securities fraud attorney

Published on: November 14, 2012

Recovery of KBS REIT Losses

Many investors who suffered significant REIT losses in KBS REIT I and KBS REIT II are exploring their options for loss recovery through a Financial Industry Regulatory Authority arbitration claim. KBS REIT I is a non-traded real estate investment trust with a focus on commercial real estate. It has raised around $1.7 billion from investors. Current estimations indicate that investors’ interests in KBS REIT I are worth $5.16 per share. The last change in valuation occurred in late 2009, at which time the investment was valued at $7.32 per share; the new valuation represents a 29 percent decline from that value and a drop of almost 50 percent from the investment’s initial offering price of $10 per share.

Recovery of KBS REIT Losses

In addition, investors of both KBS REIT I and KBS REIT II have been informed that they would not receive any more distributions. Prior to this announcement, KBS REIT I investors were receiving annual distributions of 5.3 percent. Reportedly, KBS REIT I has also suspended redemptions. This means that investors who hold shares in this investment may have trouble selling their investment or could face serious losses by selling on the secondary market. Secondary market buyers are very unlikely to pay for shares of KBS REIT I at the appraised value.

Typically, REITs 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 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. Arbitration claims have already been filed, or are in the process of being filed, against Ameriprise on behalf of KBS REIT investors who were allegedly led to believe that the REIT was safe, similar to investing in a bond, could be liquidated, provided guaranteed monthly distributions, and that the value of the investment would not fall below the initial purchase price of $10 per share.

Published on: November 12, 2012

Recovery of Desert Capital REIT Losses

by InvestorLawyers

Recovery of Desert Capital REIT Losses

INVESTORLAWYER_6Q17_2012-11-12_Mon_Recovery of Desert Capital REIT Losses

Many investors who purchased Desert Capital REIT, a non-traded REIT, are consulting securities fraud attorneys in order to recover their REIT losses. Claims by investors include unsuitable recommendations and misrepresentations of Desert Capital REIT. In addition, many investors suffered losses as a result of overconcentration of funds in Desert Capital REIT.

Typically, REITs 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 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. The most common complaints regarding the recommendation of Desert Capital REIT mention valuations, prospects, performance, liquidity, redemption and distribution of the investment. Many investors assert that they were not aware of the truth regarding these aspects and their decision to invest would have been affected if they’d had all of this information.

Published on: October 29, 2012

Recovery of Inland Western REIT Losses

by InvestorLawyers

Earlier in October, another claim was filed in an effort to help investors recover REIT losses. This claim was against LPL Financial and its goal is to recover losses sustained in Retail Properties of America, formerly known as Inland Western Real Estate Investment Trust. This claim, which was filed with FINRA, also involves eight other alternative, illiquid investments, and is seeking $1,000,000 in damages.

Recovery of Inland Western REIT Losses

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 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. 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.

Reportedly, LPL Financial and its advisor, used an over-concentration of illiquid investments in the client’s portfolio. Furthermore, these investments carried a high level of risk because the securities recommended to the claimant didn’t trade freely. In addition to the Inland Western REIT, the portfolio also consisted of KBS REIT, Inland American REIT, LEAF Fund, Hines REIT, Atlas, ATEL Fund X, PDC 2005A, and ATEL Fund XI

Published on: October 26, 2012

Fraud Victims of William T. Johnson Could Recover Losses

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of the customers of William T. Johnson. A resident of Palm Beach Gardens, Fla., Johnson is accused of stealing around $500,000 from 13 clients. Johnson allegedly informed his clients that he would invest their money in Certificates of Deposit (CDs), Individual Retirement Accounts (IRAs), short-term commercial paper and various other products. However, according to the allegations against him, Johnson actually used the money he received from clients to benefit his family and himself. The fraud allegedly took place between July 2003 and September 2011.

Fraud Victims of William T. Johnson Could Recover Losses

Johnson’s attorney reportedly said that Johnson would likely plead guilty. Securities regulators in Maine and Florida have apparently scrutinized Johnson in the past and, in addition, the Financial Industry Regulatory Authority has already barred him from association with FINRA-registered firms. Securities arbitration lawyers say Johnson previously was associated with Kovack Securities and Next Financial Group Inc.

If Johnson defrauded clients through his company while also registered with Kovack Securities or Next Financial group, he may have been “selling away.” From 2002 until 2009, Johnson was registered with Kovack Securities, and was registered with Next Financial Group from May 2010 to June 2010. According to securities fraud attorneys, “selling away” occurs when a FINRA-registered broker-dealer executes transactions outside his or her registered firm. Investment firms can still be held liable for a broker that is “selling away” if their supervision of that broker is deemed to have been negligent. As a result, it is possible for investors to recover their losses through securities arbitration.

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 15, 2012

Sanders Morris Harris, Fifth Third Securities Fined by FINRA

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of the customers of Sanders Morris Harris Inc. and Fifth Third Securities Inc. in light of recent fines and censures by the Financial Industry Regulatory Authority. Fifth Third Securities was fined $80,000 and ordered to pay restitution to investors in the amount of $26,876.52, plus interest. The firm was also ordered to revise its WSPs in regard to step-out transactions. Sanders Morris Harris was fined $75,000. Both firms submitted a Letter of Acceptance, Waiver and Consent but neither admitted or denied FINRA’s findings.

Sanders Morris Harris and Fifth Third Securities Fined by FINRA

In the case of Sanders Morris Harris, FINRA’s findings indicated that the firm’s registered representatives distributed advertising material to retail customers for hedge funds that did not adequately disclose the risks of the funds. Furthermore, it was alleged that the advertising contained unclear graphs or charts that contained misleading statements and omitted material information. In addition, the material allegedly implied that investors could avoid negative returns and/or indicated that the fund’s past performance would yield future positive returns. According to stock fraud lawyers, FINRA’s findings also indicated that two of the nine subject pieces of advertising were distributed by the firm, without principal review, to retail customers.

Securities fraud attorneys say that in the case of Fifth Third Securities, FINRA’s findings indicated that the firm’s transactions with or for a customer resulted in a failure to execute due diligence to determine the most appropriate inter-dealer market and, further, failed to execute transactions in such a market to procure the most favorable price to its customer as possible, given market conditions. Reportedly, the firm did not properly report transactions in municipal securities to the RTRS, and an adequate supervisory system was not in place to maintain compliance with applicable MSRB rules, securities laws and regulations in regard to step-out transactions.

Published on: October 8, 2012

ProShares Investors Could Still Recover Losses Following Class Action Lawsuit Dismissal

by InvestorLawyers

Following the dismissal of the class action lawsuit against ProShares, securities fraud attorneys are investigating potential claims on behalf of investors who suffered significant losses as a result of their investment in the ProShares leveraged and inverse exchange-traded funds.

ProShares Investors Could Still Recover Losses Following Class Action Lawsuit Dismissal

The U.S. District Court for the Southern District of New York recently dismissed the class action lawsuit that was reportedly filed in 2009. According to securities arbitration lawyers, reports indicated that the plaintiffs’ claims that certain risks were omitted from the registration statements disclosures were rejected by the courts. Reportedly, these omitted risks were associated with holding inverse and leveraged exchange-trade funds, or ETFs, for periods exceeding one day.

In a warning issued by FINRA, the regulatory authority stated that leverage inverse ETFs are unsuitable for ordinary investors and that these investments should be held for a short time period only. Brokers have been known to sell ETFs and ETNs as conservative ways to track a sector of the market, or the market as a whole. However, complicated trading strategies are necessary to accomplish this, and using these investments to track a sector of the market may or may not be a conservative trading strategy. This depends on the sector of the market and assets in the account relative to the investment’s concentration level. For more information on ETFs and ETNs, see the previous blog post, “Investors Could Recover Losses from their Inverse ETF and ETN Investments.”

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 3, 2012

SEC Suspension Could Result in Investor Arbitration Claims

by InvestorLawyers

Following a recent announcement by the Securities and Exchange Commission, securities fraud attorneys are investigating potential claims on behalf of investors who suffered losses in investments from a variety of issuers. The following issuers were temporarily suspended by the SEC pursuant to Section 12(k) of the Securities Exchange Act of 1934:

SEC Suspension Could Result in Investor Arbitration Claims

Alto Group Holdings Inc. (ALTO)
AER Energy Resources Inc. (AERN)