securities fraud attorney

Published on: June 25, 2013

Customers of Wendy J. Worchester, TNP Securities Could Recover Losses

Securities fraud attorneys are currently investigating claims on behalf of the customers of Wendy J. Worchester and TNP Securities LLC. According to a recent article in InvestmentNews, Tony Thompson’s non-traded REIT, or real estate investment trust, was suspended by the Financial Industry Regulatory Authority for five months because of a failure to conduct independent and adequate due diligence.

Worchester was the co-chief compliance officer of TNP Securities LLC, a broker-dealer under Thompson’s control. Worchester and TNP Securities were suspended from working with a FINRA affiliated broker-dealer and Worchester was fined $15,000. According to FINRA, Worchester’s failure in due diligence was regarding three TNP Securities-sponsored private placement offerings.

According to stock fraud lawyers, TNP suffered almost $25.8 million in losses in 2009, resulting in negative $13.6 million net equity while launching the TNP Strategic Retail Trust Inc., a REIT. Allegedly, both of the note programs and two of the private placements offered by Thompson used new investor money to pay old investors. Both note programs are now in default.

Published on: June 18, 2013

Investors Could Recover Losses for Unsuitable Recommendation of Floating-rate Bank Loan Funds

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses as the result of an unsuitable recommendation of floating-rate bank loan funds. Earlier this month, the Financial Industry Regulatory Authority announced that it ordered Banc of America and Wells Fargo to pay a fine and restitution for the improper and unsuitable recommendation and sale of floating-rate bank loan funds.

Investors Could Recover Losses for Unsuitable Recommendation of Floating-rate Bank Loan Funds

Wells Fargo Advisors LLC was ordered to pay a $1.25 million fine and restitution of approximately $2 million for losses sustained by 239 customers. As Banc of America’s successor, Merrill Lynch, Pierce, Fenner & Smith was ordered to pay a $900,000 fine and restitution of approximately $1.1 million for losses sustained by 214 customers.

Floating-rate bank loan funds can be illiquid and carry significant risks because they invest in loans to entities with below-investment-grade ratings. According to FINRA’s findings, Banc of America and Wells Fargo made recommendations of concentrated purchases of these investments to customers for whom the recommendation was unsuitable. Stock fraud lawyers say that most investors with conservative risk tolerances or who want to conserve principal should not have received a recommendation to invest in a floating-rate bank loan fund.

Published on: June 4, 2013

Non-traded REITs: Five Firms to Pay $7 Million in Massachusetts Settlement

by InvestorLawyers

On May 22, 2013, secretary of the Commonwealth of Massachusetts William Galvin announced settlements with five major independent broker-dealers. According to the settlements, Ameriprise Financial Services Inc. will pay $2.6 million in restitution to investors and a $400,000 fine, Commonwealth Financial Network will pay restitution of $2.1 million and a fine of $300,000, Royal Alliance Associates Inc. will pay restitution of $59,000 and a fine of $25,000, Securities America Inc. will pay restitution of $778,000 and a fine of $150,000 and Lincoln Financial Advisors Corp. will pay restitution of $504,000 and a fine of $100,000. Securities fraud attorneys are currently investigating claims on behalf of investors who purchased Real Estate Investment Trusts (REITs) from these or any other independent broker-dealers.

Non-traded REITs: Five Firms to Pay $7 Million in Massachusetts Settlement

According to a statement made by Mr. Galvin, “Our investigation into the sales of REITs, triggered by investor complaints, showed a pattern of impropriety on the sales of these popular but risky investments on the part of independent brokerage firms where supervision has historically been difficult to monitor.”

According to stock fraud lawyers, this settlement follows the February decision in which LPL Financial LLC was required to pay restitution to investors of $2 million and fines totaling $500,000 regarding non-traded REIT sales.

Published on: May 16, 2013

InnerWorkings Investigated for Breach of Fiduciary Duty, Federal Securities Laws Violations Following Per-share Price Plunge

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses in InnerWorkings Inc. securities. According to recent reports, an investigation is underway to determine whether InnerWorkings and its executives committed federal securities violations and/or breached its fiduciary duty to shareholders.

InnerWorkings Investigated for Breach of Fiduciary Duty, Federal Securities Laws Violations Following Per-share Price Plunge

On April 16, 2013, the Wall Street Journal reported that InnerWorkings projected its first-quarter 2013 results would fall below the expectations of analysts. It claimed a “significant reduction in scope of work at a large retail client” was the reason for cutting the expectations for 2013. Following the news, shares of InnerWorkings fell more than 20 percent in one day, from $14.03 per share to $10.50 per share on April 17, 2013. Furthermore, InnerWorkings now estimates per-share earnings to be 45-50 cents per share, as opposed to the previous forecast of 57-61 cents per share. Revenue projections have also decreased, from $930-$960 million to $900-$930 million.

According to investment fraud lawyers, investors became even more concerned on April 30, 2013, when a report was published by Prescience Point Research Group. The report alleges that InnerWorking shares are grossly overvalued as a result of revenue inflation committed by the company, and in violation of GAAP principles. Allegedly, InnerWorkings misapplied gross revenue accounting which, if true, would violate its credit agreement. The Securities and Exchange Commission had previously filed a letter on November 13, 2012 requesting that InnerWorkings’ service revenue recognition treatment and multiple element arrangement accounting treatment be clarified, according to securities fraud attorneys.

Published on: May 7, 2013

Retirees Targeted for Excessive Trading, Unsuitable Recommendation of REITs

by InvestorLawyers

Securities fraud attorneys are cautioning retirees regarding two potential threats to their retirement investments. Many retirees have suffered significant losses as a result of unsuitable recommendations of risky, illiquid investments. In other cases, losses have resulted from excessive trading in customer accounts.

Reportedly, many seniors are being persuaded to invest in non-traded REITs, or real estate investment trusts, but are not being made aware of the risks and illiquidity of these products. Stock fraud lawyers say that many brokers and advisers with full-service brokerage firms may be tempting senior investors with promises of steady returns that exceed those available in traditional investments such as bonds or CDs while failing to adequately disclose the risks of non-conventional investments such as non-traded REITs.

Many retirees have a low risk tolerance and want conservative, income-producing portfolios. Advisors often tout the steady stream of income produced by non-traded REITs and present them as an alternative to fixed-income investments such as bonds, but there is no guarantee of ongoing distributions by non-traded REITs. In fact, distributions may be suspended or stopped completely. Another problem retirees face with REITs is that they may need access to their funds, but redeeming or selling a non-traded REIT may be difficult, or may be possible only at a price much lower than the investor’s initial investment.

Published on: May 2, 2013

Recovery of Success Trade Promissory Note Losses

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of the customers of Success Trade Securities who purchased Success Trade promissory notes. In April 2013, the Financial Industry Regulatory Authority (FINRA) announced that it had filed a Temporary Cease-and-Desist Order in relation to these notes. The order is intended to halt fraudulent activity and misuse of investors’ assets and funds allegedly being conducted by Success Trade Securities and Fuad Ahmed, the firm’s president and CEO.

FINRA has issued a complaint against Ahmed and Success Trade Securities that charges promissory note sales fraud. These promissory notes were issued by Success Trade Inc., Success Trade Securities’ parent company. According to the complaint’s allegations, “Success Trade Securities, Ahmed and other registered representatives at the firm sold more than $18 million in Success Trade promissory notes to 58 investors, many of whom are current or former NFL and NBA players, while misrepresenting or omitting material facts. [They] misrepresented that they were raising $5 million through the sale of promissory notes and continued to make this representation, even as the sales exceeded the original offering by more than 300 percent.” According to investment fraud lawyers, FINRA also claimed that Success Trade Securities and Ahmed misrepresented the way in which they would use the proceeds and used the funds improperly, using them to pay existing noteholders’ interest payments and making unsecured loans to the president and CEO.

According to the allegations, Success Trade Securities and Ahmed also failed to disclose to investors the actual amount of the existing debt the company owed investors and the fact that it required raising money from additional investors to make future interest payments. Some of the promissory notes allegedly promised to pay as much as 26 percent interest, while most promised a 12.5 percent annual interest rate payment, due monthly, over the course of three years. Another FINRA allegation was that the exempt status and rate of return of the private placement offering used to sell the notes was misrepresented. Misrepresentations become material and therefore grounds for securities arbitration when it can be proven by a securities fraud attorney that the investor would have made a different investment choice if the misrepresentation or omission had not occurred. This, combined with the sales fraud allegations, suggests that Success Trade promissory note investors may have strong arbitration claims.

Published on: April 23, 2013

REIT Investors May be Unaware They Suffered Significant Losses

by InvestorLawyers

According to securities fraud attorneys, many investors may be unaware of the fact that they have suffered losses in non-traded real estate investment trusts, or REITs. Financial statements for REITs usually reflect the investment’s initial purchase price, not the current value of the REIT; this can mislead investors into believing that their investment’s value is stable when, in fact, they have actually suffered significant losses.

Because these investments are unregistered securities, they do not have to follow the same rules that regulated investments must follow. As a result, investors may be subject to high fees both to get in and get out of the investment. Furthermore, non-traded REITs are inherently risky and illiquid, causing them to be difficult to value. Stock fraud lawyers say the nature of these investments makes them difficult to sell, which can cause problems for investors who need access to cash (such as retirees), making REITs clearly unsuitable for such investors.

Unfortunately, even diligent investors who carefully review their financial statements can’t depend on this information to reflect the true value of their non-traded REIT investment. Instead, investors will have to do some research to determine their investment’s value. Securities fraud attorneys are currently investigating many non-traded REITs sold by LPL Financial, Ameriprise Financial and other full-service brokerage firms, including KBS REIT, Inland American, Dividend Capital Total Realty, Cole Credit Property Trust II and III, Wells Real Estate Investment Trust II, Cole Credit Property 1031 Exchange and W.P. Carey Corporate Property Associates 17. For more information on these investigations, see the previous blog posts, “Ameriprise REIT Sales Under Investigation” and “LPL Financial Faces New Complaint Regarding Non-traded REIT Sales.”

Published on: April 16, 2013

Investigations on Behalf of Cole Credit Property Trust III Shareholders

by InvestorLawyers

Securities attorneys are currently investigating claims on behalf of Cole Credit Property Trust III investors. Cole Credit III is a non-traded real estate investment trust, or REIT. A press release issued on March 21, 2013 announced that Cole Credit III’s Board of Directors Special Committee affirmed that it was committed to pursuing a New York Stock Exchange listing and the acquisition of Cole Holdings Corp.

Investigations_on_Behalf_of_Cole_Credit_Property_Trust_III_Shareholders Lawyers are reviewing whether shareholders are paying fair or excessive value in the Cole Holdings Corp. acquisition, in addition to whether or not the transaction itself may c0nstitute a breach of fiduciary duty. Reportedly, the transaction indicated that Chris Cole and Cole Holdings management would receive cash and stock amounting to $127 million in the transaction. Since the announcement of the acquisition, shareholders have filed at least three lawsuits.

Meanwhile, InvestmentNews reported on April 11, 2013 that almost one week after the acquisition of Cole Holdings closed for 10.7 million shares and $20 million in cash, Chief Executive Nicholas Schorsch and American Realty Capital Properties Inc. had withdrawn their bid to acquire Cole Credit III. Schorsch stated in an interview, “We made a good faith offer, $9.7 billion.” After the $12 per share offering was rejected by Cole management, ARCP increased the bid to $12.50 per share but, according to Schorsch, Cole Credit III never negotiated seriously.

Published on: April 9, 2013

Securities Arbitration Alternative for Medical Capital Notes Victims

by InvestorLawyers

On April 2, 2013, a federal judge rejected Wells Fargo & Co.’s request to dismiss investors’ class action against it. These investors suffered investment losses in Medical Capital Holdings Inc.-issued notes. In addition to the class action, many investors are choosing to file an individual securities arbitration claim with the help of a securities fraud attorney.

Title of the Post Goes Here

U.S. District Court for the Central District of California judge David Carter denied in part Wells Fargo’s motion for summary judgment, allowing some of the claims made by investors to move forward.

Medical Capital is a medical-receivables company that was charged with fraud by the Securities and Exchange Commission in 2009 and subsequently went under. Since 2003, Wells Fargo has issued almost $2.2 billion in Medical Capital Holdings notes. The Medical Capital’s court-appointed receiver had, as of February, recovered $157.5 million for investors, but over $1 billion in unpaid principal is yet outstanding. Stock fraud lawyers hope to get that money back for their clients through the class action or individual FINRA securities arbitration claims.

Published on: April 4, 2013

LPL Financial Faces New Complaint Regarding Non-traded REIT Sales

by InvestorLawyers

Securities fraud attorneys say LPL Financial LLC is facing another complaint regarding its sale of REITs to unsophisticated investors. The complaint was filed by the State of Montana Auditor’s Department and was reported in The New York Times and Investment News. LPL Financial faced the Montana Auditor’s Department last year as well for allegedly failing to properly supervise one of its brokers. Reportedly, the new case involves multiple brokers and questions how sophisticated the broader compliance efforts of LPL Financial are.

A spokesman for the Montana Auditor’s Department would not make comments regarding any investigation into LPL Financial but did confirm that the state has more complaints about LPL Financial’s advisers than other firms.

Stock fraud lawyers say this case follows a complaint filed against LPL Financial by the Massachusetts Securities Division, which alleged shortcomings in the firm’s compliance practices with respect to the sales of non-traded REITs, or real estate investment trusts. That complaint, which was filed in December of 2012, alleged that the firm did not adequately supervise its registered representatives in the sales of non-traded REITs, which violated the company’s rules and state limitations. In February, Massachusetts ordered LPL Financial to pay a fine of $500,000 and restitution to clients of up to $2 million.