stock fraud lawyer

Published on: April 23, 2013

REIT Investors May be Unaware They Suffered Significant Losses

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 18, 2013

Ameriprise REIT Sales Under Investigation

by InvestorLawyers

Securities arbitration lawyers are currently investigating claims on behalf of investors who purchased risky non-traded REITs through Ameriprise Financial. Reportedly, Ameriprise Financial was one of the biggest non-traded real estate investment trust sellers and, in some cases, may not have properly advised customers as to the risks associated with non-traded REITs.

Ameriprise_REIT_Sales_Under_Investigation Many full-service brokerage firms recommended the purchase of REITs to investors, marketing them as safe, low-risk investments. Stock fraud lawyers say that some customers placed a substantial portion of their assets into a single non-traded REIT at the recommendation of a full-service brokerage firm representative, causing an over-concentration of their portfolio that was unsuitable. As a result, securities arbitration lawyers say many investors may have a valid securities arbitration claim that could lead to the recovery of some of their losses.

Some non-traded REITs may have carried a high commission which motivated brokers to recommend the product to investors despite the investment’s unsuitability. The commissions and fees associated with non-traded REITs are sometimes 15 percent or more. Non-traded REITs, like the ones sold by Ameriprise, carry a relatively high distributions of income, making them attractive to investors. However, non-traded REITs are inherently risky and illiquid, which limits access of funds to those investors. However, in many instances non-traded REITs have made distributions to investors that greatly exceeded the actual cash flows from their operations and actually represented returns of principal rather than income.

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.

Published on: March 26, 2013

TNP Non-traded REIT Loss Recovery

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of TNP Strategic Retail Trust Inc. investors. TNP Strategic Retail Trust is a non-traded REIT, or real estate investment trust, which has filed a Securities and Exchange Commission Form 8-K March 19, 2013 that announced its dividend payments are suspended. No dividend payments will be paid for the first quarter of this year. Furthermore, TNP Strategic Retail Trust customers were told that they should not assume that they will receive dividends for the rest of 2013, either.

TNP Non-traded REIT Loss Recovery

The reason for the suspension of dividends stated by TNP Strategic Retail Trust is that it is unable to access short-term cash because it is in negotiation with lenders regarding whether it is in loan default. Declared effective on August 7, 2009, by the SEC, TNP Strategic Retail Trust is a non-traded REIT that, according to REIT Wrecks, raised $21 million through the end of Q3 2010. Additionally, TNP Strategic Retail Trust reportedly suffered a net loss and had a negative operating cash flow throughout the first nine months of 2010.

Stock fraud lawyers are investigating the possibility that brokerage firms may be held liable for the recommendation of TNP investments. Financial Industry Regulatory Authority rules have established that brokers and 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 their age, investment objectives and risk tolerance. Furthermore, brokerage firms must, before approving an investment’s sale to a customer, conduct a reasonable investigation of the securities and issuer. The firms that recommended this investment to clients may have done so improperly, in which case investors may be able to recover losses.

Published on: March 21, 2013

Firm May Be Liable for Actions of Tracy Morgan Spaeth

by InvestorLawyers

Stock fraud lawyers are currently investigating claims on behalf of customers of Tracy Morgan Spaeth in relation to his sales of ProfitStars Int’l Corp. Spaeth, a former broker with BrokersXpress LLC, entered into a Letter of Acceptance, Wavier and Consent regarding his ProfitStars sales. According to the Financial Industry Regulatory Authority, Spaeth did not receive written approval, nor did he provide written notice to BrokersXpress, a FINRA member firm, prior to participating in private securities transactions. The alleged misconduct occurred from October 2010 through December 2010. During this time, Spaeth promoted ProfitStars Int’l Corp. limited partnership interests and assisted around 115 clients with the purchasing of the security. Investments in the security amounted to more than $8,000,000.

Firm May Be Liable for Actions of Tracy Morgan Spaeth

FINRA also alleged that “in connection with the private securities transaction described above, Spaeth provided a webinar to his clients regarding foreign exchange currency trading software. The webinar failed to provide a sound basis for evaluating the products and services being offered, failed to disclose the risks of the software and strategy being promoted, was exaggerated and misleading, and contained performance forecasts, all in violation of NASD Rule 2210 and FINRA Rule 2010.”

Securities arbitration lawyers say that according to FINRA rules, BrokersXpress LLC was obligated to adequately supervise Spaeth from July 2009 through December 2010, the entire time he was registered with the FINRA-registered firm. Spaeth’s alleged misconduct occurred during the time he was registered with the firm and, as a result, stock fraud lawyers say that BrokersXpress may be held liable for customer losses resulting from Spaeth’s alleged misconduct.

Published on: March 14, 2013

Credit Suisse Yield Enhancement Strategy Recommendation Under Investigation

by InvestorLawyers

Stock fraud lawyers are currently investigating claims on behalf of Credit Suisse Securities (USA) LLC customers who received recommendations to invest a significant portion of their funds in the Yield Enhancement Strategy and suffered significant losses as a result. The Yield Enhancement Strategy, or YES, is a high-fee proprietary strategy and may not be suitable for many investors.

Credit Suisse Yield Enhancement Strategy Recommendation Under Investigation

Allegedly, Credit Suisse may have recommended the Yield Enhancement Strategy to some investors without properly explaining the risks to customers or considering their investment objectives and risk tolerances.

According to a recent statement of claim regarding this investment, advisors for Credit Suisse allegedly used literature that stated the goals would be achieved by the strategy by “selling short-term out-of-the-money puts and calls on the S&P 500 index.” Furthermore, the literature allegedly claimed that in order to “manage downside and upside market exposure, short term below-market put and above-market call options are purchased with the same duration as the puts and calls sold.” Securities arbitration lawyers say the allegations in the suit are that the strategy to “provide an additional source of income to portfolios when markets are flat, trending higher or trending lower” failed and, in a little over two years, more than $500,000 in losses and $200,000 in investor fees resulted.

Published on: March 7, 2013

Fromer Merrill Lynch and LPL Financial Advisor Greg Campbell Charged With Fraud

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of the customers of Gregory John Campbell, a former advisor for Merrill Lynch and LPL Financial. A Petition for Order to Cease and Desist, which was related to Greg Campbell of Ladue, Missouri, was recently issued by the State of Missouri.

Merrill Lynch, LPL Financial Could be Held Responsible for Advisor’s Investor Fraud

Missouri stated that “from 2008 to 2012, Respondent Greg John Campbell made unauthorized transfers in excess of $1,500,000 from at least five client accounts. A majority of the transferred funds from these client accounts were used for Campbell’s benefit.” According to Missouri, a portion of the funds went to payments on a BMW lease and two of Campbell’s properties.

Campbell’s activity reportedly went undetected because clients stopped receiving account statements from LPL Financial and Merrill Lynch. The addresses used by the firms for mailing account statements were changed without authorization from the clients. When questioned about the changes in address, Campbell reportedly stated that “they were the result of administrative errors.”

Published on: February 26, 2013

Paulson Hedge Fund, Full-service Brokerage Firm Feeder Fund Investors Could Recover Losses

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors with full-service brokerage firms who suffered significant losses as a result of their investment in Paulson & Co.’s Advantage and Advantage Plus hedge funds. Reportedly, the Advantage Fund’s value declined 51 percent in 2011 and 19 percent in 2012. According to Securities and Exchange Commission filings, many major brokerage firms including Citigroup, Morgan Stanley, Merrill Lynch and UBS Financial Services used proprietary “feeder” funds to invest in the Paulson funds.

Paulson Hedge Fund and Full-Service Brokerage Firm Feeder Fund Investors Could Recover Losses

The feeder funds used by full-service brokerage firms to invest in Paulson’s Advantage and Advantage Plus Funds went by a variety of names, such as LionHedge Paulson, UBS Paulson Advantage Fund, Morgan Stanley HedgePremier Paulson, Paulson Advantage Access Fund and CAIS Paulson. Stock fraud lawyers say that all of the aforementioned funds invest in Paulson’s funds and that in some cases they may not have provided oversight or due diligence in the funds, despite representations made to investors.

Following the Advantage Fund’s decline, in May 2012 the fund was put on Morgan Stanley Wealth Management’s “watch list” and investors are now being advised to redeem. Three months later, Citigroup reportedly made a similar decision, pulling $410 million from Paulson’s funds. In light of the fact that the Paulson funds were sued by an investor in February 2012, many investors are contacting securities fraud attorneys about their losses. In the 2012 lawsuit, both Paulson & Co. and its funds were charged with deeply investing into SinoForest without conducting adequate due diligence and accused of breach of fiduciary duty.

Published on: February 21, 2013

Hartford Floating Rate Fund Investors Could Recover Losses

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses in the Hartford Floating Rate Fund. Hartford Investment Financial Services and Hartford Life Distributions LLC, now known as Forethought Distributions LLC, entered into a Letter of Acceptance, Waiver and Consent earlier this year regarding several violations connected with the fund and must pay a fine of $100,000.

Hartford Floating Rate Fund Investors Could Recover Losses

According to the Financial Industry Regulatory Authority, Hartford Life Distributors distributed a brochure which made statements that were “unwarranted and misleading in light of changing conditions in the bank loan market.” FINRA went on to say that “in particular, the brochure contained misleading statements that the fund was appropriate for bond investors concerned about the price stability of their investments, provided the potential for greater price stability compared with other fixed income investments, and was appropriate for investors seeking some degree of capital preservations.”

Launched in 2005, Hartford’s Floating Rate Fund had at least 80 percent of its assets invested in senior secured floating rate bank loans which were extended to companies and fixed income securities that were rated below investment grade. According to stock fraud lawyers, floating rate loans are subject to credit risks. Because of these significant risks, the credit crisis caused the fund’s NAV to suffer significant fluctuations and many of its holdings had to be sold at a discount to support fund outflows. Hartford’s Floating Rate Fund suffered a 40 percent decline by the end of 2008.