CLYDE THORNBURG OF NEXT FINANCIAL PERMANENTLY BARRED FROM BROKERAGE INDUSTRY FOR CHURNING AND FORGERY AND NEXT FINANCIAL RECEIVES A PASS AGAIN!

According to an Order recently issued by the Financial Industry Regulatory Authority (FINRA), Clyde Thornburg, formerly employed by NEXT Financial, has been permanently barred from working as a stockbroker in the securities industry. Mr. Thornburg was charged earlier this year with violations of NASD Rules 2110, 2310, 2510(b) and 3110 and FINRA Rule 2010 for engaging in a pattern of unsuitable short-term trading in switching of unit investment trusts ("UITs"), corporate debt, and mutual funds in accounts owned by five customers, four of whom were elderly and unsophisticated investors, including a mentally incapacitated 91-year-old widow under the care of a guardian and an 82-year-old widow who was beginning to experience the effects of the Alzheimer's disease.
In the five customers' accounts, Mr. Thornburg repeatedly purchased or switched UITs, corporate debt, and mutual funds less than one year after purchasing them. On average, Mr. Thornburg switched the products almost every two months. He often used a strategy where he caused a customer to sell one UIT, mutual fund, or corporate bond and invest all or part of the sales proceeds in another UIT, corporate bond, or mutual fund. The switching strategy was contrary to the design of the UITs, corporate debt and mutual funds. These investments are generally intended to be held long-term and carry substantial transaction fees which can become excessive in an actively traded account. During the time period that Mr. Thornburg churned the customer's accounts there were approximately 200 short-term UIT, corporate debt, and mutual fund transactions.
As a result of the approximately 200 short-term transactions, none of which were held for more than ten months, Mr. Thornburg's customers incurred unnecessary sales charges amounting to over $332,000. By looking the other way the supervisors at NEXT Financial allowed Mr. Thornburg to improperly generate over $301,000 in gross commissions for the firm. During the same time period the five customers collectively lost over $983,000.
Mr. Thornburg was found to have made these recommendations to buy and sell UIT's, corporate debt, and mutual funds without having reasonable grounds for believing that such recommendations were suitable in view of the size and frequency of the transactions, and based upon the facts known to him regarding the five customers' financial situations, objectives, and needs. As a result, the pattern of short-term trading in switching of these investments was undoubtedly unsuitable for all five customers and a violation of NASD Rules 2110 and 2310 and FINRA Rule 2010.
It was further found by FINRA that Mr. Thornburg misrepresented and omitted information concerning the costs of the products, leading these elderly investors to believe that they would not be charged sales charges or commissions. In fact, they were charged duly for the transactions and Mr. Thornburg violated NASD 2110 and FINRA Rule 2010 for his misrepresentations and omissions. Additionally, and in furtherance of his short-term strategy, Mr. Thornburg engaged in discretionary trading in all of the five accounts without prior written authorization, in violation of NASD Rules 2110 and 2510 (b) and FINRA Rule 2010.
To top it off, this unscrupulous stockbroker also forged or caused to be forged the names of at least three customers or their representatives on 19 mutual fund disclosure forms. Mr. Thornburg's forgery and falsification of documents further violated NASD Rule 2110 and FINRA Rule 2010. These forged documents caused NEXT Financial to maintain inaccurate books and records in violation of NASD rules 3110 and 2110 and FINRA Rule 2010.
All of the foregoing begs the question: Does NEXT Financial have a reasonable supervisory system in place and if it does why didn't the brokerage firm detect Mr. Thornburg's egregious violations of industry rules and regulations at an earlier stage and prevent the fraud? Further, why hasn't the firm been sanctioned for its negligent supervision of Mr. Thornburg? Could it be that FINRA is unwilling to take on a fight with a brokerage firm? Too often, brokerage firms receive a pass when their employees engage in an egregious fraud. It's wrong and the FINRA practice of free passes must be stopped by investors and their attorneys!
Have you suffered losses resulting from stockbroker misconduct at NEXT Financial? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

SENIOR INVESTORS MUST PROCEED WITH CAUTION WHEN USING SOCIAL MEDIA IN MAKING INVESTMENTS

Whether it is to keep in touch with distant family members, or to keep up with the latest news, elderly Americans are beginning to use social media on a daily basis. This daily activity has also steered many senior investors to use social media to help make investment decisions. Web-based platforms that allow interactive communication, such as Facebook, YouTube, Twitter, LinkedIn, bulletin boards, and chat rooms, have become an important investment tool for researching particular stocks, investigating a financial professional's background, gathering up-to-date news on a company, or to discuss the markets with other investors. Although social media can provide many benefits, it also presents opportunities for fraudsters targeting senior investors. As a result, seniors need to proceed with caution when using social media in making their investment decisions.
The key to avoiding investment scams on the internet is to be an educated investor. Below are four tips to help senior investors avoid securities fraud:
•1) Look out for "Red Flags" - Whenever an investment touts "incredible gains" or "breakout stock pick," consider it to be a hallmark of extreme risk or outright fraud. Also, do not believe a promise of guaranteed returns with "no risk." Every investment entails some risk, which is reflected in the rate of return you can expect to receive. Moreover, you should carefully examine any unsolicited offer to invest outside the United States. Many fraudsters set up offshore operations to evade supervision by regulators. Last, do not be pressured into buying an investment before you have a chance to think about the opportunity, even if it is "once in a lifetime."
•2) Look out for "Affinity Fraud" - An investment pitch made through an online group of which you are a member may be an affinity fraud. Affinity fraud refers to investment scams that prey upon members of identifiable groups, often senior, religious, or ethnic communities, professional groups, or a combination of such groups. Even if you know the person, be sure to conduct a thorough investigation, no matter how trustworthy the presenter seems to be.
•3) Be Thoughtful about Privacy and Security Settings - Seniors who use social media as a tool for investing should be mindful of the various features on these websites that can help protect privacy. You must understand that unless you guard personal information, it may be available not only to your friends, but for anyone with access to the internet, including fraudsters.
•4) Ask Questions and Check out the Answers - Never judge a person's integrity, or the merits of an investment, without doing thorough research on both the person selling the investment and the investment itself. Investigate the investment thoroughly and check every statement you are told about the investment. You can use the SEC's EDGAR filing system to investigate investments, FINRA's BrokerCheck to check registered brokers, and registered investment advisers at the SEC's Investment Adviser Public Disclosure website.
In addition, some financial professionals are using social media to attract new clients. These financial professionals may use designations such as "senior specialist" or "retirement advisor" to imply that they are experts at helping seniors with financial issues. Therefore, investors are encouraged to always look beyond a financial professional's designation and determine whether he or she can provide the type of financial services or products needed. Investors should thoroughly evaluate the background of anyone with whom he or she intends to do business before handing over hard-earned cash.
Have you suffered losses resulting from an investment offering through a web-based social media platform? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

WELLS TIMBERLAND REIT BLAMES STILL-DISMAL HOUSING INDUSTRY FOR AXE TO SHARE PRICE

Wells Timberland REIT Inc. has recently issued an estimated per share value of $6.56 in their real estate investment trust (REIT), which invests in working timberland. The shares were offered to the public at $10 when the REIT was launched in 2006. Wells Timberland blamed the 35 percent drop in share price value on the still-dismal housing industry. Wells Timberland REIT is sponsored by Wells Real Estate Funds, one of the largest firms in the arena of non-traded REITs. It has invested more than $11 billion in real estate for more than 300,000 investors. The $6.56 share price valuation was based on information as of September 30, 2012, which in all probability is not a realistic exit price available to investors due to the illiquid nature of the REIT.
REITs invest in a diversified set of income producing real estate properties and mortgages, and they must distribute 90 percent of net earnings to investors. REITs allow investors to partake in real estate investing without directly owning property, which may lock up large amounts of money for longs periods of time. The most popular REITs are publicly traded on a stock exchange such as the New York Stock Exchange (NYSE) - they are relatively transparent in their finances and operations and are covered extensively by investment analysts. Non-traded REITs are not listed or registered with securities regulators and are supposed to be available only to accredited investors - $1 million or more in assets or $200,000.00 in annual income. Non-traded REITs disclose their finances publicly and offer shares to the public, but they do not list their shares on an exchange, which is one of many risk factor associated with them.
Wells Timberland's 8-K filing with the Securities and Exchange Commission lists timber assets of $11.70 per share, $0.28 of other assets per share, and debt and preferred equity liabilities of $5.42. Although the board of directors used appraisal information from a forest consulting firm and a certified public accountant, it made the final estimate itself. In October, the trust suspended redemptions of shares until the new estimate of share values was completed. Beginning in January, investors will be able to redeem shares for 95% of the estimated value - or $6.23. However, Wells Timberland pays for redemptions out of its distribution reinvestment plan, and because it has made no cash distributions, it has also not made any ordinary share redemptions.
Have you suffered losses in the Wells Timberland REIT? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

MORGAN STANLEY AGREES TO PAY $5 MILLION FOR WITHHOLDING INFORMATION RELATED TO FACEBOOK IPO

Morgan Stanley has agreed to pay a $5 million fine to settle charges by the State of Massachusetts for its role in the Facebook initial public offering (IPO). Massachusetts regulators claimed that a senior investment banker at Morgan Stanley helped Facebook officials update analysts about lower revenue forecasts during private calls on May 9, 2012 - information not given to investors. Massachusetts claims that the investment banker drafted a script used by Facebook's treasurer while the phone calls were made to analysts only minutes after filing an update with the Securities and Exchange Commission (SEC). The script said that revenues for the second quarter would be "on the lower end of our 1.1 to 1.2 [billion dollar] range" and "over the next six to nine months could be 3% to 3.5% off the 2012 $5 billion target," stated the consent order. Both of these specific targets were not mentioned in the SEC filing. In addition, the consent order alleged failure to supervise analysts under the 2003 global research analyst settlement.
An IPO is a type of offering where shares of stock in a private company are sold to the general public on a securities exchange for the first time. Initial public offerings are used by companies to raise capital and to become publicly traded enterprises. A company selling shares is never required to repay the capital to its public investors. After the IPO, when shares trade freely in the open market, money passes between public investors. Although an IPO offers many advantages, there are also significant disadvantages such as the costs associated with the requirement to disclose certain information that could prove helpful to competitors, or create difficulties with vendors. Details of the proposed offering are disclosed to potential purchasers in the form of a lengthy document known as a prospectus. Most companies undertaking an IPO do so with the assistance of an investment banking firm acting in the capacity of an underwriter. Underwriters provide a valuable service, which includes help with correctly assessing the value of shares and establishing a public market for shares.
Regardless of the revenue downgrades, the price and quantity of Facebook's IPO were pushed up by bullish investors who were ignorant of the downgrades. The company went public on May 18, 2012 at $45 per share, but shares immediately sold off to settle around $38 per share. Facebook shares fell further, touching the $17 dollar range after the bad news was digested in the marketplace.
Have you suffered losses on your purchase of Facebook IPO shares? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

INVESTORS NATIONWIDE BEWARE - INTERVAL FUNDS ARE STILL SEARCHING FOR AN IDENTITY!

The alternative investment industry has recently created a vehicle for packaging investments such as traded and non-traded real estate investment trusts (REITs) and business development companies and selling them to general investors. This new vehicle is called an "interval fund" because investors can redeem a percentage of their investment at the end of each quarter. Interval funds fall under the Investment Company Act of 1940, which means that they must comply with rigid disclosure methods as well as compute a net asset value on a daily basis. However, despite the heavy disclosure requirements, interval funds pose major concerns for investors and financial advisors alike. Investors need to be aware of the fact that a variety of alternative investments are at the center of the new funds' investment strategies, and that they may be stuck with an illiquid investment. On the other hand, financial advisors are still deciphering whether interval funds are an alternative investment or just another mutual fund. Alarmingly, whether broker-dealers are spending enough time educating advisors on the product's characteristics and supervising their sales is far from certain.
Interval funds offer to repurchase its shares from its investors - generally every three, six, or twelve months, as disclosed in the fund's prospectus and annual report. That is to say, funds will periodically offer to buy back a stated portion - typically 5 percent - of its shares from investors, but investors are not required to accept these offers. Interval funds will periodically notify its investors of the upcoming repurchase dates. When funds make a repurchase offer to its investors, it will specify a date by which investors must accept the repurchase offer. Also, shares typically do not trade on the secondary market. Instead, their shares are subject to periodic repurchase offers by the fund at a price based on net asset value. Funds are permitted to continuously offer their shares at a priced based on the fund's net asset value. The price that investors will receive on a repurchase will be based on the NAV per share determined as of a specified date. This date will occur sometime after the close of business on the date that shareholders must submit their acceptances of the repurchase offer. In addition, interval funds are permitted to deduct a redemption fee from the repurchase proceeds. The fee is paid to the fund and is intended to compensate the fund for expenses directly related to the repurchase. Interval funds may charge other fees as well.
The very first interval fund, the Ladenburg Thalmann Alternative Strategies Fund, has $19.5 million in assets. It was launched in 2010 and is managed by Ladenburg Thalmann Asset Management Inc., which sells it through its related network of three independent broker-dealers. Sponsors of non-traded REITs and other real estate funds are lining up to sell interval funds as well. American Realty Capital, which sponsors several non-trade REITs, has one interval fund in registration, the American Realty Capital Real Estate Income Fund. Also, Bluerock Real Estate LLC has an interval fund in registration, the Bluerock Total Alternatives Real Estate Fund. In addition, wholesalers are already on the road to present the product to independent broker-dealers. This has caused securities regulators to set their sights on alternative investment offerings by independent firms. Even if broker-dealers decide to tread softly due to government oversight, investors should carefully read all of an interval fund's available information, including its prospectus and most recent shareholder report, before investing.
Have you suffered losses resulting from an investment in an interval fund? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

MASSACHUSETTS LAWSUIT AGAINST LPL FINANCIAL FOR REIT SALES PAVES THE WAY FOR SUCCESSFUL INVESTOR CLAIMS

A Massachusetts lawsuit against LPL Financial will surely strengthen investors' arbitration claims for losses resulting from illegal sales practices involving real estate investment trusts (REITs). Massachusetts Secretary of the Commonwealth William Galvin charged LPL with failure to supervise registered representatives who sold the non-traded REITs in violation of both state limitations and the company's guidelines. The Massachusetts securities division also charged LPL with dishonest and unethical business practices. Massachusetts charges stem from the sale of $28 million of non-traded REITs to almost 600 clients from 2006 to 2009. Of the REITs listed in the complaint, the highest sales were for Inland American Real Estate Trust, the largest non-traded REIT, with $11.2 billion in real estate assets. Robert Pearce, a 30-year securities and commodities attorney in Boca Raton, FL, believes that Massachusetts' action will certainly generate a flood of cases against LPL. Mr. Pearce added that the Massachusetts complaint will serve as a roadmap for investors and their attorneys to follow when asserting their claims.
REITs invest in a diversified set of income producing real estate properties and mortgages, and they must distribute 90 percent of net earnings to investors. REITs allow investors to partake in real estate investing without directly owning property, which may lock up large amounts of money for long periods of time. The most popular REITs are publicly traded on a stock exchange such as the New York Stock Exchange (NYSE) - they are relatively transparent in their finances and operations and are covered extensively by investment analysts. Non-traded REITs are not listed or registered with securities regulators and are supposed to be available only to accredited investors - $1 million or more in assets or $200,000.00 in annual income. Non-traded REITs disclose their finances publicly and offer shares to the public, but they do not list their shares on an exchange, which is one of many risk factors associated with them.
In LPL's case, Massachusetts' investigation showed significant and widespread issues with LPL's adherence to product prospectus and state requirements. As a result, Massachusetts is seeking full restitution to clients who were sold REITs allegedly in violation of state and prospectus requirements. The state is also seeking an unspecified administrative fine against LPL. Although LPL set forth stringent requirements for the sale for non-traded REITs, it failed to properly review sales of non-traded REITs. In addition, the securities division was able to uncover similar issues with many other REITs sold by LPL. To counter the possibility of future violations, the firm has changed its policies and procedures, creating a separate complex-products team to review all alternative investments. Regardless of the measures taken by LPL, investors are urged to conduct their own investigation prior to making an investment decision involving non-traded REITs. That way, investors will have a clearer understanding of non-traded REITs, which just might keep them from buying the product from the get-go.
Have you suffered losses in real estate investment trusts sold by LPL Financial? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

MASSACHUSETTS TAKES AIM AT CROWDFUNDING AND CHARGES TWO FIRMS WITH FRAUDULENT AND UNREGISTERED SECURITIES SALES

The State of Massachusetts has recently filed fraud charges against two players in the up and coming arena of crowdfunding, which allows small private companies to sell equity directly to investors. Prodigy Oil and Gas LLC and Synergy Oil LLC, both out-of-state oil and gas operations, have been charged in connection with their sale of unregistered securities to Massachusetts investors. In one case, it is alleged that Prodigy Oil and Gas employed a cold-caller who had been found guilty of theft. The complaint also stated that Prodigy principal Shawn Bartholomae was subject to three state securities regulatory actions and two criminal charges. The complaint further alleged that Prodigy sold at least $464,000 in unregistered securities to a Massachusetts resident. In another case, fraud charges have been filed against Synergy Oil of Oklahoma and two of its executives allegedly involved in the sale of $35,000 of unregistered securities to two investors. Both companies, along with their officers and directors, were subject to securities orders in other states revoking their use of private placement exemptions.
Crowdfunding consists of an online money-raising strategy that invites the public to allocate money, oftentimes through social networking websites, to help finance projects or causes. Through the JOBS Act, small businesses and entrepreneurs will be able to sell equity directly to investors in order to finance their business ventures as soon as the Securities and Exchange Commission (SEC) adopts rules. A crowdfunding equity raise can have an unlimited number of investors but is limited to $1 million. These rules are expected to go into effect sometime in 2013.
Although the Securities and Exchange Commission has yet to write crowdfunding rules, SEC officials have stressed that it is important to include meaningful and effective "bad actor" rules that will disqualify securities law violators, brokers with revoked licenses, and other fraud operators from using exemptions from the securities registration requirements. State securities regulators were against the measure and petitioned Congress not to sign off on the legislation. State regulators believe that the law was essentially opening the door for those with a history of defrauding investors.
Once crowdfunding gets the green light, deals must take place on SEC registered websites. Deals will also require numerous investors, not just one or two as in the Prodigy and Synergy cases. Legislation also requires an issuer to hit 100% of their capital raising target portrayed on an SEC-registered website.
Have you suffered losses in a fraudulent or misleading sale of unregistered securities? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

NASAA SEES SHARP RISE IN CROWDFUNDING WEBSITES AND ANTICIPATES WIDESPREAD ONLINE FRAUD

The North American Securities Administrators Association (NASAA) has reported a sharp rise in crowdfunding in recent months in expectation of rules, which would allow small businesses to raise capital online. As a result, investors can expect to be inundated with crowdfunding pitches, legitimate or otherwise. State securities regulators conducted an analysis of internet domain names that found nearly 8,800 domains with crowdfunding in their names as of late November 2012 - up from less than 1,000 at the beginning of the year. Of the 8,800 websites, 2,000 contained content, over 3,700 had no content, and more than 3,000 appeared to be serving as placeholders to reserve a domain name for future use or sale. Since the signing of the Jumpstart Our Business Startups (JOBS) Act in April 2012, about 6,800 domains with crowdfunding in their name have appeared.
Crowdfunding consists of an online money-raising strategy that invites the public to allocate money, oftentimes through social networking websites, to help finance projects or causes. Through the JOBS Act, small businesses and entrepreneurs will be able to sell equity directly to investors in order to finance their business ventures as soon as the Securities and Exchange Commission (SEC) adopts rules. A crowdfunding equity raise can have an unlimited number of investors but is limited to $1 million. These rules are expected to go into effect sometime in 2013.
In anticipation of an increase in online fraud schemes stemming from the passage of the JOBS Act, NASAA has initiated a task force on internet fraud to monitor crowdfunding and other offerings over the internet. Currently, NASAA is coordinating multi-jurisdictional efforts to scan various online offering platforms for fraud, and where authorized, it will coordinate investigations into online capital raising fraud. In addition, NASAA members are being trained in the use of online data mining tools developed by the staff of the Enforcement Division of the New Brunswick Securities Commission to help identify potentially fraudulent websites. The task force is also working with NASAA's Investor Education Section to put together investor and industry awareness programs covering crowdfunding.
Have you suffered losses in a fraudulent or misleading crowdfunding deal? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

INVESTORS NATIONWIDE BEWARE - PRE-IPO INVESTMENTS CAN RANGE FROM RISKY DEALS TO OUTRIGHT FRAUDS!

When a promising company is emerging or an industry sector becomes "hot," investors cannot resist the desire to get a piece of the action. Oftentimes these companies are privately held, and investors cannot buy shares because the company has not conducted an initial public offering (IPO). Still, the lack of a public market for popular companies does not stop zealous investors from doing anything it takes to get a pre-IPO allotment. Some of the recent issues of high profile social media and internet companies such as Facebook and Zynga had investors searching for access to their pre-IPOs through any available means. As a result, social media has also become the latest hook on which con artists can perpetrate a scam. In this scenario, fraudsters tout the way these companies have dramatically changed the way people interact, and that future prospects alone should make investors rich by simply owning pre-IPO shares.
Generally, securities offerings must either be registered with the Securities and Exchange Commission (SEC) or meet an exemption under the federal securities laws. Pre-IPO speculation consists of buying unregistered shares in a private company before the initial public offering of the securities, and it can range from risky deals to outright frauds. Investors bear the risk that the company may not exist, or if it does, the promoter might be offering shares he does not have or that he acquired in a questionable transaction. The fraud could also involve misrepresentations about the company, including the likelihood, timing, and pricing of a potential IPO.
The people and companies that promote fraudulent pre-IPO offerings often use impressive websites, bulletin board postings, and email spam to attract investors who scour the internet looking for e-business investments. To lure investors in, they make unfounded comparisons between their company and other established, successful internet companies. However, these and other claims that sound so believable at first turn out to be false or misleading.
Fraudsters would have investors believe that anyone can get in on a pre-IPO offering, no matter how big or small the deal is. Investors are recommended to ignore such bogus claims, no matter where they heard it from. However, if one cannot resist the temptation, it is important to do some homework. Never rely solely on information contained in a fax, email, text message, tweet, blog posts, or other format for social network communications. Investors can follow these steps to help safeguard their hard earned money:
-Details About the Offering: It is important to determine whether the offering is subject to an exemption. If it is neither registered nor exempt, it is illegal. Check with the state securities regulator and the SEC to find out whether they have any information about the company and whether the company has filed an offering circular. Ask if the stock will be restricted in any way and whether it can be liquidated in case the company does not go public.
-Information on the Company: Investors should independently verify claims made by the company. Information such as the company's products, services, customers, physical location, inventory, and financial statements should be inquired into before making an investment decision.
-Management's Background: Check with the state securities regulator about who runs the company, whether they have made money for investors in the past, and whether they have violated the law.
-The Existence and Identity if the Underwriter: It is important to verify whether the company has hired an investment banking firm to underwrite the offering. Contact your state securities regulator to find out whether the firm has a history of complaints or fraud.
-The Identity and Disciplinary History of the Promoter: Deceitful promoters typically try to lure in as many unwitting investors as possible to maximize their returns. Check the disciplinary history of any promoters with your state securities regulators.
Have you suffered losses on shares purchased before any company's initial public offering (IPO)? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

INVESTORS NATIONWIDE BEWARE - EXCHANGE-TRADED NOTES CARRY UNPLEASANT SURPRISES!

The Financial Industry Regulatory Authority (FINRA) has recently raised concerns about disclosure and sales practices involving Exchange Traded Notes (ETNs). Of primary concern is the number of clients not suited for the risks associated with ETNs, but who still were recommended ETNs by their brokers. As a result, FINRA has issued a regulatory notice to provide broker-dealers with guidance on how to oversee the sale of complex products such as ETNs that are difficult for retail investors and brokers to understand. Firms are now required to make sure that their marketing materials fairly disclose risks, and that supervisors and registered representatives are trained to understand the risks associated with ETNs. FINRA also warned that ETNs have little or no performance history, their investment indexes and investment strategies are complex, their returns have the potential to be volatile, and the price given by the issuer can vary significantly from the price on the secondary market.
ETNs are a type of debt security that trade on exchanges and offer a return linked to a market index or other benchmark. Unlike exchange traded funds (ETFs), ETNs do not buy or hold assets to duplicate the performance of the underlying index - some of the indexes and investment strategies used by ETNs can be complex and without much performance history. The return on an ETN generally depends on price changes if the ETN is sold prior to maturity, as with stocks or ETFs, or on the payment of a distribution if the ETN is held to maturity. An ETN's closing value is calculated by the issuer and is distinct from an ETN's market price, which is the price at which an ETN trades in the secondary market. Investors should understand that an ETN's market price can significantly deviate from its indicative value. Therefore, investors should avoid buying ETNs that are trading at a premium to its closing or intraday indicative value.
Investors should keep the following risks associated with ETNs before making an investment decision:
-Credit Risk: ETNs are unsecured debt obligations of the issuer.
-Market Risk: As an index's value changes with market forces, so will the value of the ETN in general, which can result in a loss of principal to investors.
-Liquidity Risk: Even though ETNs are exchange-traded, a trading market may not develop.
-Price-Tracking Risk: Investors should be wary of buying at a price that varies significantly from closing and intraday indicative values.
-Holding-Period Risk: Some leveraged, inverse and inverse leveraged ETNs are designed to be short-term trading tools, and the performance of these products over long periods can differ significantly from the stated multiple of the performance of the underlying index or benchmark during the same period.
-Call, Early Redemption, and Acceleration Risk: Some ETNs are callable at the issuer's discretion.
-Conflicts of Interest: The issuer of the notes may engage in trading activities that are at odds with investors who hold the notes - shorting strategies, for example.
Have you suffered losses resulting from exchange-traded notes recommended by your broker? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

INVESTORS NATIONWIDE BEWARE - DON'T FALL FOR EARLY RETIREMENT INVESTMENT SCHEMES THAT PROMISE TOO MUCH!

The thought of retiring early is an attractive notion. Especially when faced with a pitch that promises that one can cash in company retirement savings in his or her 50s, reinvest the money, and live comfortably off the proceeds. Many do not have the ability to say no to this alluring proposal, but they should. This is because there have been instances in which employees who had built up sizeable retirement savings have been misled and financially harmed by flawed, and even fraudulent, early retirement schemes.
The scheme is hatched with an invitation to employees of a major corporation to attend a free seminar where a broker pitches a strategy that recommends one or more of the following actions: 1) retiring earlier than one might otherwise have done; 2) opt out of the company's retirement plan, which requires the employee to take a lump-sum payment for the cash value of his or her pension; 3) open a traditional Individual Retirement Account at the broker's firm; and 4) invest in variable annuities, Class B and C mutual fund shares, and exchange traded fund shares, which were substantially more risky than the fixed benefit pension given up. The suggested investments are represented as being able to generate returns as high as 18 percent, but little mention is made about the risks associated with such aggressive growth. The pitch also fails to mention the fees and expenses associated with the transactions. Furthermore, the strategy recommends annual withdrawals starting between 7.5 percent and 9 percent of the customer's initial investment, with increases at five year-intervals. While materials given to customers portrayed these rates as being sustainable for 30 years, they assume returns of 11 to 14 percent. These rates are simply unrealistic and not achievable without taking a substantial amount of risk.
Since slick early retirement promoters can be quite persuasive, investors cannot be urged enough to think before they act. Taking early retirement presents risks and only makes sense if one has saved enough to begin with, made intelligent investment decisions during retirement years, and can withdraw money at a rate that does not deplete savings too early. Though there is no perfect formula on what the withdrawal rate should be, the uncertainty of return, market fluctuations, and increased life expectancy argue for being conservative with withdrawals, especially during the first years of retirement.
Investors feeling lured in by promises of easy money during retirement should consider the following tips before withdrawing funds and committing to a broker:
-Be skeptical of free lunch training sessions and other seminars that promote early retirement strategies, even if those events take place at the workplace.
-Be wary of early retirement pitches that promote exceptions to the 10 percent tax penalty.
-Think hard before trading the relative certainty of company pension, which may offer steady and predictable income for life for uncertain and fluctuating investments such as variable annuities and mutual funds.
-Leaving 401(k) assets in the company's plan is probably the safest and least costly option. Numerous online resources about 401(k) investing can be found online and can help investors make good decisions.
-Before cashing in a 401(k), it is important to do some math. Even if one can avoid the 10 percent penalty, not all the money withdrawn from the 401(k) can be reinvested outside of an IRA or other retirement account. Ordinary income taxes on withdrawals must be paid. So it is important to consult with a tax professional about any potential tax on the amount withdrawn before you reinvest in the early retirement program.
-Consulting with an attorney is important if one owes child support or alimony. Cashing out of a retirement plan may mean that creditors can collect against any payments received.
-If the strategy involves mutual fund investing, Class A mutual funds may be the best option if the investment amount is large enough to qualify of a discount on front end sales loads.
-If the strategy involves variable annuities, be aware that most variable annuities have sales charges, a variety of fees, administrative costs, and investment advisory fees.
-Verify whether the person offering early retirement investments is registered with FINRA by using FINRA BrokerCheck. If the person is registered, it is important to check for any disciplinary history.
-Always seek a second opinion before committing to an early retirement program. Set up an appointment with a financial professional before considering someone who is looking for clients.
Have you suffered losses resulting from an early retirement investment program that failed to deliver what was promised? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

FINRA INVESTIGATES BROKER-DEALERS FOR SELLING VARIABLE ANNUITIES INVESTED IN HEDGE FUNDS

The Financial Industry Regulatory Authority (FINRA) is investigating six independent broker-dealers for selling variable annuities with subaccounts invested in hedge funds, which resulted in $18 million in client losses during the credit crisis. The variable annuity product at the heart of the investigation was issued by Sun Life Financial, and the two hedge funds were Foresee Strategies Insurance Fund and the Foresee Strategies 3(c)(1) Insurance Fund LP, which were related to a group called the SALI Multi-Series Fund LP. The broker-dealers that have already faced FINRA arbitration complaints from investors include: Geneos Wealth Management Inc., Lincoln Financial Network, National Planning Corp., SagePoint Financial Inc., and FSC Securities Corp. Lincoln Financial had the most clients in the Sun Life annuity, and the average investment was about $500,000.00. One broker-dealer that sold the product has completely shut down, and Sun Life has dropped out of the variable annuity business altogether.
An annuity is a form of insurance that offers a series of payments for a period of time. Variable annuities are typically higher in risk when compared with other types of annuities and depend on how the stock market is performing. Buyers have the option to allocate the cash invested into different types of assets such as mutual funds, indices, fixed income investments or bonds, and cash. Variable annuities do not guarantee principal protection, so investors can lose money if markets deteriorate.
Hedge funds are similar to mutual funds in structure. Investor money is pooled together and invested in an effort to make a positive return. However, hedge funds have more flexible investment strategies than mutual funds. Hedge funds seek to profit in all kinds of markets by utilizing strategies involving leverage, short-selling, and other speculative investment practices that are not typically used by mutual funds. Another factor that distinguishes hedge funds from mutual funds is that hedge funds are not subject to the same regulations designed to protect investors. Depending on the amount of assets in the hedge funds advised by a manager, some hedge funds may not be required to file reports with the SEC. Fortunately, hedge funds are subject to the same prohibitions against fraud as are other market participants. In addition, managers owe a fiduciary duty to the funds under management.
The funds' strategy was put together between 2004 and 2007, which was considered a period of low volatility - the strategy was to invest in options in the Standard and Poor's 500 Stock Index, and to use both put and call options, known as a strangle. The strategy collapsed when the market crash began in September 2008, which caused one fund to lose 90 percent of its value, and the other to lose 75 percent. A FINRA arbitration panel has recently issued a $284,000.00 award to a SagePoint client, who alleged unsuitability, common law fraud, breach of fiduciary duty, and negligence. Three of the other broker-dealers have already resolved litigation.
Have you suffered losses in your variable annuity due to investments in hedge funds? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

INVESTORS NATIONWIDE BEWARE - THERE IS NO "MARGIN" FOR ERROR IN INVESTING WITH BORROWED FUNDS!

The Financial Industry Regulatory Authority (FINRA) is concerned about the slew of investors that underestimate the risks of trading on margin and misunderstand the reason for margin calls. In 2012 alone, investors purchasing on margin has averaged more than $320 billion per month. The problem lies in not being able to satisfy margin calls under unfavorable market conditions - investors can have large portions of their portfolios liquidated, and these liquidations can cause substantial losses for investors. Therefore, before an investor decides to open a margin account, he or she should understand all the risks associated with purchasing securities on margin.
Margin accounts allow investors to borrow money from their brokerage firm to purchase securities. The portion of the purchase price that the investor must deposit is called margin, and it is the investor's initial equity in the account. The loan from the firm is secured by the securities the investor purchases. If the securities on margin go down in price, the firm can issue a margin call, which is a demand that the investor repay all or part of the loan with cash, make a deposit of securities, or liquidate some of the securities in the account. Therefore, buying on margin amounts to getting a loan from the brokerage firm, which entails repaying the amount borrowed plus interest - even if you lose money. Some firms automatically open margin accounts with the account owner knowing.
The Federal Reserve Board, FINRA, and securities exchanges, including the New York Stock Exchange (NYSE), regulate margin trading, and most brokerage firms also establish their own stringent margin requirements. Before purchasing a security on margin, FINRA requires that the investor deposit the lesser of $2000 or 100 percent of the purchase price in the account - called minimum margin. Federal Reserve rules allow investors to borrow up to 50% of the total purchase price of a stock for new, or initial, purchases - called initial margin. If the investor does not already have cash or other securities in the account to cover the share of the purchase price, the investor will received a margin or Fed call from his or her firm that requires the investor to deposit the other 50 percent of the purchase price. Under FINRA's margin maintenance requirements rule, the equity in the account must not fall below 25 percent of the current market value of the securities in the account. If it does, the investor will receive a margin maintenance call that requires the investor to deposit more funds or securities in order to maintain the equity at the 2 percent level in order to avoid the risk of a forced sale of securities by the firm. Also, firms have the right to set their own margin requirements - called house requirements. As long as requirements are set higher than the margin requirements under Regulation T or the FINRA rules and the exchanges, firms are permitted to do so.
Investors should consider the number of risks associated with opening and trading in a margin account. The following points should be kept in mind while making a decision:
-The firm can force the sale of securities in your account to meet a margin call. Investors are responsible for the margin deficiency and shorts falls in the account after the sale should the accounts fall below the maintenance margin requirements under the law or set by the firm.
-Your firm can sell your securities without contacting you. Many investors believe that a firm must contact them first for a margin call to be valid. Although most firms will attempt to contact the account holder, they are not required to do so. Firms can even initiate a sale after a deadline is provided to the account holder.
-You are not entitled to choose which securities or other assets in your account are sold. The firm may decide to sell any of the securities that are collateral for your margin loan to protect its interests.
-Your firm can increase its house maintenance requirements at any time and is not required to provide you with advance notice. If an unexpected house call is made, the firm can liquidate any holdings they choose.
-You are not entitled to an extension of time on a margin call. Although an extension of time may be available under certain conditions, there is not right to an extension.
-You can lose more money than you deposit in a margin account. A decline in value of the securities purchased on margin may require the investor to provide additional money to the firm to avoid forced sale of those securities or other securities held in the account.
Have you suffered losses resulting from your broker's recommendation to open and trade in a margin account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

INVESTORS NATIONWIDE BEWARE - THE PROTECTION IN PRINCIPAL PROTECTED FUNDS HAS ITS PRICE!

In recent bear markets investors were more worried about the return of their principal than about a return on their principal. Broker-dealers and investment banks responded by marketing new types of mutual funds that guarantee, for a limited period of time, the capital invested - for a price, of course. These products are known as principal protected funds. Before investing in principal protected funds, investors ought to understand their characteristics and make sure that their broker has made a suitable recommendation.
Principal protected funds have several characteristics that every investor should understand. First, most principal protected funds guarantee the invested amount less any front-end sales charge even if the stock market falls. In many cases, the guarantee is backed by an insurance policy. Second, if the investor decides to sell any shares in the fund prior to the end of the guarantee period, usually five to ten years, the investor will lose the guarantee on those shares and could lose money if the share price has fallen since the initial investment. Third, most principal protected funds invest a portion of the fund in debt securities and a portion in stocks and other equity investments during the guarantee period. To make sure the fund can support the guarantee, many funds will hold zero-coupon bonds or other debt securities when interest rates are low and markets are volatile, which can greatly reduce any potential gains from a subsequent rise in the stock market. This allocation may also increase the risk of rising interest, which causes bond values to drop. Last, many principal protected funds carry an expense ratio that is higher than that of non-protected funds. Fees range from 1.5 percent to nearly 2 percent, of which .33 percent to .75 percent typically pays for the principal guarantee. In addition, many funds impose sales charges and redemption fees or penalties for early withdrawals.
Before investing in principal protected funds, investors should read the prospectus and keep the following points in mind:
-Do I need the money in the next 5 to 10 years? If you liquidate an investment in a principal protected fund early, you may lose your principal guarantee and have to pay an early withdrawal penalty.
-Do I need income from the investment? The guarantee is based on taking no redemptions during the guarantee period and reinvesting all dividends and distributions.
-Unless held in a tax-deferred retirement account such as an IRA, you must pay U.S. income tax yearly on the imputed interest from the fund's zero coupon bond holdings as it accrues.
-In certain market conditions, the fund may be invested in zero-coupon bonds and other debt securities forfeiting all potential gains if the stock market rises.
-If the fund achieves no gains above your initial investment, your performance would trail that of US Treasury bonds purchased with no annual fees.
-The benefit of the guarantee is only valid on the funds maturity date. If you sell your shares before or after the maturity date, you could lose money if share prices have fallen.
-The guarantee the fund provides is only as good as the company backing it. Interested investors should investigate the company's financial strength by verifying with several credit rating agencies - information can be found on the Securities and Exchange Commission (SEC) website.
Have you suffered losses in your portfolio due to an investment in a principal-protected fund? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

INVESTORS NATIONWIDE BEWARE - A PLEDGED-ASSET MORTGAGE CAN PUT YOUR SECURITIES PORTFOLIO AT RISK!

Brokerage firms are offering up to 100 percent loan-to-value ratio mortgages or pledged-asset mortgages to clients who do not have enough cash to make a down payment on a home. Instead of making a down payment, customers are required to pledge their stocks, bonds, mutual funds, and other securities. Though brokerage firm websites and brochures often tout the advantages of 100 percent mortgages, such as allowing the investor to avoid private mortgage insurance or liquidating their securities, investors may overlook and consign to the fine print without understanding the risks associated with these mortgages. Investors must realize that pledged-asset mortgages, or 100 percent mortgages, are not suitable for everyone. In order to determine whether 100 percent mortgages are suitable, an investor must start by evaluating their risks.
The classic 100 percent mortgage requires little or no cash down payment. Instead, the investor pledges securities in his or her brokerage account, allowing the investor to finance up to 100 percent of the value of the house. The amount of securities required in the pledge will depend on the type of securities proposed in the pledge and the terms of the mortgage. The amount pledged usually exceeds the amount required, which allows for some fluctuation in the value of the securities. However, if the value of the securities pledged goes down below a minimum amount set by the firm, the firm may issue a collateral call, which is a demand that the investor deposit additional cash or securities. If the investor cannot meet the demand or the value of the securities continue to decline, the firm may sell some or all of the securities, sometimes without notification.
100 percent mortgages also bear certain costs. Since the investor is borrowing more money with a 100 percent mortgage, he or she is probably paying more interest than if a cash payment would have been made. This may be economical if the investor's portfolio is able to make returns on investments that are greater than the mortgage payments. Furthermore, if the investor chooses an adjustable-rate 100 percent mortgage and interest rates rise, the returns in the investor's portfolio may not keep up with the rising mortgage payments, particularly if the investor is holding bonds or other fixed income instruments - fixed income principal values decline when interest rates rise. With an adjustable-rate mortgage, the securities markets decline at the same time that interest rates rise, the investor may be stuck with both larger mortgage payments and thousands in markets losses.
Investors considering a 100 percent mortgage must consider the risks associated with them before making a decision. Investors are encouraged to keep in mind the following:
-Even after obtaining a mortgage loan, an investor may be required to deposit more cash or securities if the value of the securities pledged falls below the minimum required by the firm.
-The firm can force the sale of pledged securities to meet a collateral call. The case will remain in the account until the mortgage is paid or refinanced, the firm is instructed to use the funds to pay down the mortgage, the equity in the home reaches a certain level, or the cash is applied to the outstanding mortgage balance upon default.
-The firm can sell the securities without contacting the investor. Most firms will attempt to contact the investor prior to the sale, but they are not required to do so. Even if the investor is contacted and given a specific date to meet a collateral call, the firm may decide to proceed with selling the securities before the date.
-Investors are not entitled to choose which securities are sold. The firm may decide to sell any of the securities that are held as collateral for the mortgage.
-Investors are not entitled to an extension of time on a collateral call. While an extension may be available to an investor to meet a collateral call under certain conditions, there is no right to an extension.
-If the investor defaults on the mortgage, he or she could lose both the home and the securities pledged. Some states allow firms to sell the securities immediately, while others only allow for liquidation after the home is sold for a loss at a public sale.
Have you suffered losses in your portfolio due to a pledged-asset mortgage? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

FINRA FILES COMPLAINT AGAINST BROOKSHIRE SECURITIES CORPORATION'S TIMOTHY BURKE RUGGIERO AND PETER SHAWN CHUNG FOR STOCK MANIPULATION

Timothy Burke Ruggiero and Peter Shawn Chung, both with Brookshire Securities Corporation, have been named in a Financial Industry Regulatory Authority (FINRA) complaint for allegedly assisting private companies in going public by reverse mortgages with publicly held shell corporations. FINRA is asserting that Mr. Ruggiero and Mr. Chung entered securities purchases and limit orders that manipulated the price of two stocks during the period of a private investment in public equity (PIPE) offering for the over-the-counter (OTC) securities. The complaint states that because Mr. Ruggiero and Mr. Chung controlled the member firm that was the placement agent for the PIPE offering, they would benefit from placement agent fees, stock, and warrants if the PIPE was successful. Mr. Ruggiero's and Mr. Chung's orders and purchases artificially created increases in the inside bid price for a stock, which sent generated false or misleading signals to prospective investors, who thought that the market placed a higher value on the stock - as the firms CEO, Mr. Ruggiero was responsible for the firm's role in processing and submitting these orders. This scheme influenced investors into purchasing shares at an artificially increased price through the PIPE offering.
FINRA's complaint also alleges that Mr. Ruggiero and Mr. Chung violated SEC Regulation M by soliciting limit orders and processing stock purchases firm personnel solicited for two PIPE offerings during the period when distribution participants in a securities offering were prohibited from trading that security. In addition, the complaint alleges that Mr. Ruggiero failed to make and preserve records of electronic communications relating to his firm's business and to make note of his review of emails. Mr. Ruggiero failed to assure his firm installed and employed email systems that captured and preserved firm communications, and he failed to ensure that the firm employed a non-erasable and non-rewritable format to retain email correspondence. Furthermore, Brookshire Securities' written procedures on electronic correspondence required prior approval for electronic messages, review of incoming email before delivery, and a principal's review and written endorsement of all correspondence of associated persons related to securities transactions.
On top of all this, FINRA alleged in its complaint that Mr. Ruggiero failed to supervise trading at the firm - he failed to appropriately review and approve transactions and trading activities in order to prevent the firm and its registered representatives from improperly soliciting and purchasing limit orders during restricted offering periods, and he failed to supervise electronic communications at the firm. Mr. Ruggiero also forged options order tickets with a retired senior registered options principal's (SROP) signature to evidence the SROP's review of the records - Mr. Ruggiero filed a Form U4 to reflect the SROP's return to work from retirement.
Have you suffered damages resulting from illegal activity at Brookshire Securities Corporation? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

INVESTORS NATIONWIDE BEWARE - THERE IS NO SUCH THING AS A FREE LUNCH!

If you have not been invited to a free-meal investment seminar yet, chances are you will be in the near future. If you decide to go, you need to be prepared. This is because financial advisors who host free-meal seminars promise to educate attendees about investing strategies or managing money in retirement - you will also enjoy an expensive meal provided at no cost. However, because someone in a suit buys you lunch or dinner does not mean you have to buy what they are saying or selling. In many cases, free-meal investment seminars are not solely about education. Their ultimate goals are to recruit new clients and sell products - while some sales proposals may be easy for investors to swallow, the consequences can be hard to stomach.
Free investment seminars are popular and widespread. The Financial Industry Regulatory Authority (FINRA) Investor Education Foundation surveyed and found that four out of five investors age 60 and up got at least one invitation to a free investment seminar in the past three years - three out of five got six or more invitations. 25 percent of invitees said that they went to at least one seminar within the three-year period.
There is potentially nothing wrong with a free lunch. However, problems can arise when the speaker has something to sell to the audience. To examine these problems, securities regulators, including FINRA, the Securities and Exchange Commission (SEC), and state regulators, conducted more than 100 examinations involving free-meal seminars. In half the cases, the invitations and advertisements contained claims that appeared to be exaggerated, misleading, or otherwise unwarranted. 12 percent of the seminars appeared to involve fraud, ranging from unfounded projections of returns to sales of fictitious products.
If you are considering attending an investment seminar, the following points should be kept in mind while undergoing a hard sale effort:
-Seminars are designed to sell: Even when advertised as educational, many investment seminars are conducted to sell financial products. Keep in mind that sales pitches might include confusing comparisons of dissimilar products or misleading information about the safety, performance, and returns of the products.
-A good show is not always a good deal: People are generally inclined to take advice from a well-dressed speaker in a high-end restaurant or hotel. This is exactly why investment seminars are held at upscale venues. Be sure to take the time and assess whether the opportunity is right for you.
-The speaker might not be the sponsor: Even if you recognize the names of the individuals who invite you to seminar or speak at the event, they might not be the sponsors. At times, insurance companies or mutual funds finance the events, expecting that the speaker will use the event to drive up sales of their products.
Have you suffered losses resulting from promises made at a free-meal investment seminar? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

INVESTORS NATIONWIDE BEWARE - BROKER-DEALER SELF-OFFERINGS ARE RISKY INVESTMENTS!

Broker-dealers oftentimes use broker-dealer self-offerings (BDOs) to raise capital by selling their own or an affiliate's securities. Typically BDO offerings come in the form of registered public offerings or private placements. Even though BDOs can be a legitimate investment, potential for abuses still exist. Prior actions have been brought against broker-dealers and financial advisors that have sold more than $36 million in BDOs to clients that involved fraud or other serious misconduct - numerous cases involved high pressure sale tactics targeting elderly or retired investors. Thus, investors are encouraged to consider the risks associated with investing in BDOs and the possibility of fraud or other misconduct before buying their broker.
When an investor purchases a private BDO, they are investing in the brokerage firm itself. Money raised in a BDO offering is usually used to finance a brokerage firm's operations. Therefore, the investor shares the risks that business will be unprofitable in the near future. The Securities and Exchange Commission (SEC) places limitations on the way private BDOs can be sold to investors. For example, brokerage firms are not permitted to advertise the BDO, and the number of small investors to whom the securities can be offered is limited in number. The BDO securities sold are not registered with the SEC or filed with FINRA, and they are not publicly traded. Consequently, private BDOs are subject to fewer disclosure requirements and regulations than registered public offerings. Private BDOs are also highly illiquid investments.
Investing in a private BDO can involve significant risks, especially when a private BDO has been announced through emails or cold calling, which may be a clear sign of a fraudulent offering. Investors can avoid the risks associated with investing in BDOs by considering a few very important points. First, the offering may be illegal if the brokerage firm did not register the BDO with the SEC, which means it was not subject to a Regulation D exemption. To meet the Regulation D exemption, the BDO cannot be advertised to the general public. Second, the reason that a brokerage firm is conducting a private BDO is because the firm is not a public company. So, there is no guarantee when, or even if, there will be a public market for the securities. Even if a company goes public through an initial public offering (IPO), federal and state laws often require that unregistered or private securities acquired in transactions such as BDOs be held for a year or more before they can be sold. Last, when an investor buys a private BDO, the brokerage firms is getting all the investor's money rather than just a commission. The brokerage firm might be selling the BDO to benefit from the offering in a certain way - the firm has been losing money or it needs cash reserves to meet regulatory requirements.
Investors should also consider the following red-flags:
-Cold-Calling or Spam: Brokers selling problematic private BDOs often use unsolicited telephone calls or email to sell private BDOs.
-High Pressure Sales Tactics: Dishonest brokers often use boiler room sales tactics, hounding investors to invest in BDOs/
-Initial Public Offering is Imminent: Investors should be wary of brokers who tell you that in the near future the brokerage firm will conduct an IPO, which will reap large profits once the securities are traded on the open market.
-Promises of Unusually High Returns: Brokers make optimistic price projections about future performance with no research to back up their assertions.
-Risk-free Investments: Some private BDO frauds involve promises that you cannot lose money.
Refusal to Provide Current Financial Documents on Request: Brokers should supply financial and other supporting materials upon a client's request.
Brokerage firms that use the above mentioned tactics oftentimes provide little or no supervision of their salespersons. Such firms may materially misrepresent experience and financial soundness of the company to attract investors. Firms will also go as far as omitting information about disciplinary actions against the firm or individuals associated with the firm.
Have you suffered losses in a broker-dealer self-offering? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

INVESTORS NATIONWIDE BEWARE - PROMISSORY NOTES ARE NOT SO PROMISING!

Securities and Exchange Commission (SEC) investigations have revealed that promissory note scams are on the rise. In fact, promissory note schemes have robbed hundreds of investors of tens of millions of dollars. The promise of high guaranteed rates of interest combined with today's volatile markets should alarm investors to make an adequate investigation before investing. This is because unlike many investments today, promissory notes tout a simple and safe concept, but they also offer returns as high as 25 percent. Even though they can be legitimate investments, some promissory notes sold widely to individual investors turn out to be fraudulent. Therefore, investors need to fully understand the promissory note they are considering, and they need to be aware of warning signs that may signal a scam.
A promissory note is a debt instrument that companies use to raise capital. The company issues the notes and promises to return the purchaser's funds and to make interest payments to the buyer in exchange for the borrowed money. Promissory notes have set repayment periods ranging from a few months to several years. Legitimate promissory notes oftentimes face significant risks - the issuing company may have problems such as competition, bad management, or severe market conditions that make it nearly impossible for the company to fulfill its promise to pay interest and principal to note buyers. Investors should also note that bona fide notes are marketed almost exclusively to corporate and other sophisticated investors, who have the resources and expertise to make a sound investment decision.
Problems with promissory notes fall into three main categories: fraud and deception, unregistered securities, and unregistered sellers. Fraudulent promissory note programs often consist of deceptive statements to lure in investors. Callers tout high, guaranteed returns and collateral to back the notes. Promissory note schemes usually target the elderly and their retirement savings. Promissory notes must be registered with the SEC or the state in which they are sold if they are not subject to a registration exemption. If the note is unregistered, it will not be subject to review by regulators before it is sold, and investors have to do their own research to verify that the company can meet its obligations. If registered brokers are involved, they may be selling the notes without a license or without their firms' approval.
Investors should consider the following before investing in a promissory note:
-Ask why the seller wants to sell to you: Bona fide corporate promissory notes are generally sold to sophisticated investors. The fact that promissory notes are being sold to individual investors is itself a danger signal.
-Be wary of pushy sales tactics: No reputable investment professional should push an investor to make an immediate decision about an investment or tell you to act now.
-Use on-line resources: The SEC's EDGAR Database and the state's securities regulator offer information on whether the notes are registered. The Financial Industry Regulatory Authority's (FINRA) BrokerCheck will reveal if the individual selling the promissory notes is registered or has a disciplinary history.
-Broker role: The promissory note should be sold through the broker's firm. If not, it is being "sold away," which means that the associated broker-dealer has not approved the note for sale.
-Guaranteed returns: Salespersons cannot guarantee returns. Even if the seller says that the promissory notes are insured, be wary - the insurer may not be legitimate or offshore.
-High returns: Promissory notes usually offer double digit returns - those greater than 10 percent while other fixed income investment are yielding much less. The rule is: the higher the return, the greater the risk.
-Commissions: The salesperson's commission is important. Normal commissions rarely exceed 5 percent. Promissory notes offer much more - as high as 30 percent or more.
-Issuing Company: How the company issuing the promissory notes plans on generating returns to make the interest payments should be vital to an investor's decision to commit to the notes.
Have you suffered losses in a promissory note investment scam? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

INVESTORS NATIONWIDE BEWARE - RISKING YOUR HOME TO BUY SECURITIES COULD LEAD TO FORECLOSURE!

Many investors are tempted to risk their homes by taking out second mortgages, re-financing, or obtaining a line of credit for the specific purpose of investing such funds when mortgage rates are low and the stock market is rising. Typically, the goal is to generate additional wealth while continuing to make mortgage payments. In more than most cases, investors who fail to achieve this ambitious objective end up defaulting on their mortgage. This is why investors must consider the risks associated with "betting the ranch" before they move forward with making such a bold investment decision.
Investing in any type of security entails risk to principal. Using home equity to buy securities compounds this risk in a few different ways. First, when an investor buys securities with mortgage money, he or she is investing with borrowed funds. This action increases the investor's exposure to market risk, similar to buying securities on margin. However, the mortgage money will most likely be greater than any amount a broker-dealer would lend in a margin account. Second, when an investor uses mortgage money to purchase securities, he or she risks losing the principal invested along with the underlying collateral - namely the house. Even if the home is not lost, the investor could lose a significant amount of home equity, which might have taken decades to build up. Last, investors usually maker riskier investments, or investments that offer higher than average yields, to surpass their mortgage rate. If the given investment yield is unsatisfactory, investors may feel compelled to place the money in an even riskier product.
The classic example of investors using mortgage money to purchase securities involves a retired couple who wants to earn a higher income by using the equity in their mortgage-free home. The couple will take out a new mortgage at an interest rate of 6% with hopes of paying the loan and earning more income. On the advice of their broker, the couple will invest in a mutual fund with an average return of 12% over the past five to 10 years. However, instead of posting a gain for that year, the fund loses 15 percent of its value. Since the couple was depending on earning a profit from the fund to pay their mortgage debt, and they have no other assets, they are faced with a tough choice - sell the depleted investment to be able to make mortgage payments and hope that the fund will be profitable soon, or they can sell the house and hope that the price is enough to pay off the outstanding mortgage. Either way, the couple risks losing their home.
If a broker recommends that an investor should consider using home equity to invest in securities, the investor can avoid financial calamity by asking herself a couple simple questions: 1) Will I be able to make mortgage payments in the value of my investments decline?; or 2) Do I have a secure salary or other funds to make mortgage payments if the value of my investments decline? If the answer is no, just say no to betting the ranch on securities.
Have you lost or risked losing your home as a result of your broker's recommendation to use home equity to invest in securities? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

INVESTORS NATIONWIDE BEWARE - PUBLIC, NON-LISTED REITS ARE NOT WORTH THE RISK!

For quite some time now, a lack of attractive fixed income yields has created serious issues for many investors, especially seniors. Certificates of deposit (CDs) are paying almost nothing, and interest payments on bonds are on a greater decline than a shopper's savings account during the holiday season. Therefore, many investors are turning to public, non-listed real estate investment trusts (REITs), which promise attractive quarterly distributions - 6.5% a year with full return of the invested principal. However, investors must realize that public, non-listed REITs have a multitude of risks that most stocks, bonds, and CDs do not, and many investment advisers do not believe that public, non-traded REIT distributions compensate for those risks. Some of the public, non-listed REITs to watch out for are: Apple, Behringer, Pacific Cornerstone, Desert Capital, Inland American, Inland Western, KBS, and Retail Properties of America.
REITs invest in a diversified set of income producing real estate properties and mortgages, and they must distribute 90 percent of net earnings to investors. REITs allow investors to partake in real estate investing without directly owning property, which may lock up large amounts of money for longs periods of time. The most popular REITs are publicly traded on a stock exchange such as the New York Stock Exchange (NYSE) - they are relatively transparent in their finances and operations and are covered extensively by investment analysts. Private REITs are not publicly traded, listed, or registered with securities regulators and are supposed to be available only to accredited investors - $1 million or more in assets or $200,000.00 in annual income. Public, non-listed REITs disclose their finances publicly and offer shares to the public, but they do not list their shares on an exchange, which is one of many risk factor associated with them.
The following are some of the risks associated with investing in public, non-listed REITs:
-High fees: non-listed REITs pay brokers and financial advisers large commissions, oftentimes 10 percent of the amount invested. Numerous REITs also charge investors ongoing management fees, and some of them charge fees when an investor wants to liquidate.
-Share value: more than half of non-listed REITs are sold in $10 per share allotments to investors. After the real estate bubble popped and credit markets fell apart, many REITs lost most of their value. A lack of an efficient secondary market makes it almost impossible to successfully auction off shares to recover some of the lost principal.
-Liquidity: REIT investors usually find that their original investment is locked in for seven to ten years. Also, many REITs refuse share-redemption requests except in emergency cases such as death or disability.
-Distribution cuts: many REITs are not generating enough income to pay distributions owed to shareholders. In order to circumvent this dilemma, REITs are financing payments owed by selling more shares, selling off properties, or cutting dividends.
Regulators have begun to closely scrutinize public, non-listed REITs. In 2009, the Financial Industry Regulatory Authority (FINRA) began to examine how broker-dealers advertised and sold REITs. In fact, FINRA recently ordered David Lerner and Associates (DLA) of Syosset, NY to pay $12 million to investors who were sold shares of Apple REIT. FINRA found that DLA was providing misleading materials to unsophisticated investors nationwide, which included elderly clients.
Have you suffered losses in a public, non-listed real estate investment trust such as David Lerner and Associates' Apple REIT? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

WAS FLORIDA BROKER DONALD HORRAS RUN OUT OF MORGAN STANLEY?

On November 8, 2012, stockbroker Donald Horras of Morgan Stanley Smith Barney transferred employment to Raymond James and Associates. Our law office is conducting an investigation and wants to know whether he was run out of Morgan Stanley or truly terminated his employment voluntarily? During the course of Mr. Horras career he was the subject of at least 7 customer complaints and one regulatory investigation. The customer complaints were generally made by elderly customers who claimed he made unsuitable recommendations of variable annuities that cause them significant losses to their retirement funds.
An annuity is a form of insurance that offers a series of payments for a period of time. Variable annuities are typically higher in risk when compared other types of annuities and depend on how the stock market is performing. Buyers have the option to allocate the cash invested into different types of assets such as mutual funds, indices, fixed income investments or bonds, and cash. Most variable annuities do not have principal protection, so investors can lose money if markets deteriorate.
The Law Offices of Robert Wayne Pearce P.A. is currently investigating Donald Horras' acts and omissions at Morgan Stanley Smith Barney and would be interested in speaking with anyone with the truth about Mr. Horras' sudden departure from that brokerage firm.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

FLORIDA SUNTRUST INVESTMENT SERVICES BRANCH MANAGER BRENNAN R. LOLLAR BARRED FOR MISAPPROPRIATING FUNDS

The Financial Industry Regulatory Authority (FINRA) has barred Brennan R. Lollar from association with any FINRA member for misappropriating funds while working as a branch manager for SunTrust Investment Services. FINRA's finding stated that Mr. Lollar transferred funds into customers' accounts without SunTrust's permission and labeled them as refunds of banks fees. However, bank fees were never incurred by the customers, and Mr. Lollar knew that the customers were not entitled to any refunds. Mr. Lollar misappropriated a total of $3,242.90 into customer accounts through a series of small transactions - Mr. Lollar admitted to the bank that he issued the false refunds for purposes of gaining favor with certain customers. SunTrust Investments obtained reimbursement through the liquidation of Mr. Lollar's retirement fund. In addition, Mr. Lollar did not respond to FINRA requests for information and failed to appear for an on-the-record FINRA interview.
Broker-dealers must establish and implement a reasonable supervisory system to protect clients from fraudulent practices by their investment professionals. If broker-dealers do not establish and/or implement a reasonable supervisory system, they may be liable to investors for damages. Therefore, investors who have suffered damages resulting from the misappropriation of their funds by an investment professional can bring forth claims to recover losses against their broker-dealer for failure to prevent such illegal activity.
Have you suffered damages resulting from a misappropriation of your funds? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.