stock fraud lawyer

Published on: October 17, 2013

$7 Million Awarded to Investor in FINRA Auction-rate Securities Dispute

Investors who suffered significant losses as a result of their auction-rate securities investment with Jeffries Group LLC may be able to obtain a recovery via FINRA securities arbitration. Jeffries Group is a subsidiary of Leucadia National Corp., another full-service brokerage firm. Recently, Jeffries was ordered to pay an investor $7 million regarding an auction-rate securities dispute.

In May 2012, a statement of claim was filed with the Financial Industry Regulatory Authority by Saddlebag LLC. The claim alleges that the firm wrongfully invested the client’s assets in illiquid auction-rate securities (ARS). According to securities lawyers, many financial firms sold auction-rate securities as short-term instruments with a highly-liquid nature, much like money market funds.

However, in 2008, the credit crunch resulted in a failure of the ARS market and investors with a piece of the $330 billion market were stuck holding securities that they were unable to sell. Other firms, including Morgan Keegan, have been accused of misleading investors regarding the liquidity risk of auction-rate securities.

Published on: October 8, 2013

Recovery of Losses Sustained in Senior Secured Zero Coupon Notes

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses as a result of doing business with Thomas O. Mikolasko, a former HFP Capital Markets broker. Specifically, the investigations are looking into whether HFP Capital Markets provided adequate supervision over Mikolasko when he allegedly caused certain material omissions and misrepresentations of material facts to be made regarding the sale of “Senior Secured Zero Coupon Notes.”

Recovery of Losses Sustained in Senior Secured Zero Coupon Notes

The Financial Industry Regulatory Authority (FINRA) issued an Order Accepting Offer of Settlement which stated, “Mikolasko was an investment banker at HFP who engaged in activity to facilitate the firm’s sale of $3 million in ‘Senior Secured Zero Coupon Notes’ sold to 58 customers of HFP for an entity known as Metals Millings and Mining LLC (‘MMM’). The notes defaulted and investors were not repaid either principal or a promised 100 percent return. Mikolasko allegedly caused material misrepresentations and omissions of material facts to be made in connection with the firm’s sales of the offering. Mikolasko also allegedly participated in various roles to facilitate the offering even though he knew or should have known that HFP had conducted inadequate due diligence concerning the offering and that the due diligence the firm had conducted identified significant ‘red flags’ as to the facts and circumstances of the offering.”

Mikolasko was suspended for 18 months from associating in any capacity with any FINRA member firm and fined $75,000 for his alleged conduct. However, stock fraud lawyers say that clients of Mikolasko may be able to recover losses through securities arbitration.

Published on: October 1, 2013

Citigroup Held Liable for Investor Losses from Adviser’s Selling Away

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses because their full-service brokerage firm-registered adviser engaged in “selling away.” Selling away occurs when an adviser sells investments without their firm’s knowledge or approval. According to stock fraud lawyers, firms have a responsibility to adequately supervise their registered representatives and can be held liable for client losses if they fail to provide such supervision.

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Recently, Citigroup was found liable for $3.1 million in a FINRA claim filed by a Florida couple. The couple had filed a case in 2010 against Citigroup, alleging negligence and fraud involving more than $1 million in investments. The real estate investments were reportedly made from 2004 to 2007 in condominium developments and real estate projects. The couple’s adviser, Scott Andrew King, was registered with Citigroup from 2002 until 2005. King reportedly referred the claimants to Lawton “Bud” Chiles III without Citigroup’s knowledge. Currently, King works as a broker for Wells Fargo Advisors.

In addition, the claimants were reportedly included in a group of investors who signed personal loan guarantees connected to a $12 million loan to one of the real estate projects. When the loan entered into default, a $10 million judgment was entered against the group. Reportedly, each investor named in the judgment could potentially have to pay the entire amount of the bad loan. The $3.1 million award includes $2.1 million to cover the plaintiffs’ share of the judgment and $1 million in losses. In addition, in the event that the couple is required to pay the entire $10 million judgment, Citigroup will be required to reimburse them the entire amount.

Published on: September 19, 2013

Morgan Stanley Fined by FINRA

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of customers of Morgan Stanley and other full-service brokerage firms regarding the sales of bonds and other securities. In some cases, full service brokerage firms may have failed to provide fair and reasonable prices or best execution in some customer transactions involving municipal bonds, corporate bonds, agency bonds or other securities.

According to a FINRA news release, on August 22, 2013, the Financial Industry Regulatory Authority fined Morgan Stanley & Co. LLC and Morgan Stanley Smith Barney LLC for failure to provide reasonable prices in certain municipal bond customer transactions and failure to provide best execution in certain corporate and agency bond customer transactions. The firms were fined $1 million and ordered to pay restitution and interest in the amount of $188,000, above and beyond what Morgan Stanley has already paid. Stock fraud lawyers say Morgan Stanley did not admit or deny the FINRA charges.

Reportedly, the violations affected 116 corporate and agency bond customer transactions and 165 municipal bond customer transactions.

Published on: September 10, 2013

Unsuitable Recommendation of ELKs Leads to Claims Against Citigroup

by InvestorLawyers

Unsuitable Recommendation of ELKs Leads to Claims Against Citigroup

ELKs are sometimes called reverse convertibles and can carry high risks. As a hybrid debt security, the return on this type of investment is linked to an underlying equity, most commonly a stock. Usually, ELKs mature in a year and, if the value of the ELK falls below a pre-set price, the investor will not receive cash but, instead, the investment is converted into shares in the underlying security. The value of these shares can be worth less than the investor’s initial investment. According to stock fraud lawyers, ELKs are structured products that are, in some cases, part of a speculative investment strategy that is unsuitable for many investors.

According to the Statement of Claim in this case, the 91-year-old female investor was allegedly sold an investment strategy that involved asset allocation that was unsuitable and materially flawed for an investor seeking conservation of principle. The claim is seeking $200,000 in damages for the investor and alleges fraud, breach of fiduciary duty and unsuitable sales.

According to securities fraud attorneys, 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 given his or her age, investment objectives and risk tolerance.

Published on: September 5, 2013

Behringer Harvard REIT I is Now TIER REIT: New Name Doesn’t Solve Investor Problems

by InvestorLawyers

Behringer Harvard REIT I changed its name on June 21, 2013, to TIER REIT, Inc.

Behringer Harvard REIT I is Now TIER REIT New Name Doesn’t Solve Investor Problems

Despite the name change which, according to the REIT’S president Scott Fordham was supposed to symbolize “how the company reflects the goals and objectives of its tenants and stockholders in everything it does,” investors continue to be trapped in an investment they can’t sell except at a significant discount on the secondary market. Furthermore, according to stock fraud lawyers, the REIT continues to pay zero distributions.

To make matters worse, the REIT’s latest SEC quarterly report disclosed some disturbing information for investors. Reportedly, notes payable amounting to approximately $221.8 million will come due in 2013 and this amount may increase significantly because of several of the REIT’s loans, which are in default. As a result, the REIT may have to pay over $300 million before the end of 2013 because of its outstanding loans. In addition, the REIT had cash and cash equivalents of only $40.7 million and $71.3 million in restricted cash as of March 31, 2013.

Published on: August 27, 2013

Securities Arbitration Investigations Continue as FINRA Files Formal Complaint Against Thompson National Properties

by InvestorLawyers

Securities fraud attorneys continue to investigate claims on behalf of investors who suffered significant losses in Thompson National Properties (TNP) promissory note investments. Specifically, investors may bave viable claims regarding three note programs sold by TNP from 2008 to 2012 that, according to a Financial Industry Regulatory Authority (FINRA) complaint dated July 30, 2013, allegedly were used in defrauding and deceiving investors. The complaint names Tony Thompson, Thompson National Properties LLC and TNP Securities LLC and is the first formal action against Thompson by FINRA.

According to stock fraud lawyers, $50 million in TNP-sponsored high-yield promissory notes were sold to investors, claiming guaranteed principal and interest. A summary of the allegations b7y FINRA in Mr. Thompson and TNP Securities’ BrokerCheck profile states that they “engaged in transactions, practices or courses of business which operated as a fraud or deceit upon the purchaser.” Furthermore, FINRA’s allegations against TNP Securities and Mr. Thompson include the use of deceptive, manipulative or other fraudulent devices, which allege4dly puts them in violation of FINRA Rule 2020 and the Exchange Act of 1934.

Specifically, the complaint discusses the TNP 2008 Participating Notes Program LLC, the TNP Profit Participation Program LLC and the TNP 12% Notes Program LLC.

Published on: August 20, 2013

SEC to Discuss Uniform Fiduciary Standard Rule for Brokers

by InvestorLawyers

According to a recent article in Investment News, Chairman of the Securities and Exchange Commission, Mary Jo White, wants the SEC to decide as soon as possible whether to propose a rule that would raise the standards for investment advice given by brokers. Securities fraud attorneys say a rule of this kind would play a significant part in protecting investors and could make it easier to determine misconduct in securities arbitration.

SEC to Discuss Uniform Fiduciary Standard Rule for Brokers

Stock fraud lawyers expect the commission, which consists of five members, will be split on this controversial issue. A cost-benefit analysis is being conducted by the SEC regarding a potential rule. In an interview, SEC Commissioner Daniel Gallagher said the potential rule hasn’t been a “front burner issue,” but it soon will be.

“We really need to decide, based on what we’ve seen, whether it makes sense to move forward,” Gallagher stated.

Published on: August 15, 2013

Investors Could Recover Losses for TNP-Sponsored Investments

by InvestorLawyers

Stock fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses in several TNP-sponsored investments, including the TNP 2008 Participating Notes Program LLC, sold by Berthel Fisher & Co. Financial Services Inc. and other full-service brokerage firms. Reportedly, around $26 million was raised from investors in total for the TNP 2008 Participating Notes Program and, though Berthel Fisher acted as the underwriter for the deal, the investment was also sold by other broker-dealers.

Investors Could Recover Losses for TNP-Sponsored Investments

According to the allegations made by one investor, Berthel Fisher failed to make the proper disclosures and perform adequate due diligence regarding the TNP 2008 Participating Notes Program. A complaint was filed in the U.S. District Court for the Northern District of Iowa on July 8, which stated, “Berthel Fisher had actual knowledge of the misrepresentations and omission in the 2008 [private-placement memorandum] and failed to investigate red flags that pointed to other misrepresentations and omissions.”

The deal’s sponsor, Thompson National Properties LLC, and chief executive Tony Thompson have also been under investigation by securities arbitration lawyers for the TNP Strategic Retail Trust Inc., a non-traded REIT, and the TNP 12% Notes Program. Allegedly, the TNP Strategic Retail Trust was recommended to many investors for which it was unsuitable, given their age, risk tolerances and investment objectives. Reportedly, the 12% Notes Program, which was designed to raise capital for tenant-in-common real estate operations, suspended interest payments to investors and was in danger of defaulting on two loans.

Published on: August 8, 2013

GenSpring Clients Could Recover Losses

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses in their accounts with GenSpring Family Offices LLC, a firm owned by a wholly-owned SunTrust subsidiary. Reportedly, arbitration cases have already been filed on behalf of ultra-high-net-worth investors which allege mishandling of investment accounts by GenSpring.

GenSpring Clients Could Recover Losses

In one case, the investors’ trust interviewed multiple money managers and investment firms including Credit Sussie, CitiGroup, Deutsche Bank, LaSalle Bank and Goldman Sachs. All of these firms recommended diversification across traditional asset classes, such as bonds and equities, as well as selective investments in alternative products for special situations.

However, the claim asserts that GenSpring stood out because of its unique approach which would provide better downside protection and better returns through the use of Multi-Strategy Hedge Funds, such as Silver Creek Funds, instead of the bond or fixed income portion of client portfolios. Allegedly, GenSpring officials claimed that their approach, which had been tested thoroughly, would behave like traditional bonds in terms of asset class correlation and volatility while providing returns across all market cycles that were superior to traditional bonds. The trust invested approximately $10 million and stated its primary goal as capital preservation.