Sunday, June 30, 2013

CAPITAL FINANCIAL SERVICES, INC. - CIP LEVERAGED FUND ADVISORS, LLC - INVESTOR ALERT!

Many investors have purchased CIP Leveraged Fund Advisors, LLC ("CLFA") through an independent broker-dealer, Capital Financial Services, Inc. CLFA was supposed to be a manager of Real Estate Investment Trusts (REITs), but failed miserably. Capital Financial Services is an independent broker-dealer in the United States who offered and sold CLFA to its best clients. Capital Financial Services is headquartered in Minot, North Dakota and reportedly has registered representatives across the United States operating in one or two person offices.
Capital Financial Services, like all broker-dealers engaging in a Regulation D securities offering such as CLFA, was responsible under the Financial Industry Regulatory Authority ("FINRA") rules to conduct "due diligence," that is, conduct a reasonable investigation of the CLFA securities offering and the issuer's representations about itself, the offering, its management, and business prospects, including any targeted returns on the investment to investors and determining the "suitability" of this investment for any and all of its clients.
Independent Due Diligence of CLFA by Capital Financial Services was Mandatory
Capital Financial Services and other broker-dealers could not simply rely upon an issuer of securities like CLFA, the issuer's attorneys or the lead broker-dealer Pacific Cornerstone Capital, Inc. ("PCCI") to conduct the investigation for it particularly where that lead broker-dealer has a relationship with the issuer, which is an inherent "conflict of interest."
Under FINRA Rules, all broker-dealers are responsible for discovering and investigating any information that could be considered a "red flag" and alerting a prudent person to conduct further inquiry. All broker-dealers have a responsibility to conduct a reasonable investigation and are obligated to follow up on any "red flags" that it encounters during its inquiry as well as to investigate any substantial adverse information about the issuer and its management. When presented with "red flags," the broker-dealer must do more than simply rely upon representations by issuer's management, the disclosure and an offering document or even a due diligence report of issuer's counsel or some third party expert.
It is reported that your CLFA investment is now worthless. PCCI and it's principal, Terry Roussel, were fined and/or suspended by FINRA for making misleading statements to investors in connection with the CLFA offering.
Thus far, two other broker-dealers have been investigated and sanctioned by FINRA for violations relating to their own failure to conduct due diligence on CLFA prior to recommending it to their best clients, namely, Investors Capital Corp. and Workman Securities Corporation. FINRA has reported that one or more of these broker-dealers failed to conduct any reasonable due diligence investigation on CLFA prior to selling CLFA securities. Further, they did not seek independent third party due diligence reports, meet with or ask questions of management about certain disclosures in the PPM relating to projections and targets or even review unaudited CLFA financial statements, which violated the rules. It has also been reported that they reviewed third party reports that did not include an analysis of how investors in CLFA would recover their principal investment and whether the projected 18.75% yield was realistic.
All of this begs the question: Did Capital Financial Services perform an independent due diligence analysis before it recommended the investment to its best clients? What analysis, if any, did Capital Financial Services perform of how investors would recover their principal investment and whether the projected 18.75% yield was realistic? FINRA investigations are confidential and although FINRA has not reportedly taken any action against Capital Financial Services to date, the failure of any broker-dealer to conduct those types of inquiries could constitute a violation of FINRA rules and entitle you to recovery of your investment losses from that brokerage firm.
Capital Financial Services was Obligated to Perform a Suitability Analysis
Capital Financial Services was also required to have reasonable grounds to believe that a recommendation to purchase a security is suitable for the customer. This analysis has two principal components. First, the "reasonable basis" suitability analysis requires the broker-dealer to have a reasonable basis to believe, based on a reasonable investigation, that the recommendation is suitable for at least some investors. If there is no reasonable basis for any of the targeted returns, then the securities offered are not suitable for any investor. Second, the "customer specific suitability" analysis requires the broker-dealer to determine whether the security is suitable for the customer to whom it would be recommended. This second suitability analysis is dependent upon the investor's stated investment objectives, risk tolerance and financial condition. Any recommendation by a broker that does not satisfactorily comply with either component can be a violation of FINRA rules.
For most investors, liquidity, income and risk tolerance are a concern, but if you are elderly and retired, they are paramount! If you have limited resources and no ability to generate income from other sources to meet your liquidity and income needs then CLFA was an unsuitable investment. Likewise, if you cannot afford a total risk of loss, then the speculative CLFA investment was unsuitable. The suitability problem is compounded when any investors' portfolio is concentrated in CLFA. A rule of thumb is that no more than 10% of anyone's investment portfolio should be concentrated in any illiquid real estate investments, and that percentage should be far less as a person reaches retirement and advances in age, perhaps zero!
Know Your Rights and Get Your Questions Answered!
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 CLFA and this blog post and/or any related matter.

Saturday, June 29, 2013

AMERICAN INVESTORS COMPANY - CIP LEVERAGED FUND ADVISORS, LLC - INVESTOR ALERT!

Many investors have purchased CIP Leveraged Fund Advisors, LLC ("CLFA") through an independent broker-dealer, American Investors Company ("American Investors"). CLFA was supposed to be a manager of Real Estate Investment Trusts (REITs), but failed miserably. American Investors is one of the larger independent broker-dealers in the United States who offered and sold CLFA to its best clients. American Investors is headquartered in San Francisco, California and reportedly has over 80 registered representatives across the United States operating in one or two person offices.
American Investors, like all broker-dealers engaging in a Regulation D securities offering such as CLFA, was responsible under the Financial Industry Regulatory Authority ("FINRA") rules to conduct "due diligence," that is, conduct a reasonable investigation of the CLFA securities offering and the issuer's representations about itself, the offering, its management, and business prospects, including any targeted returns on the investment to investors and determining the "suitability" of this investment for any and all of its clients.
Independent Due Diligence of CLFA by American Investors was Mandatory
American Investors and other broker-dealers could not simply rely upon an issuer of securities like CLFA, the issuer's attorneys or the lead broker-dealer Pacific Cornerstone Capital, Inc. ("PCCI") to conduct the investigation for it particularly where that lead broker-dealer has a relationship with the issuer, which is an inherent "conflict of interest."
Under FINRA Rules, all broker-dealers are responsible for discovering and investigating any information that could be considered a "red flag" and alerting a prudent person to conduct further inquiry. All broker-dealers have a responsibility to conduct a reasonable investigation and are obligated to follow up on any "red flags" that it encounters during its inquiry as well as to investigate any substantial adverse information about the issuer and its management. When presented with "red flags," the broker-dealer must do more than simply rely upon representations by issuer's management, the disclosure and an offering document or even a due diligence report of issuer's counsel or some third party expert.
It is reported that your CLFA investment is now worthless. PCCI and it's principal, Terry Roussel, were fined and/or suspended by FINRA for making misleading statements to investors in connection with the CLFA offering.
Thus far, two other broker-dealers have been investigated and sanctioned by FINRA for violations relating to their own failure to conduct due diligence on CLFA prior to recommending it to their best clients, namely, Investors Capital Corp. and Workman Securities Corporation. FINRA has reported that one or more of these broker-dealers failed to conduct any reasonable due diligence investigation on CLFA prior to selling CLFA securities. Further, they did not seek independent third party due diligence reports, meet with or ask questions of management about certain disclosures in the PPM relating to projections and targets or even review unaudited CLFA financial statements, which violated the rules. It has also been reported that they reviewed third party reports that did not include an analysis of how investors in CLFA would recover their principal investment and whether the projected 18.75% yield was realistic.
All of this begs the question: Did American Investors perform an independent due diligence analysis before it recommended the investment to its best clients? What analysis, if any, did American Investors perform of how investors would recover their principal investment and whether the projected 18.75% yield was realistic? FINRA investigations are confidential and although FINRA has not reportedly taken any action against American Investors to date, the failure of any broker-dealer to conduct those types of inquiries could constitute a violation of FINRA rules and entitle you to recovery of your investment losses from that brokerage firm.
American Investors was Obligated to Perform a Suitability Analysis
American Investors was also required to have reasonable grounds to believe that a recommendation to purchase a security is suitable for the customer. This analysis has two principal components. First, the "reasonable basis" suitability analysis requires the broker-dealer to have a reasonable basis to believe, based on a reasonable investigation, that the recommendation is suitable for at least some investors. If there is no reasonable basis for any of the targeted returns, then the securities offered are not suitable for any investor. Second, the "customer specific suitability" analysis requires the broker-dealer to determine whether the security is suitable for the customer to whom it would be recommended. This second suitability analysis is dependent upon the investor's stated investment objectives, risk tolerance and financial condition. Any recommendation by a broker that does not satisfactorily comply with either component can be a violation of FINRA rules.
For most investors, liquidity, income and risk tolerance are a concern, but if you are elderly and retired, they are paramount! If you have limited resources and no ability to generate income from other sources to meet your liquidity and income needs then CLFA was an unsuitable investment. Likewise, if you cannot afford a total risk of loss, then the speculative CLFA investment was unsuitable. The suitability problem is compounded when any investors' portfolio is concentrated in CLFA. A rule of thumb is that no more than 10% of anyone's investment portfolio should be concentrated in any illiquid real estate investments, and that percentage should be far less as a person reaches retirement and advances in age, perhaps zero!
Know Your Rights and Get Your Questions Answered!
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, http://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 CLFA and this blog post and/or any related matter.

Friday, June 28, 2013

ADVISORY GROUP EQUITY SERVICES, LTD. - CIP LEVERAGED FUND ADVISORS, LLC - INVESTOR ALERT!

Many investors have purchased CIP Leveraged Fund Advisors, LLC ("CLFA") through an independent broker-dealer, Advisory Group Equity Services, Ltd.  CLFA was supposed to be a manager of Real Estate Investment Trusts (REITs), but failed miserably. Advisory Group Equity Services is an independent broker-dealer in the United States who offered and sold CLFA to its best clients. Advisory Group Equity Services is headquartered in Woburn, Massachusetts and reportedly has registered representatives across the United States operating in one or two person offices.
Advisory Group Equity Services, like all broker-dealers engaging in a Regulation D securities offering such as CLFA, was responsible under the Financial Industry Regulatory Authority ("FINRA") rules to conduct "due diligence," that is, conduct a reasonable investigation of the CLFA securities offering and the issuer's representations about itself, the offering, its management, and business prospects, including any targeted returns on the investment to investors and determining the "suitability" of this investment for any and all of its clients.
Independent Due Diligence of CLFA by Advisory Group Equity Services was Mandatory
Advisory Group Equity Services and other broker-dealers could not simply rely upon an issuer of securities like CLFA, the issuer's attorneys or the lead broker-dealer Pacific Cornerstone Capital, Inc. ("PCCI") to conduct the investigation for it particularly where that lead broker-dealer has a relationship with the issuer, which is an inherent "conflict of interest."
Under FINRA Rules, all broker-dealers are responsible for discovering and investigating any information that could be considered a "red flag" and alerting a prudent person to conduct further inquiry. All broker-dealers have a responsibility to conduct a reasonable investigation and are obligated to follow up on any "red flags" that it encounters during its inquiry as well as to investigate any substantial adverse information about the issuer and its management. When presented with "red flags," the broker-dealer must do more than simply rely upon representations by issuer's management, the disclosure and an offering document or even a due diligence report of issuer's counsel or some third party expert.
It is reported that your CLFA investment is now worthless. PCCI and it's principal, Terry Roussel, were fined and/or suspended by FINRA for making misleading statements to investors in connection with the CLFA offering.
Thus far, two other broker-dealers have been investigated and sanctioned by FINRA for violations relating to their own failure to conduct due diligence on CLFA prior to recommending it to their best clients, namely, Investors Capital Corp. and Workman Securities Corporation. FINRA has reported that one or more of these broker-dealers failed to conduct any reasonable due diligence investigation on CLFA prior to selling CLFA securities. Further, they did not seek independent third party due diligence reports, meet with or ask questions of management about certain disclosures in the PPM relating to projections and targets or even review unaudited CLFA financial statements, which violated the rules. It has also been reported that they reviewed third party reports that did not include an analysis of how investors in CLFA would recover their principal investment and whether the projected 18.75% yield was realistic.
All of this begs the question: Did Advisory Group Equity Services perform an independent due diligence analysis before it recommended the investment to its best clients? What analysis, if any, did Advisory Group Equity Services perform of how investors would recover their principal investment and whether the projected 18.75% yield was realistic? FINRA investigations are confidential and although FINRA has not reportedly taken any action against Ameritas to date, the failure of any broker-dealer to conduct those types of inquiries could constitute a violation of FINRA rules and entitle you to recovery of your investment losses from that brokerage firm.
Advisory Group Equity Services was Obligated to Perform a Suitability Analysis
Advisory Group Equity Services was also required to have reasonable grounds to believe that a recommendation to purchase a security is suitable for the customer. This analysis has two principal components. First, the "reasonable basis" suitability analysis requires the broker-dealer to have a reasonable basis to believe, based on a reasonable investigation, that the recommendation is suitable for at least some investors. If there is no reasonable basis for any of the targeted returns, then the securities offered are not suitable for any investor. Second, the "customer specific suitability" analysis requires the broker-dealer to determine whether the security is suitable for the customer to whom it would be recommended. This second suitability analysis is dependent upon the investor's stated investment objectives, risk tolerance and financial condition. Any recommendation by a broker that does not satisfactorily comply with either component can be a violation of FINRA rules.
For most investors, liquidity, income and risk tolerance are a concern, but if you are elderly and retired, they are paramount! If you have limited resources and no ability to generate income from other sources to meet your liquidity and income needs then CLFA was an unsuitable investment. Likewise, if you cannot afford a total risk of loss, then the speculative CLFA investment was unsuitable. The suitability problem is compounded when any investors' portfolio is concentrated in CLFA. A rule of thumb is that no more than 10% of anyone's investment portfolio should be concentrated in any illiquid real estate investments, and that percentage should be far less as a person reaches retirement and advances in age, perhaps zero!
Know Your Rights and Get Your Questions Answered!
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 CLFA and this blog post and/or any related matter.

Thursday, June 27, 2013

AMERITAS INVESTMENT CORP. - CIP LEVERAGED FUND ADVISORS, LLC - INVESTOR ALERT!

Many investors have purchased CIP Leveraged Fund Advisors, LLC ("CLFA") through an independent broker-dealer, Ameritas Investment Corp. ("Ameritas"). CLFA was supposed to be a manager of Real Estate Investment Trusts (REITs), but failed miserably. Ameritas is one of the larger independent broker-dealers in the United States who offered and sold CLFA to its best clients. Ameritas is headquartered in Lincoln, Nebraska and reportedly has over 1700 registered representatives across the United States operating in one or two person offices.
Ameritas, like all broker-dealers engaging in a Regulation D securities offering such as CLFA, was responsible under the Financial Industry Regulatory Authority ("FINRA") rules to conduct "due diligence," that is, conduct a reasonable investigation of the CLFA securities offering and the issuer's representations about itself, the offering, its management, and business prospects, including any targeted returns on the investment to investors and determining the "suitability" of this investment for any and all of its clients.
Independent Due Diligence of CLFA by Ameritas was Mandatory
Ameritas and other broker-dealers could not simply rely upon an issuer of securities like CLFA, the issuer's attorneys or the lead broker-dealer Pacific Cornerstone Capital, Inc. ("PCCI") to conduct the investigation for it particularly where that lead broker-dealer has a relationship with the issuer, which is an inherent "conflict of interest."
Under FINRA Rules, all broker-dealers are responsible for discovering and investigating any information that could be considered a "red flag" and alerting a prudent person to conduct further inquiry. All broker-dealers have a responsibility to conduct a reasonable investigation and are obligated to follow up on any "red flags" that it encounters during its inquiry as well as to investigate any substantial adverse information about the issuer and its management. When presented with "red flags," the broker-dealer must do more than simply rely upon representations by issuer's management, the disclosure and an offering document or even a due diligence report of issuer's counsel or some third party expert.
It is reported that your CLFA investment is now worthless. PCCI and it's principal, Terry Roussel, were fined and/or suspended by FINRA for making misleading statements to investors in connection with the CLFA offering.
Thus far, two other broker-dealers have been investigated and sanctioned by FINRA for violations relating to their own failure to conduct due diligence on CLFA prior to recommending it to their best clients, namely, Investors Capital Corp. and Workman Securities Corporation. FINRA has reported that one or more of these broker-dealers failed to conduct any reasonable due diligence investigation on CLFA prior to selling CLFA securities. Further, they did not seek independent third party due diligence reports, meet with or ask questions of management about certain disclosures in the PPM relating to projections and targets or even review unaudited CLFA financial statements, which violated the rules. It has also been reported that they reviewed third party reports that did not include an analysis of how investors in CLFA would recover their principal investment and whether the projected 18.75% yield was realistic.
All of this begs the question: Did Ameritas perform an independent due diligence analysis before it recommended the investment to its best clients? What analysis, if any, did Ameritas perform of how investors would recover their principal investment and whether the projected 18.75% yield was realistic? FINRA investigations are confidential and although FINRA has not reportedly taken any action against Ameritas to date, the failure of any broker-dealer to conduct those types of inquiries could constitute a violation of FINRA rules and entitle you to recovery of your investment losses from that brokerage firm.
Ameritas was Obligated to Perform a Suitability Analysis
Ameritas was also required to have reasonable grounds to believe that a recommendation to purchase a security is suitable for the customer. This analysis has two principal components. First, the "reasonable basis" suitability analysis requires the broker-dealer to have a reasonable basis to believe, based on a reasonable investigation, that the recommendation is suitable for at least some investors. If there is no reasonable basis for any of the targeted returns, then the securities offered are not suitable for any investor. Second, the "customer specific suitability" analysis requires the broker-dealer to determine whether the security is suitable for the customer to whom it would be recommended. This second suitability analysis is dependent upon the investor's stated investment objectives, risk tolerance and financial condition. Any recommendation by a broker that does not satisfactorily comply with either component can be a violation of FINRA rules.
For most investors, liquidity, income and risk tolerance are a concern, but if you are elderly and retired, they are paramount! If you have limited resources and no ability to generate income from other sources to meet your liquidity and income needs then CLFA was an unsuitable investment. Likewise, if you cannot afford a total risk of loss, then the speculative CLFA investment was unsuitable. The suitability problem is compounded when any investors' portfolio is concentrated in CLFA. A rule of thumb is that no more than 10% of anyone's investment portfolio should be concentrated in any illiquid real estate investments, and that percentage should be far less as a person reaches retirement and advances in age, perhaps zero!
Know Your Rights and Get Your Questions Answered!
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 CLFA and this blog post and/or any related matter.

Wednesday, June 26, 2013

APPLE REIT 8 INVESTOR ALERT - DO YOU THINK APPLE REIT 8 IS OUT OF CASH?

Apple REIT 8 Investors who recently tried to cash out of the REIT are calling and telling us they think the REIT might be out of cash after they received a response to their recent redemption requests. In a January 24th letter, Glade Knight, the Apple REIT founder and chairman, told Apple REIT 8 investors that the REIT no longer had sufficient funds to meet their redemption requests in full. This leaves investors with a security that is practically illiquid. Seeing as redemption requests are now exceeding the funds available to meet them, Apple REIT 8 will have no choice but to suspend their redemption programs indefinitely. In that event, the REIT will become completely illiquid, and investors will have no access to their funds in the foreseeable future.
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.
Apple REIT 8's inability to meet redemption requests is material investment information, which cannot go undisclosed. Perhaps the lack of disclosure stems from the fact that David Lerner Associates (DLA), the Long Island securities broker that single-handedly placed these high commission-paying products into the portfolios of retirees seeking safety and income, is trying to break escrow on Apple REIT 10. It could also very well be that DLA has decided that disclosing bad news on Apple REIT 8 would be bad for sales of their latest self-enrichment schemes.
The Financial Industry Regulatory Authority (FINRA) is also inquiring into Apple REIT 8's operations. FINRA recently filed a complaint describing how Apple REIT 8 is paying monthly distributions nearly 4 times over the net income its hotels are earning. To date, FINRA has not taken any formal action for restitution on behalf of investors in Apple REIT 8. This does not mean that Apple REIT 8 investors cannot make personal claims for their losses. Investors who have suffered losses in Apple REIT 8 are encouraged and are certainly entitled to file arbitration claims for damages against DLA in order to recover their lost principal.
Have you suffered losses in Apple REIT 8 sold by David Lerner Associates? 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.

Tuesday, June 25, 2013

INVESTOR ALERT - DAVID LERNER AND ASSOCIATES ON THE HOT SEAT FOR APPLE REIT 8!

Once again, David Lerner and Associates (DLA) is on the hot seat for sales of Apple real estate investment trusts (REITs). This time around, investors who purchased Apple REIT 8 from DLA are beginning to doubt whether they are going to continue to receive distributions and be able to cash out their principal. Apple REIT 8 consists of 51 hotels, and DLA investors have invested $1 billion. For the past two years, Apple REIT 8 has been strapped for cash and is in default on 4 of its hotel properties. The REIT needed a $20 million loan to sustain its operations, which was provided when Glade Knight, the founder of the REIT, agreed to personally guarantee the loan if the REIT cannot pay it back. The Financial Industry Regulatory Authority (FINRA) is also inquiring into the REITs operations. FINRA recently filed a complaint describing how Apple REIT 8 is paying monthly distributions nearly 4 times over the net income its hotels are earning. Some secondary market makers have offered to pay investors only $3 per share - a more accurate value as opposed to the $11 share value that appears on monthly statements. This means that investors have lost more than 70% of their investment, and their distributions could very well be a return of their own investment or principal.
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.
To date, FINRA has not taken any formal action for restitution on behalf of investors in Apple REIT 8. This does not mean that Apple REIT 8 investors cannot make personal claims for their losses. Investors who have suffered losses in Apple REIT 8 are encouraged and are certainly entitled to file arbitration claims for damages against DLA in order to recover their lost principal.
Have you suffered losses in Apple REIT 8 sold by David Lerner Associates? 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.

Monday, June 24, 2013

DELANEY EQUITY GROUP, LLC AND DAVID CAMERON DELANEY NAMED IN FINRA COMPLAINT FOR MULTIPLE FINANCIAL INDUSTRY RULES VIOLATIONS

Delaney Equity Group, LLC, a Palm Beach Gardens, Florida based brokerage firm, and David Cameron Delaney, a West Palm Beach, Florida based broker, were named respondents in a Financial Industry Regulatory Authority (FINRA) complaint alleging that the firm, acting through Mr. Delaney, failed to conduct adequate due diligence to determine whether they were participating in a scheme to evade the registration requirements of the Securities Act of 1933 by selling shares of low-priced equity securities that were unregistered and non-exempt. A firm customer had obtained almost $2.4 million through the sale of these unregistered securities, which ceased only when the firm's clearing firm restricted the customer's accounts. The complaint alleges that the firm relied on opinion letters by single counsel representing all of the issuers, who was later found to have issued inaccurate correspondence to the over-the-counter (OTC) markets and failed to note the contradiction in the customer's actions and representations. The firm sold almost a billion shares of common stock on the customer's behalf that were not registered with the Securities and Exchange Commission (SEC), and no exemption from registration applied to such sales.
FINRA's complaint also alleges that the firm failed to establish, maintain and enforce adequate policies and procedures, including written supervisory procedures (WSPs), reasonably designed to ensure compliance with the Securities Act to prevent the sale of unregistered securities not exempt from registration. The firm allegedly failed to develop and implement anti-money laundering (AML) policies, procedures, and internal controls reasonably designed to achieve compliance with regulations. The complaint further alleges that the AML procedures failed to address the detection, monitoring, analyzing, investigating, and reporting of suspicious activity in the context of its securities liquidation business. The firm and Mr. Delaney should have detected the suspicious nature of a customer's liquidation of low-priced securities, investigated the activity, and made a suspicious activity report (SAR), but instead they permitted the customer's suspicious trading activity to occur and failed to report any activities.
Moreover, the complaint alleges that the firm either failed to identify or ignored red flags involving numerous instances of potentially suspicious activities and thus failed to sufficiently investigate and report these activities in accordance with its WSPs and implementing regulations. Moreover, the complaint alleges that when the firm became a FINRA member, it agreed as part of its membership agreement that a registered representative or broker would be subjected to heightened supervision. The firm's WSPs required brokers with prior disciplinary disclosures to be placed under heightened supervision, but the firm failed to cause the order memoranda to be initialed prior to the broker's execution of transactions or to verify his customers' account information.
Furthermore, the complaint alleges that Mr. Delaney assigned another principal to conduct the heightened supervision, but the principal was not consistently available to implement such supervision because he reported to work only two or three days per week. In addition, the principal relied on Mr. Delaney to notify him if any of the broker's accounts exhibited third-party trading authority although Mr. Delaney was prohibited from directly supervising the broker due to the firm's membership agreement. The firm also failed to enforce its WSPs and impose heightened supervision on the broker.
Have you suffered losses in your Delaney Equity Group, LLC brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against Delaney Equity Group, LLC stockbrokers who may have engaged in misconduct and caused investors losses.
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.

Saturday, June 22, 2013

AMY LOUISE SIESENNOP FINED AND SUSPENDED BY FINRA FOR VIOLATING FINANCIAL INDUSTRY RULES

Financial Industry Regulatory Authority (FINRA) findings have been entered against Amy Louise Siesennop, a broker with Brookfield, Wisconsin based Freedom Investors Corp., for improperly guaranteeing a customer against loss and drafting a settlement agreement with the customer that contained a condition that the customer agree not to complain to FINRA if her firm made his account whole. FINRA's findings stated that Ms. Siesennop timely filed a disclosure of events and complaint form to report the complaint but incorrectly checked the box indicating that the complaint was against the firm and not an individual representative. Ms. Siesennop, of Oconomowac, Wisconsin, was fined $11,000, suspended from association with any FINRA member in any principal capacity for 16 months, and ordered to re-qualify as a principal before acting again in that capacity. The fines are due upon Ms. Siesennop's return to the securities industry, and the suspension is in effect from December 17, 2012 through April 16, 2014.
FINRA's findings also stated that Ms. Siesennop post-dated her signature on a compliance review form and admitted that she did not disclose to the FINRA auditors that she had made additions to the form when she readied it for their review, thereby providing a false and misleading document to FINRA auditors. The findings further included that Ms. Siesennop maintained the inaccurate form in her firm's records, which caused inaccuracies in the firm's records. FINRA found that Ms. Siesennop produced the inaccurate and misleading form in response to a post-complaint Rule 8210 request for information and documents without explaining how and why she had previously altered the form.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages due to Ms. Siesennop's misrepresentations and unlawful acts can bring forth claims to recover losses against Freedom Investors Corp., which should have prevented Ms. Siesennop from committing the described illegal activity.
Have you suffered losses in your Freedom Investors Corp. brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against Freedom Investors Corp. stockbrokers who may have engaged in misconduct and caused investors losses.
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.

Friday, June 21, 2013

SEAN PLACIDO RODRIGUEZ FINED AND SUSPENDED BY FINRA FOR EXECUTING DISCRETIONARY TRADES WITHOUT PERMISSION

Sean Placido Rodriguez, a broker formerly with Los Angeles, California based Wedbush Securities Inc., submitted a letter of acceptance, waiver, and consent in which the Financial Industry Regulatory Authority (FINRA) entered findings that he executed discretion in a customer's account without the customer's written authorization or his member firm's written acceptance of the account as discretionary. FINRA's findings stated that Mr. Rodriguez recommended and executed equity purchases and sales with a short-term holding period and recommended to the customer the purchase and sale of equity securities in amounts that resulted in an inappropriate concentration of these securities in her account, ranging between 25 percent and 50 percent of her account value at the time of the transactions. In light of the customer's financial situation and needs, Mr. Rodriguez did not have a reasonable basis to recommend that she engage in short-term trading and concentrate her account in the equity securities. Mr. Rodriguez, of Glendale, California, was fined $10,000, suspended from association with any FINRA member in any capacity for 60 days, and ordered to disgorge gains to a customer - the suspension is in effect from January 22, 2013 through March 22, 2013.
A discretionary account is an account that allows a broker to buy and sell securities without the client's consent. The client must sign a discretionary disclosure with the broker in order to document the client's consent. A discretionary account sometimes referred to as a managed account. Sometimes certain guidelines are set by the client regarding trading in the account - a client might only permit investments in blue chip stocks.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages due to Mr. Rodriguez's discretionary activity can bring forth claims to recover losses against Wedbush Securities, which should have prevented Mr. Rodriguez from committing the described illegal activity.
Have you suffered losses in your Wedbush Securities Inc. brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against Wedbush Securities Inc. stockbrokers who may have engaged in misconduct and caused investors losses.
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.

Thursday, June 20, 2013

DARYL WINFIELD RILEY FINED AND SUSPENDED BY FINRA FOR EXECUTING DISCRETIONARY TRADES WITHOUT PERMISSION

Daryl Winfield Riley, a broker formerly with St. Louis, Missouri based Wells Fargo Advisors LLC, submitted an offer of settlement in which he consented to Financial Industry Regulatory Authority (FINRA) findings that he exercised discretion for solicited purchases in customer accounts without the customers' written authorization and his member firm's acceptance of the accounts as discretionary. The firm's written policies and procedures generally prohibited discretionary accounts and only allowed brokers to exercise discretion in certain types of customer accounts with firm approval. Mr. Riley, of La Habra, California, was fined $5,000 and suspended from association with any FINRA member in any capacity for one month - the suspension was in effect from January 7, 2013 through February 6, 2013.
A discretionary account is an account that allows a broker to buy and sell securities without the client's consent. The client must sign a discretionary disclosure with the broker in order to document the client's consent. A discretionary account sometimes referred to as a managed account. Sometimes certain guidelines are set by the client regarding trading in the account - a client might only permit investments in blue chip stocks.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages due to Mr. Riley's discretionary activity can bring forth claims to recover losses against Wells Fargo Advisors, which should have prevented Mr. Riley from committing the described illegal activity.
Have you suffered losses in your Wells Fargo Advisors LLC brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against Wells Fargo Advisors LLC stockbrokers who may have engaged in misconduct and caused investors losses.
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.

Wednesday, June 19, 2013

JAMES MICHAEL O'BRIEN AKA JAY O'BRIEN SUSPENDED BY FINRA FOR SELLING UNAUTHORIZED INVESTMENTS

James Michael O'Brien aka Jay O'Brien, a broker formerly with Boston, Massachusetts based LPL Financial LLC, submitted a letter of acceptance, waiver, and consent after the Financial Industry Regulatory Authority (FINRA) entered findings that Mr. O'Brien participated in private securities transactions outside the regular course and scope of his employment with his member firm. Mr. O'Brien neither provided notice of these transactions to the firm nor did he receive approval. Mr. O'Brien, of Encinitas, California, was suspended from association with any FINRA member in any capacity for 18 months. FINRA's findings stated that Mr. O'Brien referred investors to an entity that sold them securities in the form of promissory notes. The total dollar amount of the investments was $2,654,596. For these referrals, Mr. O'Brien was compensated a total of $125,416. The suspension is in effect from January 7, 2013 through July 6, 2014.
Selling away is the inappropriate practice of an investment professional who sells or solicits securities or investments not held, approved, or authorized by the brokerage firm with which the professional is associated. Under NASD and FINRA rules, brokerage firms must approve investments offered by their investment professionals and supervise its sales.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages due to Mr. O'Brien's fraudulent activity can bring forth claims to recover losses against LPL Financial, which should have prevented Mr. O'Brien from committing the described illegal activity.
Have you suffered losses in your LPL Financial LLC brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against LPL Financial LLC stockbrokers who may have engaged in misconduct and caused investors losses.
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.

Tuesday, June 18, 2013

CHARLES CHUL NAM FOREVER BARRED FROM THE SECURITIES INDUSTRY FOR MISREPRESENTING REAL ESTATE INVESTMENT TRUSTS (REITS)

Charles Chul Nam, formerly with Oakdale, Minnesota based Woodbury Financial Services, Inc. and Springfield, Massachusetts based MML Investors Services Inc., has been sanctioned by the Financial Industry Regulatory Authority (FINRA) after it found that Mr. Nam made fraudulent misrepresentations and omissions of material fact in connection with the offer or sale of a real estate investment trust (REIT) and used telephone lines and the Internet to perpetuate his fraud. FINRA's findings stated that while employed by each of the firms, Mr. Nam falsely represented that he was affiliated with and accepted investor funds on behalf of the REIT. Through his material misrepresentations and omissions of facts, Mr. Nam fraudulently obtained $792,750 from the investors, $352,750 of which has not been repaid. Mr. Nam, of Tarzana, California, was barred from association with any FINRA member in any capacity and required to pay $352,750 in restitution to investors.
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.
FINRA's findings further stated that Nam acted with "scienter," which supports a finding that his violations were willful. In addition, FINRA stated that Nam wrongfully converted investors' funds and used the funds for his own purposes. FINRA also included that Nam failed to respond to FINRA requests for information and to appear for testimony.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages due to Mr. Mercedes' fraudulent activity can bring forth claims to recover losses against Woodbury Financial Services, Inc. and MML Investors Services Inc., which should have prevented Mr. Mercedes from committing the described illegal activity.
Have you suffered losses in your Woodbury Financial Services, Inc. and/or MML Investors Services Inc. brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against Woodbury Financial Services, Inc. and MML Investors Services Inc. stockbrokers who may have engaged in misconduct and caused investors losses.
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.

Monday, June 17, 2013

NEFTALI MERCEDES PERMANENTLY BANNED FROM THE SECURITIES INDUSTRY FOR MAKING MISREPRESENTATIONS

Neftali Mercedes, formerly with New York, New York based Fordham Financial Management, Inc., was sanctioned by the Financial Industry Regulatory Authority (FINRA) after it found that Mr. Mercedes knowingly made material misrepresentations and omissions in the sale of securities. FINRA's findings stated that Mr. Mercedes' misleading statements and omissions concerned the risks associated with an investment in speculative securities and the financial condition of the issuer. Mr. Mercedes had no basis for making the statements to his customer and did not attempt to verify the information about the issuer that he provided to his customers. Mr. Mercedes also failed to disclose the issuer's negative financial condition and performance, which were facts material to the purchasers' investment decisions. Mr. Mercedes' conduct, which occurred over several months, enabled him to profit financially while his customers lost their investments, and Mr. Mercedes did not make any attempt to pay restitution to the affected customers or remedy his misconduct. Mr. Mercedes, of New York, New York, was barred from association with any FINRA member in any capacity and was ordered to pay a total of $97,500 plus interest in restitution to customers.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages due to Mr. Mercedes' fraudulent activity can bring forth claims to recover losses against Fordham Financial Management, which should have prevented Mr. Mercedes from committing the described illegal activity.
Have you suffered losses in your Fordham Financial Management, Inc. brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against Fordham Financial Management, Inc. stockbrokers who may have engaged in misconduct and caused investors losses.
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.

Sunday, June 16, 2013

RANDOLPH NG LEONG BANNED BY FINRA FOR FORGING CUSTOMER SIGNATURES ON CHECKS AND INSURANCE FORMS

Randolph Ng Leong, formerly with New York, New York based NYLIFE Securities LLC, submitted a letter of acceptance, waiver, and consent in which Mr. Leong consented to sanctions and to the entry of findings that he used a customer's checkbook to write himself a check for $900. Mr. Leong forged the customer's signature on the check, deposited the check into his account, and used the money to pay part of the amount due on his monthly mortgage loan, without the customer's authorization to write the check and sign it. FINRA's findings further stated that Mr. Leong also signed customers' names to life insurance applications without their consent. In addition, findings stated that Leong allowed an applicant for insurance to forge the signature of the applicant's mother on the back of the insurance application. Mr. Leong, of Troy, Michigan, was banned from association with any FINRA member in any capacity.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages due to Mr. Leong's fraudulent activity can bring forth claims to recover losses against NYLIFE Securities, which should have prevented Mr. Leong from committing the described illegal activity.
Have you suffered losses in your NYLIFE Securities LLC brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against NYLIFE Securities LLC stockbrokers who may have engaged in misconduct and caused investors losses.
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.

Saturday, June 15, 2013

JAMES MARTIN HIGGS FINED AND SUSPENDED BY FINRA FOR SELLING AWAY EQUITY-INDEXED ANNUITIES

James Martin Higgs, formerly with Newark, New Jersey based Pruco Securities, LLC, submitted a letter of acceptance, waiver, and consent in which he consented to sanctions and to the entry of Financial Industry Regulatory Authority (FINRA) findings that after his member firm placed him on probation for selling equity-indexed annuities (EIAs) to customers outside of its sponsored programs, Mr. Higgs continued to sell EIAs to individuals outside the scope of his employment. FINRA stated that some of the individuals who purchased EIAs were the firm's customers, but Mr. Higgs did not provide his firm with prior written notice of the business activity. Mr. Higgs, of Parkersburg, West Virginia, was fined $10,000 and suspended from association with any FINRA member in any capacity for seven months. The fine must be paid either upon Higgs' re-association with a FINRA member firm following his suspension, or prior to the filing of any application or request for relief from any statutory disqualification, whichever is earlier.
Selling away is the inappropriate practice of an investment professional who sells or solicits securities or investments not held or approved by the brokerage firm with which the professional is associated with. Under NASD and FINRA rules, brokerage firms must approve investments offered by their investment professionals and supervise its sales.
Equity-indexed annuities are complex products that are hybrid of both fixed and variable annuities. Their returns vary more than a fixed annuity, but not as much as a variable annuity. So, equity-indexed annuities are more risky than fixed annuities, but less risky than a variable annuity. Equity-indexed annuities offer a minimum guaranteed interest rate combined with an interest rate linked to a market index. Because of the guaranteed interest rate, equity-indexed annuities have less market risk than variable annuities. Equity-indexed annuities also have the potential to earn returns better than traditional fixed annuities when the stock market is rising. Equity-indexed annuities come with fees that are higher than any investment, and sales commissions to brokers can go as high as 12%. Surrender charges can go as high as 18%.
Mr. Higgs' undisclosed EIA sales totaled approximately $674,804.61, and he received approximately $22,838.50 as compensation for the transactions. Investors who may have suffered damages caused by the EIAs they purchased should know that Pruco Securities can be held liable for Mr. Higgs' selling away activities because it either failed to establish a reasonable supervisory system, or because it failed to implement an existing reasonable supervisory system. Even if Pruco Securities did not know of Mr. Higgs' activities, it can still be liable to investors for damages.
Have you suffered losses in your Pruco Securities, LLC brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against Pruco Securities, LLC stockbrokers who may have engaged in misconduct and caused investors losses.
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.

Friday, June 14, 2013

JANICE LOUISE HALLETT FINED AND SUSPENDED FOR MISREPRESENTING OIL AND GAS INVESTMENTS

Janice Louise Hallett, a broker with Schertz, Texas based The Tidal Group, submitted a letter of acceptance, waiver, and consent in which Ms. Hallett consented to sanctions and to the entry of Financial Industry Regulatory Authority (FINRA) findings that she offered and sold oil and gas interests to her firm's customers that were securities offerings issued by the firm's affiliate. While discussing the offerings, Ms. Hallett negligently made inaccurate statements to several investors relating to the returns they could expect from the investment and the affiliate's track record. FINRA's findings also stated that Hallett negligently advised some investors considering purchasing interests in an offering that they could expect a return of their principal investment in one to three years. Since oil and gas investments are considered speculative in nature, such returns are not probable. Ms. Hallett, of Cibolo, Texas, was fined $10,000 and suspended from association with any FINRA member in any capacity for 20 business days - the suspension was in effect from January 7, 2013 through February 4, 2013.
Oil and gas investments vary in form, which can include limited partnerships, ownership of fractional undivided interests in leases, and general partnerships. Tax consequences and investor liability, depending on the type investment program, can vary as well. In a general partnership, investors actively participate in the operations of the venture, and they are personally liable for partnership debts. In a drilling limited partnership, an oil or gas company sells partnership units to investors and uses the money it raises to lease property and drill wells. In return for managing the project, the sponsor company usually takes an upfront fee that averages about 15% of one's investment (commonly referred to as tangible and intangible drilling costs) and also shares in a percentage of any revenue generated. In return, the promoter offers the investor the prospect of a substantial first year tax write-off and quarterly cash distributions from the sale of any oil and gas the partnership finds until the wells run dry. Drilling partnerships have always been a gamble, but recently, they have proven somewhat riskier than usual. This type of investment is very speculative, is a highly illiquid investment, and can have a long holding period.
In addition, FINRA found that while selling interests in an oil and gas venture, Ms. Hallett negligently advised a customer that the firm's affiliate had drilled "24 straight successful wells" in a particular area. In fact, the affiliate had drilled at least one dry hole in the area and drilled other wells in the area that yielded very limited gas or oil production.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages due to Ms. Hallett's misrepresentations can bring forth claims to recover losses against The Tidal Group, which should have prevented Ms. Hallett from committing the described negligent activity.
Have you suffered losses in your The Tidal Group brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against The Tidal Group stockbrokers who may have engaged in misconduct and caused investors losses.
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.

Thursday, June 13, 2013

JAMES DOUGLAS GRIMES BANNED BY FINRA FOR FORGERY AND MISAPPROPRIATING FUNDS

James Douglas Grimes, formerly with Washington, Pennsylvania based Financial Network Investment Corporation, submitted an offer of settlement after the Financial Industry Regulatory Authority (FINRA) entered findings that he transferred $306,000 from customers' accounts to a business account in the name of another customer without any of the customers' consent or knowledge. Mr. Grimes consented to sanctions and to FINRA's findings that he affected the unauthorized transfers by submitting written journal request forms to his firm that contained forged client signatures. Mr. Grimes wrote numerous checks payable to cash totaling $250,446, withdrew funds from the business account, and converted the proceeds for his own use. Mr. Grimes forged the signature of the holder of the business account on the checks. Mr. Grimes, of Lawrence, Pennsylvania, was banned from association with any FINRA member in any capacity.
FINRA's findings also stated that the firm kept the journal request forms and the numerous checks as part of its books and records. Those documents appeared to contain genuine customer signatures. However, the signatures were forged so the records were therefore inaccurate. By falsifying journal requests and checks, Grimes caused his firm's books and records to be inaccurate.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages due to Mr. Grimes's fraudulent activity can bring forth claims to recover losses against Financial Network Investment Corporation, which should have prevented Mr. Grimes from committing the described illegal activity.
Have you suffered losses in your Financial Network Investment Corporation brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against Financial Network Investment Corporation stockbrokers who may have engaged in misconduct and caused investors losses.
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.

Wednesday, June 12, 2013

JEFFREY ALAN GIELAU FINED AND SUSPENDED BY FINRA FOR FALSIFYING SIGNATURES

Jeffrey Alan Gielau, formerly with Westlake Village, California based Financial West Investment Group, submitted a letter of acceptance, waiver, and consent after the Financial Industry Regulatory Authority (FINRA) entered findings that he had his non-licensed sales assistant sign as agent of record on a customer's variable annuity (VA) replacement form. FINRA's findings stated that the form was necessary for the customer to replace a VA he purchased from the firm where Mr. Gielau had been terminated for falsifying customer signatures with a product from another insurance company.
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.
Mr. Gielau knew that his sales assistant, as a non-licensed person, was not allowed to sign the form as the agent of record. Mr. Gielau, of Orange, California, was fined $5,000 and suspended from association with any FINRA member in any capacity for 30 days. The suspension was in effect from January 7, 2013 through February 5, 2013, and the fine must be paid either immediately upon Mr. Gielau's re-association with a FINRA member firm following his suspension, or prior to the filing of any application or request for relief from any statutory disqualification, whichever is earlier.
Have you suffered losses in your Financial West Investment Group brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is actively investigating and accepting clients with valid claims against Financial West Investment Group stockbrokers who may have engaged in misconduct and caused investors losses.
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.

Tuesday, June 11, 2013

MARTIN BENJAMIN FEIBISH BANNED BY FINRA DUE TO FRAUDULENT ACTIVITY INVOLVING ELDERLY INVESTORS

Martin Benjamin Feibish, formerly with Springfield, Massachusetts based MML Investors Services, submitted a letter of acceptance, waiver, and consent in which he was banned from association with any Financial Industry Regulatory Authority (FINRA) member in any capacity. Mr. Feibish, of Warwick, Rhode Island, consented to the FINRA sanction and to the entry of findings that he created a scheme to steal more than $5 million from an elderly customer by investing her money in fake investment vehicles, and forging her relatives' signatures. Mr. Feibish began using a company he established to create false investment vehicles. Mr. Feibish then created false promissory notes through the company, which manifested an alleged interest in mortgage-backed securities. The findings also stated that Mr. Feibish persuaded the customer to purchase false promissory notes. Mr. Feibish created and provided the customer with false documentation representing the mortgage-backed securities and IRS Form 1099s, to convince the customer that she was invested in legitimate investment vehicles. Mr. Feibish took funds from the customer for the non-existent investments and placed them in a bank account he controlled in his company's name. FINRA's findings stated that through his conduct, Mr. Feibish purposefully violated the Securities Exchange Act of 1934, FINRA rules, and NASD rules.
FINRA also included that over time, Mr. Feibish had checks issued from his company's bank account to the customer. Mr. Feibish told the customer that these payments represented the interest payments from the investments, but were really a return of the customer's own money. Thereafter, Mr. Feibish convinced the customer to reinvest the money in additional fictitious investment vehicles, including promissory notes from a bank. FINRA stated that in furtherance of this misconduct, Mr. Feibish forged the names of the customer and her relatives to open trust accounts in their names at the bank. Just as in the previous sham investments, payments issued from the accounts at the bank were not proceeds from the investments, but simply a return of the customer's money. Mr. Feibish continued to convince the customer to reinvest the supposed proceeds in other false investment vehicles to avoid having to return the money to the customer.
Moreover, FINRA found that Mr. Feibish managed insurance plans belonging to the customer, which were for the benefit of her relatives. Mr. Feibish told the customer he was paying the premiums on those policies, when in fact he had forged the relatives' signatures and borrowed approximately $280,000 against them. Mr. Feibish regularly had false documentation issued to the customer, including false promissory notes and falsified account statements.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages due to Mr. Feibish's fraudulent activity can bring forth claims to recover losses against MML Investors Services, which should have prevented Mr. Feibish from committing the described illegal activity.
Have you suffered losses in your MML Investors Services brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against MML Investors Services stockbrokers who may have engaged in misconduct and caused investors losses.
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.

Monday, June 10, 2013

DONALD RICHARD DAHN SUSPENDED BY FINRA FOR UNDISCLOSED LOANS FROM CUSTOMERS

Donald Richard Dahn, a Former Mutual Service Corporation broker located in Palm City, Florida, submitted a letter of acceptance, waiver, and consent in which he was suspended from association with any Financial Industry Regulatory Authority (FINRA) member in any capacity for six months. Due to Mr. Dahn's financial situation, no fine was imposed. Mr. Dahn consented to the sanction and to the entry of findings that he borrowed a total of $240,900 in business loans from customers, for operating expenses for a company Mr. Dahn and his brother operated, but he failed to disclose the loans to his member firm. FINRA's findings stated that in two of the cases, Mr. Dahn co-signed promissory notes executed on behalf of the customers even though the firm's written supervisory procedures prohibited borrowing money from customers. Mr. Dahn failed to repay the loans to the customers, which his firm ultimately reimbursed.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish a reasonable supervisory system, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages can bring forth claims to recover losses against Mutual Service Corporation due to Mr. Dahn's failure to disclose and promissory note co-signatures, which clearly violated Mutual Service Corporation's written supervisory procedures prohibiting such activity.
Have you suffered losses in your Mutual Service Corporation brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against Mutual Service Corporation stockbrokers who may have engaged in misconduct and caused investors losses.
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.

Sunday, June 9, 2013

RICHARD GRANT CODY FINED AND SUSPENDED FOR UNSUITABLE AND EXCESSIVE TRADING

Former Leerink Swann & Co. broker, Richard Grant Cody of Boston, Massachusetts, was fined and suspended from association with any Financial Industry Regulatory Authority FINRA member in any capacity for one year. The United States Court of Appeals for the First Circuit affirmed a Securities and Exchange Commission (SEC) decision, which had sustained a National Adjudicatory Council (NAC) decision. The sanction was based on findings that Mr. Cody engaged in unsuitable and excessive trading in customers' accounts at Boston, Massachusetts based Leerink Swank & Co., gave his customers account summaries that contained materially misleading account values, and failed to timely update his Form U4 to disclose settlements with customers. The fine imposed totaled $27,500, and the suspension is in effect from January 7, 2013 through January 6, 2014.
Excessive trading or "churning" involves excessive trading by a broker in a client's account mainly to generate commissions. Churning is considered an illegal and unethical practice that violates SEC rules and securities laws. Although there is no quantitative measure for churning, frequent buying and selling of securities that does little to meet a client's investment objectives may be construed as evidence of churning. Churning may result in substantial losses in a client's account, and even if profitable, may generate a tax liability for a client.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from churning and similar abuses. If broker-dealers do not establish a reasonable supervisory system, they may be liable to investors for damages. Therefore, investors who have suffered damages can bring forth claims to recover losses against Leerink Swann & Co. due to Mr. Cody's churning.
Have you suffered losses in your Leerink Swann & Co. brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against Leerink Swann & Co. stockbrokers who may have engaged in misconduct and caused investors losses.
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.

Saturday, June 8, 2013

CHRISTOPHER MICHAEL BONES FINED AND SUSPENDED FOR UN-AUTHORIZED TRADES IN CLIENT ACCOUNTS

Christopher Michael Bones, a broker at Summit Brokerage Services, Inc. in Eugene, Oregon, submitted a Letter of acceptance, waiver, and consent in which he was fined $5,000 and suspended from association with any Financial Industry Regulatory Authority (FINRA) member in any capacity for 15 business days. Mr. Bones, who is currently with Ameriprise Financial Services, Inc. in Eugene, Oregon, consented to the sanction and to the entry of findings that he exercised trading discretion in customers' accounts following an agreed-upon investment strategy, but he did not consistently notify the customers prior to placing a trade in their accounts.
A discretionary account is an account that allows a broker to buy and sell securities without the client's consent. The client must sign a discretionary disclosure with the broker in order to document the client's consent. A discretionary account sometimes referred to as a "managed account." Sometimes certain guidelines are set by the client regarding trading in the account - a client might only permit investments in blue chip stocks.
In this case, none of the customers provided Mr. Bones with written authorization to exercise any discretionary power, and his member firm did not authorize these accounts as discretionary. FINRA's findings stated that in fact, as was known to Mr. Bones, his member firm's policies prohibited the exercise of discretionary power in any client's account.
Have you suffered losses in your Summit Brokerage Services brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against Summit Brokerage Services stockbrokers who may have engaged in misconduct and caused investors losses.
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.

Friday, June 7, 2013

T. ROWE PRICE INVESTMENT SECURITIES, INC. CENSURED AND FINED FOR FAULTY MUTUAL FUND PROSPECTUSES

T. Rowe Price Investment Securities, Inc., a Baltimore, Maryland based brokerage firm, submitted a letter of acceptance, waiver, and consent after the Financial Industry Regulatory Authority (FINRA) entered findings alleging that it failed to deliver prospectuses to mutual fund customers within three business days of their purchases. FINRA stated that the firm's clearing firm contracted with a third-party service provider for the delivery of mutual fund prospectuses for some of the clearing firm's introducing brokers, including the firm. On a daily basis, the clearing firm provided the service provider with electronic information regarding mutual fund transactions requiring delivery of a prospectus to the firm's customers. The clearing firm also provided daily and monthly reports to the firm. The firm did not establish or implement adequate systems or procedures for review of the daily reports. Although the firm's procedures required review of the monthly reports, they did not adequately describe what the reviewer was required to look for or what actions the reviewer was required to take in the event that prospectus delivery deficiencies were identified. FINRA further stated that the firm did not take sufficient actions to ensure that all of its customers were receiving prospectuses on time. In addition, FINRA stated that because of the firm's failure to timely deliver prospectuses to certain customers who purchased mutual funds, these customers were not provided with important disclosures about these products by settlement date in contravention of the Securities Act. The firm was censured and fined a total of $40,000 for all violations.
A prospectus is a document that discloses important information about an investment. It typically provides investors with material information about mutual funds, stocks, bonds, and other investments. Such information generally includes a description of the company's business, financial statements, biographies of officers and directors, detailed information about their compensation, any litigation that is taking place, a list of material properties, and any other material information.
T. Rowe Price Investment Securities was required to establish and maintain a supervisory system and written supervisory procedures (WSPs) reasonably designed to monitor and ensure the timely delivery of mutual fund prospectuses. FINRA found that the firm's WSPs did not require an adequate review of the service provider's performance of its prospectus deliveries. Instead, the firm's system for supervising the timely delivery of mutual fund prospectuses involved substantial reliance on the clearing firm and the service provider. FINRA concluded that the firm lacked an adequate supervisory system or procedure that was reasonably designed to ensure that mutual fund prospectuses were being delivered on a timely basis consistent with the Securities Act, and failed to implement and maintain such a supervisory system and WSPs.
Have you suffered losses in your T. Rowe Price Investment Securities brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against T. Rowe Price Investment Securities stockbrokers who may have engaged in misconduct and caused investors losses.
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.

Thursday, June 6, 2013

STATE FARM VP MANAGEMENT CORP. CENSURED AND FINED FOR VARIOUS SECURITIES LAWS VIOLATIONS

State Farm VP Management Corp., a Bloomington, Illinois based brokerage firm, submitted a letter of acceptance, waiver, and consent after the Financial Industry Regulatory Authority (FINRA) entered findings that the firm failed to establish, maintain, and enforce a supervisory system or written supervisory procedures (WSPs) reasonably designed to ensure timely delivery of mutual fund prospectuses, when it was required to provide all customers who purchased a mutual fund a prospectus for that fund no later than three business days after the transaction. FINRA's findings stated that the firm executed numerous mutual fund purchase transactions that required it to deliver a mutual fund prospectus to the purchasing customer, and as such, establish and maintain a supervisory system and WSPs reasonably designed to oversee and ensure the timely delivery of mutual fund prospectuses. FINRA also stated that the firm failed to establish, maintain, and enforce an adequate supervisory system or written procedures to supervise mutual fund prospectus delivery, when it had inadequate systems and procedures in place to monitor and ensure compliance with its WSPs directive concerning delivery of a current mutual fund prospectus by its brokers to each client prior to or at the time of the sales presentation in which the broker recommended or discussed a specific mutual fund. The firm was censured and fined a total $155,000 for all violations.
A prospectus is a document that discloses important information about an investment. It typically provides investors with material information about mutual funds, stocks, bonds, and other investments. Such information generally includes a description of the company's business, financial statements, biographies of officers and directors, detailed information about their compensation, any litigation that is taking place, a list of material properties, and any other material information.
In addition, FINRA stated that the firm also had inadequate systems and procedures in place to monitor the performance of its third-party service provider in order to ensure that mutual fund prospectuses were being delivered timely. The findings also included that the firm failed to enforce its procedures requiring delivery of undated mutual fund prospectuses to certain fund holders. The firm's procedures required delivery of mutual fund prospectuses following fund companies' annual updates to their prospectuses. However, during a period, the firm failed to deliver prospectuses to certain mutual fund holders following the annual updates of the funds' prospectuses. During that period, the firm's customers were given an option to opt out of house-holding when completing paper applications. The firm did not adequately monitor its third-party vendor to ensure the mailing list was complete, and as a result, the firm failed to deliver updated prospectuses to certain fund holders as its procedures required.
Moreover, FINRA found that the firm failed to implement a supervisory system and procedures that were reasonably designed to review, monitor, and store email brokers sent to customers. The firm allowed brokers to use an email program for pre-approved email communications with customers and used a third party service provider for email archival. For supervisory purposes, all brokers were required to copy all securities-related messages into a designated mailbox. The firm's compliance department was responsible for reviewing the emails in that box. The firm did not retain securities related emails not copied to this mailbox, but established procedures to verify whether brokers were complying with these directives. The firm was aware that not all of its brokers were complying with firm procedures. Because of the reviews, the firm discovered numerous incidents of noncompliance with firm guidelines regarding selected brokers' use of the mailbox. Although the firm made this discovery, it failed to conduct deeper reviews or modify its procedures.
Have you suffered losses in your State Farm VP Management Corp. brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against State Farm VP Management Corp. stockbrokers who may have engaged in misconduct and caused investors losses.
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.