and low risk tolerance. Prior to recommending an investment to a client, brokers are required to perform the necessary due diligence to establish whether or not the investment is suitable for the client, given their age, investment objectives and risk tolerance.

Published on: April 12, 2012

Investors of Odyssey Partnership, BGK Income, Opportunity Fund Could Recover Losses Through Securities Arbitration

by InvestorLawyers

Investment fraud lawyers are investigating certain private placements in potential securities arbitration claims. Two of these private placements are the BGK Income and Opportunity Fund. Allegedly, some of the broker-dealers that recommended these private placement investments could be liable for investor losses.

Investors of Odyssey Partnership, BGK Income and Opportunity Fund Could Recover Losses Through Securities Arbitration

Because of the high commission paid by private placements (often as high as 10 percent), stockbrokers often make improper recommendations in order to earn the commission. If this fraud has occurred, a securities fraud attorney can help investors recover their losses through Financial Industry Regulatory Authority (FINRA) securities arbitration.

Another investment currently being investigated by securities fraud attorneys is the Odyssey Limited Partnership investment. Odyssey Operating Partnership II Ltd. apparently raised $30 million from investors through limited partnership unit sales. In addition, through secured note sales, Odyssey Residential Inc., Odyssey Residential II LLC, Odyssey Property III LLC and Odyssey Diversified VI LLC raised more than $69 million. These partnerships are only appropriate for sophisticated investors and involve substantial risks. Any investment recommendations made to unsophisticated investors could be considered unsuitable.

Published on: April 11, 2012

FINRA Fines David Lerner Associates

by InvestorLawyers

David Lerner Associates was recently ordered by the Financial Industry Regulatory Authority (FINRA) to pay more than $3.7 million in restitution and fines. The decision is a result of David Lerner’s practices in overcharging retail customers on sales of 1,700 collateralized debt obligations (CDOs) and over 1,500 municipal bonds transactions. The municipal bonds and CDOs were rated investment-grade or above. Securities fraud attorneys are currently consulting with customers of David Lerner.

FINRA Fines David Lerner Associates

From January 2005 through January 2007, David Lerner charged excessive markups which resulted in “unfairly high prices” and lower yields being incurred by customers, according to a release issued by FINRA. The FINRA panel stated that David Lerner’s trades “reflected a pattern of intentional excessive markups” for investments that could be obtained at “significantly lower prices.” These types of sales practices have gotten the attention of stock fraud lawyers, whose job it is to help investors who have been wronged by their broker or firm.

These unfair pricing practices apparently continued despite a letter of caution on the topic that followed a 2004 exam and Wells notices on the issue, which were received by David Lerner Associates in July 2009. This, combined with the fact that the firm “has not taken any corrective measures to improve their fixed income markups policies and practices” was taken into consideration by the panel when the sanctions were set.

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: March 30, 2012

Victims of Former LPL Financial Representative, Arthur Lin, Could Recover Losses

by InvestorLawyers

Securities arbitration lawyers are currently consulting with investors who suffered losses because of their association with Arthur Lin. A former LPL Financial representative, Lin has been accused of selling “…$5,360,000 in unregistered promissory notes issued by Malarz Equity Investments LLC to at least 20 investors, including 15 LPL customers,” according to Securities and Exchange Commission documents. Lin was registered with the Financial Industry Regulatory Authority (FINRA) member firm LPL Financial; investors who suffered losses during the time he was registered may be able to recover their losses through FINRA arbitration.

Victims of Former LPL Financial Representative, Arthur Lin, Could Recover Losses

According to the SEC, Lin was permanently enjoined from future violations of federal securities law on January 25, 2012. Between September 2006 and December 2008, Lin allegedly sold unregistered promissory notes to LPL Financial clients. Some fraudulent promissory notes should be registered with applicable regulatory bodies but, instead, bypass registration. Unregistered promissory notes that should have been registered are in violation of federal securities laws and victims of this fraud may be able to recover losses through securities arbitration.

Furthermore, according to the complaint, “Lin knowingly or recklessly made material misrepresentations or omitted to state material facts to investors regarding the risks of the investments and the use of investor funds,” according to the SEC.

Published on: March 28, 2012

Ziegler Healthcare Real Estate Fund Investors Could Recover Losses

by InvestorLawyers

Investment fraud lawyers are investigating possible Financial Industry Regulatory Authority (FINRA) claims against broker-dealers who improperly recommended the purchase of Ziegler Healthcare Real Estate Funds (ZHREF). ZHREF is one of many risky private equity funds that have been improperly recommended and could result in loss recovery through securities arbitration.

Ziegler Healthcare Real Estate Fund Investors Could Recover Losses

A series of four private equity funds, ZHREF are investments designed to take part in the development and ownership of medical office buildings and other medical facilities. ZHREF I was formed in May 2005, and is fully invested. Its portfolio includes 8 buildings, totaling 221,000 square feet and approximately $54 million. ZHREF II was formed in March 2006, and is fully invested. Its portfolio includes 8 buildings, totaling 340,000 square feet and approximately $76 million. ZHREF III was formed in June 2007, and is fully invested. Its portfolio includes 6 buildings, totaling 133,000 square feet and approximately $34 million. ZHREF IV’s portfolio currently contains two properties. In total, these funds are comprised of 23 properties across 12 states.

A recent investor alert from FINRA addresses how alternative investments such as private equity funds are marketed and sold. Securities fraud attorneys warn investors that brokers often market these investments to clients as safe, despite the risks of private equity funds. Individuals with a conservative portfolio or low risk tolerance may have received unsuitable recommendations from their broker to invest in ZHREF. Individuals who suffered losses as a result of an unsuitable investment may be able to recover losses through securities arbitration.

Published on: March 26, 2012

Shareholders of First Solar Could Recover Losses

by InvestorLawyers

Securities fraud attorneys are investigating possible claims for shareholders of First Solar. First Solar shareholders may have sustained significant investment losses as a result of overconcentration in First Solar stock shares. In July 2008, First Solar shares traded at more than $300 each. However, after a significant decline, First Solar is now trading at around $30 per share. Of course, this roughly 90 percent decline has resulted in significant losses for many shareholders.

Shareholders of First Solar Could Recover Losses

Investment fraud lawyers have long been aware that holding concentrated positions in a single sector or security can result in significant investment losses for high net worth and ultra-high net worth investors. In some cases, client portfolios have been mismanaged and risk management strategies could have protected the investor’s concentrated portfolio. These risk management strategies include protective puts and collars, stop loss and limit orders. These strategies provide accounts with an exit strategy and downside protection in the event that the stock suffers a decline in value, such as what has happened with First Solar. A “zero cost” collar is one example of a hedge strategy. This collar creates a value range maintained by the portfolio, despite the fluctuating of the price of the underlying stock.

A failure to hedge, or to utilize risk management strategies, exposes investors who hold concentrated stock positions to dangerous fluctuations in securities markets. Furthermore, if you are not a high net worth investor, but were recommended an investment only suitable to said investors, your broker made this recommendation unsuitably and you may have a valid securities arbitration claim.

Published on: March 23, 2012

News: FINRA Fines, Enforcement Actions Up in 2011

by InvestorLawyers

According to a new study, in 2011 the Financial Industry Regulatory Authority’s (FINRA) enforcement actions and fines were significantly higher than in 2010. Enforcement actions rose from $45 million in 2010 to $68 million in 2011. Of that $68 million, the largest portion was for improper advertising penalties. Furthermore, the FINRA sanctions survey stated that 1,488 disciplinary actions were filed and 329 brokers were barred by FINRA in 2011 for broker misconduct. Both of these figures saw a rise from 2010.

News: FINRA Fines and Enforcement Actions Up in 2011

A common claim made by securities fraud attorneys for investors occurs when an unsuitable recommendation is made by their broker or financial adviser. Fines for suitability violations more than doubled in 2011, as did the number of cases filed. There were 106 suitability cases filed, with fines amounting to $7.7 million in 2011, compared to 53 cases and $3.75 million in fines in 2010. These fines do not include arbitration awards to investors for losses as a result of suitability violations.

FINRA hopes the new suitability rule will keep pressure on brokers to only offer investments that are in keeping with individual investors’ investment needs, risk appetite and timeline. The new suitability rule is scheduled to be finalized in the summer of 2012. According to Brian Rubin, the former deputy chief counsel of FINRA’s predecessor, the National Association of Securities Dealers, “We anticipate this will continue to be a hot area for FINRA. The new rule gives FINRA additional ammunition.”