RICHARD JOSEPH GOBEL FINED AND SUSPENDED FOR EXECUTING UNAUTHORIZED TRADES IN CLIENTS' ACCOUNTS

Richard Joseph Gobel, a former broker with Fairport, New York based Wall Street Financial Group, Inc., submitted a Letter of Acceptance, Waiver and Consent in which he consented to the entry of the Financial Industry Regulatory Authority's (FINRA) findings that he exercised discretionary power in customers' accounts without the customers' written authorization to place discretionary trades. The findings stated that Mr. Gobel failed to obtain his member firm's written acceptance of the accounts as discretionary and falsely declared to the firm that he was not placing trades on a discretionary basis in customer accounts. Mr. Gobel, of McKeesport, Pennsylvania, was fined $7,500 and suspended from association with any FINRA member in any capacity for 45 business days. The fine must be paid either immediately upon Mr. Gobel'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. Mr. Gobel's suspension is in effect from February 19, 2013, through April 23, 2013.
A discretionary account is an account that allows a broker to buy and sell securities without the client's consent. A discretionary account is sometimes referred to as a managed account. Sometimes certain guidelines are set by the client regarding trading in the account. For example, a client might only permit investments in blue chip stocks. The client must sign a discretionary account trading authorization form with the brokerage firm. The execution of any transaction without the client's permission or without a signed discretionary account trading authorization is in violation of FINRA's rules.
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. Gobel's discretionary activity can bring forth claims to recover losses against Wall Street Financial Group, which should have prevented Mr. Gobel from committing the described illegal activity.
Have you suffered losses in your Wall Street Financial Group, Inc. account due to unauthorized trades or any other prohibited activity? 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.

JAIME MELISSA CASSINO SUSPENDED FOR EXECUTING UNAUTHORIZED TRADES IN A CLIENT'S ACCOUNT

Jaime Melissa Cassino, a former broker with Charlotte, North Carolina based Synergy Investment Group, LLC, submitted a Letter of Acceptance, Waiver and Consent in which she consented to the entry of the Financial Industry Regulatory Authority's (FINRA) findings that she effected 122 discretionary transactions in the account of a customer without the customer's prior written authorization and without her member firm's acceptance of the account as a discretionary account. Ms. Cassino, of Miller Place, New York, was suspended from association with any FINRA member in any capacity for one month, and her suspension was in effect from February 19, 2013, through March 18, 2013.
A discretionary account is an account that allows a broker to buy and sell securities without the client's consent. A discretionary account is sometimes referred to as a managed account. Sometimes certain guidelines are set by the client regarding trading in the account. For example, a client might only permit investments in blue chip stocks. The client must sign a discretionary account trading authorization form with the brokerage firm. The execution of any transaction without the client's permission or without a signed discretionary account trading authorization is in violation of FINRA's rules.
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. Cassino's discretionary activity can bring forth claims to recover losses against Synergy Investment Group, which should have prevented Ms. Cassino from committing the described illegal activity.
Have you suffered losses in your Synergy Investment Group, LLC account due to unauthorized trades or any other prohibited activity? 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.

ORAN BEN CARROLL FINED AND SUSPENDED BY FINRA FOR VIOLATING INDUSTRY RULES GOVERNING DUE DILIGENCE AND REGULATION D OFFERINGS

Oran Ben Carroll, a former broker with Dallas, Texas based Cambridge Legacy Securities L.L.C., submitted a Letter of Acceptance, Waiver and Consent in which he consented to the entry of Financial Industry Regulatory Authority (FINRA) findings that, acting in his capacity as the president and a registered principal of Cambridge Legacy Securities, he failed to conduct adequate due diligence of private placements (PPMs) offered by Cambridge Petroleum Group (CPG). The five CPG offerings were the CPG 2005A, CPG 2005B, CPG 2006A, CPG Opportunity I, and CPG Opportunity II, and Mr. Carroll's firm sold $22,900,000 in interests to its customers. Cambridge Legacy Securities also sold $900,000 in interests in the Cambridge Legacy Group (CLG) offering to its customers - Mr. Carroll is the CEO and Chairman of CLG.
FINRA found that Mr. Carroll, who was affiliated with the issuers, failed to implement and enforce reasonable supervisory procedures for the firm relating to conducting due diligence on PPMs from August 2005 through September 2010. FINRA found that Cambridge Legacy Securities did not have any written supervisory procedures (WSPs) governing due diligence for PPMs until January 2008. After January 2008 until at least September 2010, Mr. Carroll failed to enforce the firm's WSPs that required it to conduct due diligence for all PPMs the firm sold. FINRA also found that Mr. Carroll failed to ensure that Cambridge Legacy Securities created and maintained due diligence files and conducted on-going due diligence, as required by its WSPs, so it did not create or maintain due diligence files or conduct on-going due diligence on the offerings.
Mr. Carroll, of Granbury, Texas, was fined $50,000 and suspended from association with any FINRA member in any capacity for nine months. The fine must be paid either immediately upon Mr. Carroll'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. Mr. Carroll's suspension is in effect from March 4, 2013 through December 3, 2013.
Have you suffered losses in your private placement investments or any other investment sold by Cambridge Legacy Securities L.L.C.? 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.

JOHN MICHAEL BABIARZ FINED AND SUSPENDED BY FINRA FOR VIOLATING INDUSTRY AND FIRM RULES

The Financial Industry Regulatory Authority (FINRA) has rendered a default decision against John Michael Babiarz, a former broker with Worcester, Massachusetts based Jesup & Lamont Securities Corp., for settling customer complaints without Jesup & Lamont Securities knowledge or approval. FINRA's findings stated that Mr. Babiarz deceived Jesup & Lamont Securities by concealing the customer complaints, which kept Jesup & Lamont Securities from participating in or approving the settlements. Mr. Babiarz's actions delayed the regulatory filings requiring the disclosure of complaints and settlements. FINRA also stated that Mr. Babiarz caused solicited trading orders to be miscoded as unsolicited and miscoded order tickets in customer accounts. As a result, the Jesup & Lamont Securities' trade confirmations sent to customers, generated from the order entry information, falsely identified solicited orders as unsolicited. Due to Mr. Babiarz's misconduct, the Jesup & Lamont Securities' books and records, including the orders and trade confirmations, were inaccurate and contained false information. FINRA further stated that Mr. Babiarz exercised discretion in customer accounts without written authorization. The customers gave Mr. Babiarz verbal grants of discretion, but none of them provided Mr. Babiarz with written authorization to exercise discretion, and Jesup & Lamont Securities never accepted the accounts as discretionary. During the time Mr. Babiarz was employed by Jesup & Lamont Securities, it prohibited its registered representatives from exercising discretion in customer accounts. Still, Mr. Babiarz was able to conceal the discretionary nature of his trading from Jesup & Lamont Securities for almost four years. Mr. Babiarz, of Peabody, Massachusetts, was fined a total of $20,000 and suspended from association with any FINRA member in any capacity for a total of 90 business days. The fines are due and payable when and if Mr. Babiarz seeks to re-enter the securities industry, and the suspensions are in effect from February 19, 2013 through June 26, 2013.

Broker-dealers must establish and implement a reasonable supervisory system to protect their customers' interests. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from broker misconduct. Have you suffered losses in your Jesup & Lamont Securities Corp. brokerage account due to your broker's misconduct? 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 Jesup & Lamont Securities 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.

ARTHUR APOSTOL FINED AND SUSPENDED BY FINRA FOR AFFIXING CUSTOMER SIGNATURES ONTO ACCOUNT DOCUMENTS

Arthur Apostol, a broker with Charlotte, North Carolina based LPL Financial LLC and East Hartford, Connecticut based First Niagara Securities, submitted a Letter of Acceptance, Waiver and Consent in which Mr. Apostol consented to the Financial Industry Regulatory Authority's (FINRA) findings that while he was in the process of transferring his customers' accounts from his former member firm, New Haven, Connecticut based Newalliance Investments, Inc., to LPL Financial, he affixed customers' signatures onto new account forms by cutting and pasting their signatures from documents they had executed earlier. Mr. Apostol then submitted those forms to LPL Financial. FINRA's findings stated that the customers had authorized the opening of the accounts, but Mr. Apostol did not have their authorization or consent to affix their signatures to the forms. The findings also stated that on previous occasions, Mr. Apostol asked customers to sign blank forms for future use. Mr. Apostol, of Ashford, Connecticut, was fined $5,000 and suspended from association with any FINRA member in any capacity for three months. The fine must be paid either immediately upon Mr. Apostol'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. Mr. Apostol's suspension is in effect from February 19, 2013, through May 18, 2013.

Broker-dealers must establish and implement a reasonable supervisory system to protect their customers' interests. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from broker misconduct. Have you suffered losses in your LPL Financial LLC brokerage account due to your broker's misconduct? 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.

LEONARD AND COMPANY CENSURED AND FINED FOR MAKING UNSUITABLE RECOMMENDATIONS INVOLVING INVERSE FLOATER COLLATERALIZED MORTGAGE OBLIGATIONS TO CLIENTS

Troy, Michigan based Leonard & Company submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured, fined $250,000, and consented to the entry of Financial Industry Regulatory Authority (FINRA) findings that for more than two years, by and through its brokers, it affected numerous Inverse Floater Collateralized Mortgage Obligation (CMO) transactions to retail customers without having reasonable grounds for believing that the recommendations were suitable. According to FINRA, Leonard & Company provided little, if any, formal training regarding Inverse Floater CMOs to its brokers. Specifically, Leonard & Company's brief training program did not provide brokers with information about making a suitability determination for each customer and distinguishing between the Inverse Floater CMOs. FINRA's findings also included that Leonard & Company failed to provide adequate "point-of-sale" information to its brokers to enable them to make informed and appropriate recommendations to their customers and failed to ensure that its brokers understood the unique features and specific risks associated with each Inverse Floater CMO they recommended to their retail customers - neither Leonard & Company nor its brokers conducted an adequate investigation of each individual Inverse Floater CMO to ensure it was suitable for each individual retail customer. As a result, retail customers who lacked sophistication and/or did not have any prior experience investing in Inverse Floater CMOs were exposed to the risk of losing a significant portion of their investment without having a sufficient understanding of the risks they were undertaking.
FINRA's findings also stated that while the firm had written supervisory procedures (WSPs) addressing CMOs, it did not have any WSPs specifically addressing the suitability of Inverse Floater CMOs. Consequently, Leonard & Company's supervisory system and WSPs were inadequate to ensure appropriate supervision of sales of Inverse Floater CMOs to retail customers. Moreover, FINRA said Leonard & Company's WSPs also failed to provide specific guidelines that the firm and its supervisors could apply in reviewing the firm's fixed income group's process of identifying and selecting Inverse Floater CMOs that it then recommended and promoted to the firm's registered brokers for purchase and sale to retail customers. Furthermore, FINRA said Leonard & Company's WSPs also failed to provide adequate guidance to the firm's brokers and principals for reviewing and approving each recommended Inverse Floater CMO transaction in order to ensure suitability for retail customers.

Have you suffered losses in an inverse floater collateralized mortgage obligation or any other investment sold by Leonard & Company? 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.

HARTFORD INVESTMENT FINANCIAL SERVICES AND HARTFORD LIFE DISTRIBUTORS CENSURED AND FINED FOR DISTRIBUTING MUTUAL FUND PROSPECTUSES CONTAINING UNWARRANTED AND MISLEADING STATEMENTS

Radnor, Pennsylvania based Hartford Investment Financial Services, LLC and Berwyn, Pennsylvania based Hartford Life Distributors, LLC now known as Forethought Distributors, LLC submitted a Letter of Acceptance, Waiver and Consent in which the firms were censured, fined $100,000 jointly and severally, and consented to the entry of Financial Industry Regulatory Authority (FINRA) findings that Hartford Life prepared and distributed numerous copies of a brochure called Staying Ahead of the Curve that discussed features of the Hartford Floating Rate Fund (HFRF) mutual fund, which were unwarranted and misleading in light of changing conditions in the bank loan market. The brochure was provided to selling broker-dealers for use in the marketing and sale of HFRF to their customers. The brochure was approved by Hartford Investment, the Chief Investment Advisor to HFRF.

In particular, the brochure contained misleading statements regarding HFRF's appropriateness for bond investors concerned about the price stability of their investments, the potential for greater price stability compared with other fixed income investments, and suitability for investors seeking some degree of capital preservation. Given the conditions in the bank loan market during the relevant period, these statements were not accurate. The findings also stated that between the time when Hartford Investment became aware of conditions that rendered the statements inaccurate and removed the statements on a later date, it approved the brochure at least twice. Consequently, during this period, Hartford Life distributed approximately 2,450 copies of the brochure. FINRA further included that although concerns regarding the bank loan market and HFRF were reported to the mutual fund's board, none of Hartford Investment's employees responsible for approving HFRF's advertising materials participated in the meetings where these concerns were discussed.

FINRA also found that both firms' written supervisory procedures also lacked any mechanism for ensuring that those responsible for drafting or reviewing advertising materials would be informed of material facts concerning relevant conditions in the bank loan market or HFRF's performance. As a consequence, Hartford Investment approved, and Hartford Life continued to distribute, thousands of copies of the brochure that contained unwarranted and misleading statements.

Have you suffered losses in a mutual fund or any other investment sold by Hartford Investment Financial Services, Hartford Life Distributors, and/or Forethought Distributors? 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.

HALEY SECURITIES, INC. CENSURED AND FINED FOR PROHIBITED PRIVATE PLACEMENT AND LIMITED PARTNERSHIP SALES THROUGH HALEY ASSOCIATED LIMITED PARTNERSHIP

Omaha, Nebraska based Haley Securities submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured, fined $20,000, and consented to the entry of the Financial Industry Regulatory Authority's findings that it was solely engaged in the sale of private offerings of securities designed to raise equity for an affiliate, Haley Associated Limited Partnership (HALP). While selling the private placements and limited partnerships, HALP relied on the Rule 506 exemption from registration under Regulation D. FINRA stated that the firm sold some interests in HALP's offerings by soliciting potential investors at the suggestion of existing customers or at meetings convened by third parties.

The Securities Act of 1933 provides several exemptions to the securities registration requirements of Section 5 of the Act. For an issuer to be afforded the protection of the Regulation D, Rule 506 private offering registration exemption, it must not engage in any "general" solicitation. In order for a solicitation to not be general, the firm must have a substantive, pre-existing relationship with the potential investor. A substantive, pre-existing relationship may exist if the potential investor previously invested in public or private securities offered through the firm. A firm may also establish a substantive, pre-existing relationship by having interested persons fill out general questionnaires that do not relate to any offering. In addition, there must be sufficient time between establishment of the relationship and the solicitation for the sale of an unregistered security.

Although Haley created questionnaires for purchasers, only some contained the annual income information for the customers, and none of them contained the purchaser's net worth, the name and address of the purchaser's employer, and the customer's tax status. The firm was to supposed provide these customers with a copy of an account record or an alternative document with all of the required information within 30 days after opening an account with the firm. For nearly three years, the firm's customers were provided with the questionnaires, but they did not receive other documentation the firm maintained that revealed their investment objectives and other background information.

FINRA's findings also included that for almost two months, the firm permitted its president and supervising principal to engage in securities-related activities as a general securities principal while his registration status with FINRA was inactive due to his failure to timely complete continuing education (CE) requirements. The president's activities included the approval of securities sales by signing and initialing subscription agreements.

In addition to all this, Haley Securities failed to establish, maintain, and enforce adequate supervisory systems and written supervisory procedures to appropriately monitor sales of private offerings of its affiliate. Broker-dealers must establish and implement a reasonable supervisory system to protect their customers' interests. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from misconduct.

Therefore, investors who have suffered damages due to Haley Securities' failure to monitor its solicitation activities can bring forth claims to recover losses against Haley Securities, which should have watched over the above described illegal activity. Have you suffered losses in a private placement or limited partnership or any other investment sold by Haley Securities, Inc.? 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.

GRAND FINANCIAL, INC. CENSURED AND FINED FOR PROHIBITED CONDUCT IN OIL AND GAS PRIVATE PLACEMENT SALES

Addison, Texas based Grand Financial, Inc. submitted a Letter of Acceptance, Waiver and Consent in which the firm was fined $25,000 and consented to the entry of Financial Industry Regulatory Authority (FINRA) findings that it offered for sale oil and gas private placements (PPMs), which were unregistered pursuant to the exemption provided within Rule 506 of Regulation D within a few days of an initial telephone call to potential investors. FINRA stated that this conduct by Grand Financial constituted "general" solicitation in violation of Section 5 of the Securities Act of 1933. FINRA's findings also included that the firm sent advertising materials that omitted material facts to individuals rather than sending the individuals the PPM memorandum for an offering, which contained full disclosure of the risks involved in the offering. Grand Financial opted to send an executive summary that did not contain full disclosure of the risks associated with the offering.

Private placements are private investment offerings in public companies, which are sold to a small number of chosen investors. Private placements typically consist of offers of common stock, preferred stock, warrants, promissory notes, convertible promissory notes, or bonds. Purchasers are often institutional investors such as banks, insurance companies, or pension funds. An unlimited number of accredited investors can also purchase securities in an offering. Generally, accredited investors are those with a net worth in excess of $1 million or annual income exceeding $200,000 or $300,000 combined with a spouse. No more than 35 non-accredited investors may participate in a private placement.

The Securities Act of 1933 provides several exemptions to the securities registration requirements of Section 5 of the Act. For an issuer to be afforded the protection of the Regulation D, Rule 506 private offering registration exemption, it must not engage in any "general" solicitation. In order for a solicitation to not be general, the firm must have a substantive, pre-existing relationship with the potential investor. A substantive, pre-existing relationship may exist if the potential investor previously invested in public or private securities offered through the firm. A firm may also establish a substantive, pre-existing relationship by having interested persons fill out general questionnaires that do not relate to any offering. In addition, there must be sufficient time between establishment of the relationship and the solicitation for the sale of an unregistered security.
FINRA findings further stated that the firm failed to establish a supervisory system reasonably designed to achieve compliance with industry rules and regulations relating to general solicitation and telemarketing. Broker-dealers must establish and implement a reasonable supervisory system to protect their customers' interests. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from misconduct.

Therefore, investors who have suffered damages due to Grand Financial's failure to monitor its general solicitation and telemarketing activities can bring forth claims to recover losses against Grand Financial, which should have watched over the above described illegal activity. Have you suffered losses in a PPM or any other investment sold by Grand Financial, Inc.? 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.

SIGMA FINANCIAL CORP. - CIP LEVERAGED FUND ADVISORS, LLC - INVESTOR ALERT!

Many investors have purchased CIP Leveraged Fund Advisors, LLC ("CLFA") through an independent broker-dealer, Sigma Financial Corp. CLFA was supposed to be a manager of Real Estate Investment Trusts (REITs), but failed miserably. Sigma Financial is a mid-size independent broker-dealer in the United States who offered and sold CLFA to its best clients. Sigma Financial is headquartered in New York City and reportedly has over 600 registered representatives across the United States operating in one or two person offices.

Sigma Financial, 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 Sigma Financial was Mandatory

Sigma Financial 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 Sigma Financial perform an independent due diligence analysis before it recommended the investment to its best clients? What analysis, if any, did Sigma Financial 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 Sigma Financial 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.

Sigma Financial was Obligated to Perform a Suitability Analysis

Sigma Financial 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.

SAMMONS SECURITIES COMPANY LLC - CIP LEVERAGED FUND ADVISORS, LLC - INVESTOR ALERT!

Many investors have purchased CIP Leveraged Fund Advisors, LLC ("CLFA") through an independent broker-dealer, Sammons Securities Company LLC ("Sammons Securities"). CLFA was supposed to be a manager of Real Estate Investment Trusts (REITs), but failed miserably. Sammons Securities is an independent broker-dealer in the United States who offered and sold CLFA to its best clients. Sammons Securities is headquartered in Ann Arbor, Michigan and reportedly has registered representatives across the United States operating in one or two person offices.
Sammons Securities, 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 Sammons Securities was Mandatory
Sammons Securities 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 Sammons Securities perform an independent due diligence analysis before it recommended the investment to its best clients? What analysis, if any, did Sammons Securities 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 Sammons Securities 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.
Sammons Securities was Obligated to Perform a Suitability Analysis
Sammons Securities 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.

ROYAL SECURITIES COMPANY- CIP LEVERAGED FUND ADVISORS, LLC - INVESTOR ALERT!

Many investors have purchased CIP Leveraged Fund Advisors, LLC ("CLFA") through an independent broker-dealer, Royal Securities Company ("Royal Securities"). CLFA was supposed to be a manager of Real Estate Investment Trusts (REITs), but failed miserably. Royal Securities is an independent broker-dealer in the United States who offered and sold CLFA to its best clients. Royal Securities is headquartered in Grandville, Michigan and reportedly has registered representatives across the United States operating in one or two person offices.
Royal Securities, 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 Royal Securities was Mandatory
Royal Securities 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 Royal Securities perform an independent due diligence analysis before it recommended the investment to its best clients? What analysis, if any, did Royal Securities 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 Royal Securities 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.
Royal Securities was Obligated to Perform a Suitability Analysis
Royal Securities 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.

RBC CAPITAL MARKETS LLC - CIP LEVERAGED FUND ADVISORS, LLC - INVESTOR ALERT!

Many investors have purchased CIP Leveraged Fund Advisors, LLC ("CLFA") through an independent broker-dealer, RBC Capital Markets LLC ("RBC Capital"). CLFA was supposed to be a manager of Real Estate Investment Trusts (REITs), but failed miserably. RBC Capital is an independent broker-dealer in the United States who offered and sold CLFA to its best clients. RBC Capital is headquartered in New York, New York and reportedly has registered representatives across the United States operating in one or two person offices.
RBC Capital, 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 RBC Capital was Mandatory
RBC Capital 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 RBC Capital perform an independent due diligence analysis before it recommended the investment to its best clients? What analysis, if any, did RBC Capital 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 RBC Capital 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.
RBC Capital was Obligated to Perform a Suitability Analysis
RBC Capital 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.

NORTHLAND SECURITIES, INC. - CIP LEVERAGED FUND ADVISORS, LLC - INVESTOR ALERT!

Many investors have purchased CIP Leveraged Fund Advisors, LLC ("CLFA") through an independent broker-dealer, Northland Securities, Inc. CLFA was supposed to be a manager of Real Estate Investment Trusts (REITs), but failed miserably. Northland Securities is an independent broker-dealer in the United States who offered and sold CLFA to its best clients. Northland Securities is headquartered in Minneapolis, Minnesota and reportedly has registered representatives across the United States operating in one or two person offices.
Northland Securities, 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 Northland Securities was Mandatory
Northland Securities 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 Northland Securities perform an independent due diligence analysis before it recommended the investment to its best clients? What analysis, if any, did Northland Securities 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 Northland Securities 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.
Northland Securities was Obligated to Perform a Suitability Analysis
Northland Securities 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.

INVESTORS CAPITAL CORP. - CIP LEVERAGED FUND ADVISORS, LLC - INVESTOR ALERT!

Many investors have purchased CIP Leveraged Fund Advisors, LLC ("CLFA") through an independent broker-dealer, Investors Capital Corp. CLFA was supposed to be a manager of Real Estate Investment Trusts (REITs), but failed miserably. Investors Capital is a mid-size independent broker-dealer in the United States who offered and sold CLFA to its best clients. Investors Capital is headquartered in Lynnfield, Massachesetts and reportedly has over 500 registered representatives across the United States operating in one or two person offices.

Investors Capital, 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 Investors Capital was Mandatory

Investors Capital 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 Investors Capital perform an independent due diligence analysis before it recommended the investment to its best clients? What analysis, if any, did Investors Capital 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 Investors Capital 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.

Investors Capital was Obligated to Perform a Suitability Analysis

Investors Capital 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.

INTERVEST INTERNATIONAL EQUITIES CORP. - CIP LEVERAGED FUND ADVISORS, LLC - INVESTOR ALERT!

Many investors have purchased CIP Leveraged Fund Advisors, LLC ("CLFA") through an independent broker-dealer, Intervest International Equities Corp. ("Intervest International"). CLFA was supposed to be a manager of Real Estate Investment Trusts (REITs), but failed miserably. Intervest International is an independent broker-dealer in the United States who offered and sold CLFA to its best clients. Intervest International is headquartered in Colorado Springs, Colorado and reportedly has registered representatives across the United States operating in one or two person offices.
Intervest International, 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 Intervest International was Mandatory
Intervest International 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 Intervest International perform an independent due diligence analysis before it recommended the investment to its best clients? What analysis, if any, did Intervest International 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 Intervest International 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.
Intervest International was Obligated to Perform a Suitability Analysis
Intervest International 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.

FINANCIAL WEST GROUP - CIP LEVERAGED FUND ADVISORS, LLC - INVESTOR ALERT!

Many investors have purchased CIP Leveraged Fund Advisors, LLC ("CLFA") through an independent broker-dealer, Financial West Group ("Financial West"). CLFA was supposed to be a manager of Real Estate Investment Trusts (REITs), but failed miserably. Financial West is a mid-size independent broker-dealer in the United States who offered and sold CLFA to its best clients. Financial West is headquartered in Westlake Village, California and reportedly has over 340 registered representatives across the United States operating in one or two person offices.

Financial West, 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 Financial West was Mandatory

Financial West 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 Financial West perform an independent due diligence analysis before it recommended the investment to its best clients? What analysis, if any, did Financial West 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 Financial West 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.

Financial West was Obligated to Perform a Suitability Analysis

Financial West 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.

HARVEST CAPITAL LLC - CIP LEVERAGED FUND ADVISORS, LLC - INVESTOR ALERT!

Many investors have purchased CIP Leveraged Fund Advisors, LLC (“CLFA”) through an independent broker-dealer, Harvest Capital LLC.  CLFA was supposed to be a manager of Real Estate Investment Trusts (REITs), but failed miserably.  Harvest Capital is one of the smaller independent broker-dealers in the United States who offered and sold CLFA to its best clients.  Harvest Capital is headquartered in Wethersfield, Connecticut and reportedly has over 70 registered representatives across the United States operating in one or two person offices.

Harvest Capital, 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 Harvest Capital was Mandatory

Harvest Capital 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 Harvest Capital perform an independent due diligence analysis before it recommended the investment to its best clients? What analysis, if any, did Harvest Capital 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 Harvest Capital 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.

Harvest Capital was Obligated to Perform a Suitability Analysis

Harvest Capital 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.

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

Many investors have purchased CIP Leveraged Fund Advisors, LLC ("CLFA") through an independent broker-dealer, Equity Services, Inc. CLFA was supposed to be a manager of Real Estate Investment Trusts (REITs), but failed miserably. Equity Services is an independent broker-dealer in the United States who offered and sold CLFA to its best clients. Equity Services is headquartered in Montpelier, Vermont and reportedly has registered representatives across the United States operating in one or two person offices.
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 Equity Services was Mandatory
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 Equity Services perform an independent due diligence analysis before it recommended the investment to its best clients? What analysis, if any, did 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 Equity 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.
Equity Services was Obligated to Perform a Suitability Analysis
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.