stock fraud lawyer

Published on: February 15, 2013

Investors in Equity Linked Structured Products Tied to Apple Could Recover Losses

Stock fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses in Equity Linked Structured Products which were tied to the Apple stock price. Apple stock has suffered a significant decline since last year, falling from more than $700 per share to less than $440 per share. While many Apple shareholders suffered losses as a result of this price decline, Equity Linked Structured Products, or ELSPs, that were tied to Apple’s stock price also suffered significant losses. Essentially, ELSPs are bonds that have a feature that allows them to be converted into other companies’ stocks.

Title of the Post Goes Here

Features of ELSPs include high interest payments for a year or less. If the stock price of the company that the ELSPs are tied to remains close to the price of the stock at the time the bonds were issued, or increases, ELSP investors will get their money back when the investment comes due. However, if the stock price suffers a decline of more than 20 percent, the ELSPs can become shares of the stock — in this case, Apple — and the investor has no choice but to hold the investment until maturity.

Securities arbitration lawyers say that when Apple’s stock price increased substantially in 2012, full-service brokerage firms like Morgan Stanley, JPMorgan Chase and Barclays sold more than $722 million in ELSPs. In 2012, around 450 of the new structured products issued were tied to Apple, 75 percent of which suffered an estimated 15 percent decline in just one week. Most of these products are now underwater. In addition, many believe that investment banks were using ELSPs as an inexpensive hedging strategy against Apple’s stock price and benefited from these investments while investors were losing.

Published on: February 5, 2013

More Trouble for TNP Strategic Retail Trust Inc. REIT, TNP 12% Notes Program

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered losses in the TNP Strategic Retail Trust Inc., a non-traded REIT, and the TNP 12% Notes Program. Both of these products come from Tony Thompson’s company, Thompson National Properties LLC. Reportedly, Thompson National Properties’ January Securities and Exchange Commission filings stated that TNP Strategic Retail Trust Inc. has two loans on which it is in danger of defaulting.

In addition to the difficulty with the non-traded REIT, stock fraud lawyers say that a new lawsuit has been filed in the U.S. District Court for the District of Colorado relating to the TNP 12% Notes Program LLC. According to the allegations, TNP “has failed to make required interest payments on the note.” In 2008, the plaintiffs purchased a $100,000 note, the principal of which TNP was obligated to repay by 2011. A guarantee signed by Thompson is an attachment to the lawsuit and states that TNP “hereby unconditionally guarantees the performance of all the company’s obligations under the notes, including, without limitation, the payment of principal and interest.” However, TNP allegedly missed the 2011 deadline to repay the principal and then ceased making interest payments the following year. A similar suit was filed in September, 2012.

According to an InvestmentNews article, Thompson downplayed the financial difficulties at his companies in e-mail messages to InvestmentNews. When asked specifically about TNP’s growing financial problems, Thompson reportedly wrote, “You are wrong.” For more information on securities fraud attorneys’ investigations into TNP investments, see the previous blog posts, “TNP Strategic Retail Trust Investors Could Recover Losses” and “Thompson National Properties 12 Percent Note Investors Could Recover Losses.

Published on: January 31, 2013

Bambi Holzer Still Trading Despite Numerous Customer Complaints

by InvestorLawyers

Stock fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of doing business with Bambi Holzer. According to a Forbes article, Holzer’s investment advice has resulted in securities settlements amounting to more than $12 million. Despite this article, which appeared three years ago, her trades are still being cleared by brokerage firms.

Bambi Holzer Still Trading Despite Numerous Customer Complaints

Currently a broker at Newport Coast Securities, Holzer has also worked with a number of other firms, including UBS, Brookstreet Securities Corporation, AG Edwards, Wedbush Morgan Securities Inc. and Sequoia Equities Securities. Holzer and UBS have already been compelled to pay to settle securities claims amounting to $11.4 million. These claims alleged that Holzer misrepresented variable annuities through misrepresentation of guaranteed returns. Holzer was fired from AG Edwards in 2003 for allegedly engaging in business practices that did not coincide with the firm’s policies. Further allegations against Holzer include misrepresentations while at Brookstreet. These misrepresentations allegedly occurred in 2005 at a Beverly Hills presentation at which Holzer allegedly stated that a fictional couple was able to make $9 million by deferring $732,000 in taxes through the use of trusts. In another claim, a customer of Wedbush Morgan Securities alleged breach of fiduciary duty, account mishandling, and breach of contract that allegedly resulted in damages of $824,000.

According to securities fraud attorneys, allegations against Holzer include fraud, churning, unsuitable investments, misrepresentations of fees, Securities Act violations, private placement-related fraud, negligent representations related to variable annuities, inadequate supervision, variable annuity-related fraud, negligent recommendation and sale of Provident Royalties LLC, negligent sale and recommendation of Behringer Harvard Security trust and other unsafe products as well as elder abuse.

Published on: January 24, 2013

UBS Willow Fund Declines 80%, Investors Could Recover Losses

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses in the UBS Willow Fund, sold by UBS Financial Services. Formed in 2000, the UBS Willow Fund is a private hedge fund. Reportedly, investors were notified in October 2012 that the Willow Fund had sustained substantial losses and would be liquidated.

Allegedly, UBS may have offered and sold the UBS Willow fund to investors — particularly customers with low risk tolerance seeking stable income, such as retirees — while marketing it as a safe, reliable investment. However, the fund has suffered a decline of around 80 percent. Investigations are also underway to determine if UBS Financial Services adequately disclosed or misrepresented the material risks of this investment to clients.

In some cases, securities fraud attorneys say that investors’ portfolios may have been over-concentrated in the UBS Willow Fund. If so, these portfolios may have been mismanaged, given that risk management strategies were available that would have offered investors protection for the value of their portfolio.

Published on: January 15, 2013

Behringer Harvard REIT I Share Price Cut Again

by InvestorLawyers

On December 20, 2012, Behringer Harvard REIT I officials stated that its per share price valuation was decreasing from $4.64 per share to $4.01 per share. Securities fraud attorneys say this last devaluation represents a significant decline from its original offering price. Behringer Harvard REIT I has assets amounting to $4.2 billion. Allegedly, the devaluation is a result of funding leasing and operating costs with the use of assets, distribution payments and reductions in the value of its real estate assets and debt.

Behringer Harvard REIT I Share Price Cut Again

Non-traded REITs, such as Behringer Harvard REIT I, carry a relatively high dividend or high interest, making them attractive to investors. In many cases, stock fraud lawyers say brokers may have represented Behringer Harvard REIT I as a safe, conservative investment. However, in reality, non-traded REITs are inherently risky and illiquid. Some of the factors that make REITs risky investments are that distributions are not guaranteed, valuation complexities and illiquidity can be created if there is a deficiency of a public trading market, redeeming the investment early is often expensive and restrictive and non-traded REITs’ valuation can be affected by many factors, including the trust’s balance sheet strength, cost of capital, overhead expenses and the portfolio of assets owned.

As a public non-traded REIT, Behringer Harvard REIT I may have carried a high commission which may have motivated 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. Securities fraud attorneys say that if Behringer Harvard REIT was misrepresented by their brokers as safe, clients may be able to recover losses through securities arbitration. Furthermore, some brokers allegedly put a substantial amount of some clients’ assets in the REIT, which resulted in an over-concentration that was unsuitable for investors.

Published on: January 10, 2013

Investor Recovers $1.38 Million from Morgan Keegan

by InvestorLawyers

On December 17, a Financial Industry Regulatory Authority arbitration panel reportedly sided with an investor against Morgan Keegan & Co. Inc. Stock fraud lawyers say the FINRA arbitration panel awarded the investor $1.38 million in settling his complaint related to Morgan Keen proprietary bond funds called the Intermediate Fund. Of the award, $851,000 was for compensatory damages and $400,000 was for other compensation and legal fees.

Investor Recovers $1.38 Million from Morgan Keegan

The claim, which originally requested $4.3 million in relief, was filed in 2010 by Lawrence B. Dale, an investor in the Intermediate Fund. The award stated that Morgan Keegan allegedly “represented to the claimants that the (bond fund) was a safe and conservative investment.” Further allegations by Dale were that the Intermediate Fund “did not match Morgan Keegan’s misrepresentations, failed to disclose material information, misrepresented values, and invested in structured finance and asset-backed securities” that were unsuitable for Dale. The firm also allegedly failed to adequately supervise its employees, according to Dale.

Securities arbitration lawyers say that Morgan Keegan and Regions Financial have been facing many problems because of the Intermediate Fund and its blowup during the financial crisis. This fund was one of a group that saw a significant decline in net asset value in 2007 and 2008, reportedly between 60 and 80 percent. Furthermore, the firm was later charged by regulators with overstating the value of the funds’ mortgage-backed securities. The firm agreed to pay a fine to regulators amounting to $200 million in 2011. In addition, a civil complaint was filed by the Securities and Exchange Commission against the funds’ former board members in December. According to this complaint, the board members allegedly failed to properly oversee the managers of the fund.

Published on: January 10, 2013

Inland American REIT Share Price Cut Again

by InvestorLawyers

On December 19, 2012, Inland American Real Estate Trust Inc. stated that its per share price valuation was decreasing from $7.22 per share to $6.93 per share. Securities fraud attorneys say this last devaluation represents a 30 percent decrease from its original price of $10 per share. With assets amounting to $12.2 billion, Inland American REIT is the largest REIT that has seen a decline in valuation recently. Allegedly, the devaluation is a result of increased capitalization rates.

Inland American REIT Share Price Cut Again

Non-traded REITs such as Inland American carry a relatively high dividend or high interest, making them attractive to investors. And in many cases, stock fraud lawyers say brokers may have represented Inland American REIT as a safe, conservative investment. However, in reality, non-traded REITs are inherently risky and illiquid. Some of the factors that make REITs risky investments are that distributions are not guaranteed, and shares can be very difficult to sell because there is no public trading market. Non-traded REITs’ valuation can be affected by many factors, including the trust’s balance sheet strength, cost of capital, overhead expenses and the portfolio of assets owned.

Public non-traded REITs often carry high commissions that can motivate brokers to recommend them to investors despite the investment’s unsuitability. The commission on a non-traded REIT is often as high as 15 percent. Securities fraud attorneys say that if Inland American REIT was misrepresented by their brokers as safe, clients may be able to recover losses through securities arbitration. Furthermore, some brokers allegedly put a substantial amount of some clients’ assets in the REIT which resulted in an over-concentration that was unsuitable for investors.

Published on: January 2, 2013

Cole Credit Property Trust II, Dividend Capital Total Realty Named in Complaints Against LPL Financial

by InvestorLawyers

Securities fraud attorneys continue to investigate claims on behalf of investors who suffered losses in nontraded real estate investment trusts purchased from LPL Financial between 2006 and 2009. The recent announcement that LPL is being sued by the State of Massachusetts over sales practices related to nontraded REITs has helped inform investors about the issues concerning the sales of these risky, illiquid products.

Cole Credit Property Trust II and Dividend Capital Total Realty Named in Complaints Against LPL Financial

Cole Credit Property Trust II and Dividend Capital Total Realty were named in the list of complaints filed by investors, in addition to REIT giant Inland American Real Estate Trust. Shares of these nontraded REITs were purchased through LPL-affiliated financial advisors. Currently, there are 13,170 financial advisors who are LPL-affiliated advisors. Stock fraud lawyers say Wells Real Estate Investment Trust II, Cole Credit Property III, 1031 Exchange and W.P. Carey Corporate Property Associates 17 were also named.

LPL compliance documents state that the broker-dealer “cannot make exceptions to prospectus suitability requirements or the regulatory imposed limit of 10 percent of net worth in public managed futures.” However, the state regulator alleges that advisors affiliated with LPL “frequently made transactions in violation of product prospectus and Massachusetts requirements.” In addition, the complaint alleges that a LPL supervision employee was “completely unaware of Massachusetts’ requirements concerning the sale of non-traded REITs” for a minimum of two years.

Published on: December 20, 2012

Massachusetts Regulator Sues LPL Financial Alleging Violations in Sales of Non-traded REITs

by InvestorLawyers

On December 12, 2012, Massachusetts securities regulators announced that they are suing LPL Financial in connection with sales of risky investments known as non-traded REITs. LPL Financial has been charged with improper sales practices and inadequate supervision of registered representatives who sold non-traded REITs.

The Fight Against LPL Financial Nontraded REIT Fraud Continues

These charges are in connection with the sales of $28 million in non-traded REITs between 2006 and 2009, which were sold to nearly 600 clients in Massachusetts. According to the Massachusetts Securities Division, 569 of those transactions had regulatory violations, including violations of prospectus requirements, violations of Massachusetts concentration limits and violations of LPL’s compliance practices.

Inland American Real Estate Trust Inc. accounted for the largest amount of sales of all the REITs listed in the complaint. With real estate assets amounting to $11.2 billion, this REIT was the largest non-traded REIT in the industry.

Published on: December 13, 2012

Merrill Lynch Customers Could Recover Losses Over Hedge Funds, Fannie Mae Preferred Stock

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of Merrill Lynch customers who suffered significant losses as a result of their hedge fund investments and/or Fannie Mae Preferred Shares investments with the firm.

Merrill Lynch Customers Could Recover Losses Over Hedge Funds or Fannie Mae Preferred Stock

In particular, these stock fraud lawyers are looking into the sales practices of Merrill Lynch and its brokers in regards to the Coast Access II LLC hedge fund. Coast Access II LLC is a “feeder fund,” investing substantially all of its assets in Coast Diversified Fund LLC, a multi-manager, multi-strategy “fund of funds” which invests through the market neutral or relative value trading of several securities and commodities trading advisors, according to Coast Access’ SEC Form D filing. Coast Access II LLC’s place of principal business operations and executive offices are listed as Merrill Lynch Alternative Investments and the investment was offered through Merrill Lynch. However, securities fraud attorneys now believe that the hedge fund was recommended to certain Merrill Lynch clients, despite its unsuitability for those clients.

A recent FINRA arbitration proceeding concluded with an order for Merrill Lynch to pay two of its investors $1.34 million in connection with their Fannie Mae preferred shares investments. Allegedly, Merrill Lynch misrepresented the risks involved in this investment, marketing them as “safe.” As a result, the investors, clients of broker Miles Pure, suffered significant losses. Their claim included allegations that the firm was negligent in its supervision of Pure and had committed civil fraud. Pure now works for Morgan Keegan.