stock fraud lawyer

Published on: October 15, 2012

Sanders Morris Harris, Fifth Third Securities Fined by FINRA

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 11, 2012

Fidelity Customers Could Recover Losses

by InvestorLawyers

Stock fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of their investments with Fidelity Brokerage Services LLC and Fidelity Investments Institutional Services Company Inc. Reportedly, Fidelity Brokerage Services and Fidelity Investments Institutional Services Company submitted a Letter of Acceptance, Waiver and Consent recently. In this letter, the firms were jointly censured and fined $375,000.

Fidelity Customers Could Recover Losses

According to the allegations against them, the firms sold, wholesaled and/or marketed an income mutual fund’s shares and, in connection, created training, wholesaling and/or advertising materials for the fund. These materials were provided to the retail sales firms, used within the selling intermediaries for institutional purposes, used internally, used for institutional purposes and provided to public customers.

Securities arbitration lawyers say that the findings stated that some of the sales materials distributed by the firms were misleading, unbalanced, failed to provide a sound basis for evaluating the risks of the funds and contained statements that were unwarranted. Furthermore, the firms allegedly failed to perform timely updates on the sales materials which affected the accuracy of the portrayal of the negative impacts resulting from the sub-prime crisis. This resulted in an inaccurate representation of the value of the portfolio investments and share of the fund and unqualified promises about future performance.

Published on: October 10, 2012

FINRA Targets Non-traded REITs

by InvestorLawyers

According to stock fraud lawyers, the Financial Industry Regulatory Authority has and will continue to relentlessly target non-traded real estate investment trusts, or REITs. Specifically, the regulatory authority is focusing on how broker-dealers sell these investments and potential shortcomings in their strategies. According to the Executive Vice President of Member Regulation Sales Practices at FINRA, Susan Axelrod, examiners at FINRA have been scrutinizing “numerous retail sellers of non-traded REITs.” Axelrod also stated that, “In several instances, FINRA examiners have found that firms selling these products failed to conduct reasonable diligence before selling a product and failed to make a determination that the product was suitable for investors.”

FINRA Targets Non-traded REITs

Investment fraud lawyers note that independent broker-dealers have a responsibility to perform adequate due diligence when selling any investment, especially complex, illiquid products. Since the 2008 market collapse, FINRA has been aggressive with broker-dealers who failed to do so. Axelrod stated to the Securities Industry and Financial Markets Association’s Complex Products Forum that, “FINRA examiners have noted that in the instances of REITs that have experienced financial difficulties, red flags existed and should have been considered by firms prior to the product being offered to firm clients.”

Another problem with non-traded REITs, according to Axelrod, is that “non-traded REITs may also borrow funds to make distributions if operating cash flow is insufficient, and excessive borrowing may increase the risk of default or devaluation. In addition, non-traded-REIT distributions may actually be a return on principal.”

Published on: October 4, 2012

Advanced Equities Investors May Have Securities Arbitration Claim

by InvestorLawyers

Securities arbitration lawyers are currently investigating claims on behalf of Advanced Equities customers who invested in what reportedly was known as Bloom Energy, a Silicon Valley alternative energy company. On September 18, the Securities and Exchange Commission charged co-founders Keith G. Daubenspeck and Dwight O. Badger, a FINRA registered broker-dealer, and Advanced Equities Inc. in connection with the private offerings of an alternative energy company offered in 2009 and 2010. According to the allegations, Advanced Equities misled investors and failed to adequately supervise the offerings in two private equity offerings.

Advanced Equities Investors May Have Securities Arbitration Claim

Reportedly, Daubenspeck is the parent company’s board chairman and Badger was the parent company’s former chief executive. Together, they founded Advanced Equities. The SEC has stated that the sales effort was led by Badger, who misstated facts about the finances of the energy company, and Daubenspeck failed to correct these misstatements, which resulted in a failure to adequately supervise.

One of these misstatements, according to the SEC and stock fraud lawyers, occurred in the 2009 offering when Badger said the company had order backlogs amounting to more than $2 billion when, in fact, this amount never exceeded $42 million. In addition, he said a national grocery store chain had placed a $1 billion order when, in reality, it was only a $2 million order, with a non-binding letter of intent for future purchases, that had been placed by the store. Badger also stated that a U.S. Department of Energy loan had been granted to the company that exceeded $250 million, but only a $96.8 million loan had been applied for. This loan application misstatement was repeated in 2010 during the follow-up offering. Reportedly, Daubenspeck, when hearing these misstatements during his participation in at least two internal sales calls, remained silent. No reasonable corrections were made despite these red flags and, as a result, an obvious risk of investors receiving this false information went unchecked. According to securities arbitration lawyers, when misstatements like this are made in an internal sales call to brokers, it is likely that the brokers will unknowingly pass this false information to investors.

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)

Published on: September 28, 2012

TIC Investor Losses Could be Recovered in FINRA Arbitration

by InvestorLawyers

Securities arbitration lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of their investment in TIC, or tenants-in-common, investments with a full-service brokerage firm. The securities industry has watched as TICs have become more common as a result of the IRS rules amendment in 2003, allowing an avoidance in capital gains taxes to investors who invested their property sale proceeds into TIC investments.

TIC Investor Losses Could be Recovered in FINRA Arbitration

According to stock fraud lawyers, following the crash of the real estate market, many TIC investors, as fractional owners in a single property, saw a significant decline in the value of their investment. However, because of the sales practices of some FINRA registered brokerage firms, some of these investors may be able to recover losses through securities arbitration. These products were often represented as “guaranteed” and/or “safe” investments that would return between 7 and 12 percent each year. However, in many cases, investors were not properly advised on the risks associated with TIC investments.

A Financial Industry Regulatory Authority panel has already ordered one firm, LPL Financial, to reimburse investor losses amounting to $1.4 million in Braintree Park LLC and Heron Cove LLC. These two TICs were sponsored by Direct Invest LLC.

Published on: September 26, 2012

JP Turner Victims of Churning Could Recover Losses

by InvestorLawyers

Stock fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of their investment with JP Turner, Ralph Calabro, Jason Konner or Dimitrios Koutsoubos. Earlier in September, the Securities and Exchange Commission charged three brokers, formerly employed at JP Turner & Company in Atlanta, with “churning” accounts, incurring significant fees for themselves and causing significant losses to investors.

JP Turner Victims of Churning Could Recover Losses

In this case, the investors whose accounts were churned had conservative investment objectives. However, securities fraud attorneys say that when “churning” an account, the broker will disregard investment objectives and, instead, excessively trade in the account in order to generate commissions, margin interest, and fees for themselves or the firm at which they are employed. According to the SEC allegations, Calabro, Konner and Koutsoubos engaged in churning between January 2008 and December 2009, while they were employed with JP Turner.

Together, these three brokers generated approximately $845,000 through churning, while their customers suffered significant aggregate losses totaling around $2.7 million. If it can be proven that the firm failed to adequately supervise their brokers, in many cases that firm may be held liable for customer losses regardless of the employees’ ability to reimburse their clients for fraud.

Published on: September 21, 2012

Customers of Ray Lucia Sr. Could Recover Losses Through Arbitration Following SEC Allegations

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses as a result of their investment with Ray Lucia Sr. and his affiliated broker-dealers. Reportedly, the Securities and Exchange Commission has charged Lucia and his company, formerly known as Raymond J. Lucia Companies Inc. (RJL), for using misleading information at a series of investment seminars when soliciting for his “Buckets of Money” strategy.

Customers of Ray Lucia, Sr. Could Recover Losses through Arbitration, Following SEC Allegations

According to the allegations issued by the SEC’s Division of Enforcement, Lucia claimed that this wealth management strategy had been thoroughly “backtested” over real bear market periods. He allegedly made these claims while promoting Buckets of Money at seminars where he presented a lengthy slideshow indicating that retires would receive inflation-adjusted income while protecting and increasing savings through his wealth management program. In truth, however, despite publicly made claims, little, if any, backtesting was done by RJL and Lucia on the Buckets of Money strategy.

These seminars were held in hopes of obtaining advisory clients, according to the SEC’s order which instituted administrative proceedings against RJL and Lucia. These clients would then be charged advisory services fees. Lucia’s radio show and personal and company website promoted the seminars.

Published on: September 20, 2012

JOBS Act for Hedge Fund Advertising Faces Criticism from Investor Protection Groups

by InvestorLawyers

In a recent 4-1 vote, SEC commissioners decided to invite public comment related to a proposal for how to put an end to decades of limits imposed on startups and private funds in their pursuit of investors. Together with the mutual fund industry and investor protection groups, stock fraud lawyers look upon the new JOBS Act with criticism. The Act will essentially, as part of an effort to increase fledgling companies’ funding options, end the advertising ban on hedge funds. Reportedly, hedge funds will possibly be able to conduct wide advertising campaigns, as opposed to the current strategy of closed-door solicitation to individual investors.

JOBS Act for Hedge Fund Advertising Faces Criticism from Investor-Protection Groups

According to securities arbitration lawyers, concern related to the JOBS Act comes from the possibility that a restriction-free lift of the ban could result in some private funds exposing investors to misleading advertisements. Securities laws have previously only allowed firms to solicit non-public securities to “accredited” investors, who were usually wealthy, frequent investors. Furthermore, these investors would have needed an existing relationship with the firm.

While individuals who qualify for the investments will still need to have over $1 million in assets or a minimum income of $200,000 a year, a lack of advertising restrictions would still expose individuals for which these investments are unsuitable to misleading solicitation. Furthermore, those individuals may not have the investment sophistication required to understand the risks of these products. According to stock fraud lawyers, this could be a situation that leaves investors susceptible to securities fraud.

Published on: September 13, 2012

Investors in Icon Leasing Fund Eleven May Have Securities Arbitration Claim

by InvestorLawyers

Stock fraud lawyers are currently investigating claims on behalf of investors of Icon Leasing Fund Eleven investors. A recent announcement stated that investors will not be able to withdraw their money from Icon for another seven years longer than originally agreed. ICON Leasing Fund Eleven LLC participates in the purchasing and leasing of various types of equipment to third parties in Europe, Canada and the United States. Based in New York and founded in 2004, Icon also provides equipment and other financing.

Icon Leasing Fund Eleven Investors may have Securities Arbitration Claim

Like any private placement, the high risks associated with Icon Leasing Fund Eleven investments are only appropriate for sophisticated, high-net-worth investors. However, according to securities arbitration lawyers, the commissions offered to brokers and brokerage firms for this investment were high enough that some broker-dealers recommended this investment to clients for whom it was unsuitable without adequately disclosing the risks associated with the investment. Furthermore, stock fraud lawyers say information that is now available indicates that many of the firms selling the product did not adequately perform the necessary due diligence.

The following investments made up the bulk of Icon Leasing Fund Eleven’s portfolio as of March 21, 2012: