Fidelity Brokerage Services LLC was subpoenaed by Massachusetts in connection with a sweep investigation, which is looking into sales practices involving alternative investments sold to seniors. Fidelity Brokerage Services' principal office is located in Smithfield, Rhode Island. On July 10, 2013, the state's securities division sent the subpoena to Fidelity Brokerage Services asking for information on sales of the products to state residents who are 65 or over. Some of the non-traditional investments include oil and gas partnerships, private placements, structured products, hedge funds, and tenant-in-common offerings. The state demanded information from Fidelity Brokerage Services on any such products that have been sold over the past year, the investors who purchased them, the commissions generated, how the sales were reviewed, and all relevant compliance, training and marketing materials - Fidelity Brokerage Services has until July 24 to respond. The state added that being on the list of targeted firms does not indicate wrongdoing.
Although non-traded REITs were not part of the information request, Massachusetts has expressed its heightened concern "that the senior marketplace is being targeted for the sales of these high-risk, esoteric products," Massachusetts Secretary of the Commonwealth William F. Galvin said in a statement. The state has already cracked down on a number of firms for alleged improper sales of non-traded REITs. In February 2013, the state reached a settlement with LPL Financial to pay at least $2 million in restitution and $500,000 in fines related to the sale of non-traded REITs. In May 2013, it settled REIT cases with Ameriprise Financial Services Inc., Commonwealth Financial Network, Lincoln Financial Advisors Corp., Royal Alliance Associates Inc. and Securities America Inc. The five firms agreed to pay a total of $6.1 million in restitution to investors and fines totaling $975,000.
Senior investors have become the targets of unscrupulous brokers, investment advisors and insurance agents. This is due in part to the fact that as we age, our ability to understand newer and complex investments diminishes every year. Therefore, senior retirement savings are ripe for picking and an epidemic of fraud is underway all across America. As a result many states, such as Massachusetts, have enacted laws with harsh penalties and are performing investigative sweeps to protect senior investors.
Broker-dealers have a duty to protect senior investors from broker misconduct by establishing and implementing an adequate supervisory system to oversee sales practices. If broker-dealers do not so, they may be liable to senior investors for damages flowing from an unreasonable recommendation and sale. Are you a senior investor suffering losses in your Fidelity Brokerage Services LLC account due to an unreasonable recommendation and sale by your broker? 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 Fidelity Brokerage Services stockbrokers who may have engaged in misconduct and caused investors losses.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
Showing posts with label Elder Abuse. Show all posts
Showing posts with label Elder Abuse. Show all posts
Thursday, December 12, 2013
Thursday, August 1, 2013
DONALD WAYNE HASTINGS BARRED BY FINRA FOR LYING TO A CUSTOMER ABOUT AN ACCOUNT OPENING AND SUBSEQUENTLY COMMINGLING THE CUSTOMER'S FUNDS
Donald Wayne Hastings, a former broker with Lincoln, Nebraska based Allstate Financial Services, LLC, 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 a customer provided Mr. Hastings with a check for $12,000 to open an IRA. The customer believed the funds would be invested on his behalf and that he would receive 5 percent interest on his investment. Mr. Hastings neither created the IRA nor opened an account for the customer. The customer was 73 years-old, therefore an IRA could not be opened. FINRA's findings stated that Mr. Hastings deposited the customer's funds into a business account under his direction and control. Mr. Hastings paid interest to the customer using his own funds at prevailing interest rates. FINRA also stated that the customer was unaware the IRA was never created and his funds were never invested in any securities or investment products. FINRA further included that Mr. Hastings did not inform or seek approval from his supervisor or from anyone with his member firm to commingle the customer's funds in an account under his personal control. When the customer inquired about his IRA account, the firm informed the customer that he did not have an IRA account with the firm. Mr. Hastings, of Lewisville, Texas, was barred from association with any FINRA member in any capacity.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages due to prohibited activity such as the above described can bring forth claims to recover losses against Allstate Financial Services, which should have prevented Mr. Hastings from committing the illegal acts. Have you suffered losses in your Allstate Financial Services, LLC account due to broker misconduct? 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.
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 prohibited activity such as the above described can bring forth claims to recover losses against Allstate Financial Services, which should have prevented Mr. Hastings from committing the illegal acts. Have you suffered losses in your Allstate Financial Services, LLC account due to broker misconduct? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
Tuesday, June 11, 2013
MARTIN BENJAMIN FEIBISH BANNED BY FINRA DUE TO FRAUDULENT ACTIVITY INVOLVING ELDERLY INVESTORS
Martin Benjamin Feibish, formerly with Springfield, Massachusetts based MML Investors Services, submitted a letter of acceptance, waiver, and consent in which he was banned from association with any Financial Industry Regulatory Authority (FINRA) member in any capacity. Mr. Feibish, of Warwick, Rhode Island, consented to the FINRA sanction and to the entry of findings that he created a scheme to steal more than $5 million from an elderly customer by investing her money in fake investment vehicles, and forging her relatives' signatures. Mr. Feibish began using a company he established to create false investment vehicles. Mr. Feibish then created false promissory notes through the company, which manifested an alleged interest in mortgage-backed securities. The findings also stated that Mr. Feibish persuaded the customer to purchase false promissory notes. Mr. Feibish created and provided the customer with false documentation representing the mortgage-backed securities and IRS Form 1099s, to convince the customer that she was invested in legitimate investment vehicles. Mr. Feibish took funds from the customer for the non-existent investments and placed them in a bank account he controlled in his company's name. FINRA's findings stated that through his conduct, Mr. Feibish purposefully violated the Securities Exchange Act of 1934, FINRA rules, and NASD rules.
FINRA also included that over time, Mr. Feibish had checks issued from his company's bank account to the customer. Mr. Feibish told the customer that these payments represented the interest payments from the investments, but were really a return of the customer's own money. Thereafter, Mr. Feibish convinced the customer to reinvest the money in additional fictitious investment vehicles, including promissory notes from a bank. FINRA stated that in furtherance of this misconduct, Mr. Feibish forged the names of the customer and her relatives to open trust accounts in their names at the bank. Just as in the previous sham investments, payments issued from the accounts at the bank were not proceeds from the investments, but simply a return of the customer's money. Mr. Feibish continued to convince the customer to reinvest the supposed proceeds in other false investment vehicles to avoid having to return the money to the customer.
Moreover, FINRA found that Mr. Feibish managed insurance plans belonging to the customer, which were for the benefit of her relatives. Mr. Feibish told the customer he was paying the premiums on those policies, when in fact he had forged the relatives' signatures and borrowed approximately $280,000 against them. Mr. Feibish regularly had false documentation issued to the customer, including false promissory notes and falsified account statements.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages due to Mr. Feibish's fraudulent activity can bring forth claims to recover losses against MML Investors Services, which should have prevented Mr. Feibish from committing the described illegal activity.
Have you suffered losses in your MML Investors Services brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against MML Investors Services stockbrokers who may have engaged in misconduct and caused investors losses.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
FINRA also included that over time, Mr. Feibish had checks issued from his company's bank account to the customer. Mr. Feibish told the customer that these payments represented the interest payments from the investments, but were really a return of the customer's own money. Thereafter, Mr. Feibish convinced the customer to reinvest the money in additional fictitious investment vehicles, including promissory notes from a bank. FINRA stated that in furtherance of this misconduct, Mr. Feibish forged the names of the customer and her relatives to open trust accounts in their names at the bank. Just as in the previous sham investments, payments issued from the accounts at the bank were not proceeds from the investments, but simply a return of the customer's money. Mr. Feibish continued to convince the customer to reinvest the supposed proceeds in other false investment vehicles to avoid having to return the money to the customer.
Moreover, FINRA found that Mr. Feibish managed insurance plans belonging to the customer, which were for the benefit of her relatives. Mr. Feibish told the customer he was paying the premiums on those policies, when in fact he had forged the relatives' signatures and borrowed approximately $280,000 against them. Mr. Feibish regularly had false documentation issued to the customer, including false promissory notes and falsified account statements.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages due to Mr. Feibish's fraudulent activity can bring forth claims to recover losses against MML Investors Services, which should have prevented Mr. Feibish from committing the described illegal activity.
Have you suffered losses in your MML Investors Services brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against MML Investors Services stockbrokers who may have engaged in misconduct and caused investors losses.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
Thursday, January 31, 2013
CLYDE THORNBURG OF NEXT FINANCIAL PERMANENTLY BARRED FROM BROKERAGE INDUSTRY FOR CHURNING AND FORGERY AND NEXT FINANCIAL RECEIVES A PASS AGAIN!
According to an Order recently issued by the Financial Industry Regulatory Authority (FINRA), Clyde Thornburg, formerly employed by NEXT Financial, has been permanently barred from working as a stockbroker in the securities industry. Mr. Thornburg was charged earlier this year with violations of NASD Rules 2110, 2310, 2510(b) and 3110 and FINRA Rule 2010 for engaging in a pattern of unsuitable short-term trading in switching of unit investment trusts ("UITs"), corporate debt, and mutual funds in accounts owned by five customers, four of whom were elderly and unsophisticated investors, including a mentally incapacitated 91-year-old widow under the care of a guardian and an 82-year-old widow who was beginning to experience the effects of the Alzheimer's disease.
In the five customers' accounts, Mr. Thornburg repeatedly purchased or switched UITs, corporate debt, and mutual funds less than one year after purchasing them. On average, Mr. Thornburg switched the products almost every two months. He often used a strategy where he caused a customer to sell one UIT, mutual fund, or corporate bond and invest all or part of the sales proceeds in another UIT, corporate bond, or mutual fund. The switching strategy was contrary to the design of the UITs, corporate debt and mutual funds. These investments are generally intended to be held long-term and carry substantial transaction fees which can become excessive in an actively traded account. During the time period that Mr. Thornburg churned the customer's accounts there were approximately 200 short-term UIT, corporate debt, and mutual fund transactions.
As a result of the approximately 200 short-term transactions, none of which were held for more than ten months, Mr. Thornburg's customers incurred unnecessary sales charges amounting to over $332,000. By looking the other way the supervisors at NEXT Financial allowed Mr. Thornburg to improperly generate over $301,000 in gross commissions for the firm. During the same time period the five customers collectively lost over $983,000.
Mr. Thornburg was found to have made these recommendations to buy and sell UIT's, corporate debt, and mutual funds without having reasonable grounds for believing that such recommendations were suitable in view of the size and frequency of the transactions, and based upon the facts known to him regarding the five customers' financial situations, objectives, and needs. As a result, the pattern of short-term trading in switching of these investments was undoubtedly unsuitable for all five customers and a violation of NASD Rules 2110 and 2310 and FINRA Rule 2010.
It was further found by FINRA that Mr. Thornburg misrepresented and omitted information concerning the costs of the products, leading these elderly investors to believe that they would not be charged sales charges or commissions. In fact, they were charged duly for the transactions and Mr. Thornburg violated NASD 2110 and FINRA Rule 2010 for his misrepresentations and omissions. Additionally, and in furtherance of his short-term strategy, Mr. Thornburg engaged in discretionary trading in all of the five accounts without prior written authorization, in violation of NASD Rules 2110 and 2510 (b) and FINRA Rule 2010.
To top it off, this unscrupulous stockbroker also forged or caused to be forged the names of at least three customers or their representatives on 19 mutual fund disclosure forms. Mr. Thornburg's forgery and falsification of documents further violated NASD Rule 2110 and FINRA Rule 2010. These forged documents caused NEXT Financial to maintain inaccurate books and records in violation of NASD rules 3110 and 2110 and FINRA Rule 2010.
All of the foregoing begs the question: Does NEXT Financial have a reasonable supervisory system in place and if it does why didn't the brokerage firm detect Mr. Thornburg's egregious violations of industry rules and regulations at an earlier stage and prevent the fraud? Further, why hasn't the firm been sanctioned for its negligent supervision of Mr. Thornburg? Could it be that FINRA is unwilling to take on a fight with a brokerage firm? Too often, brokerage firms receive a pass when their employees engage in an egregious fraud. It's wrong and the FINRA practice of free passes must be stopped by investors and their attorneys!
Have you suffered losses resulting from stockbroker misconduct at NEXT Financial? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
In the five customers' accounts, Mr. Thornburg repeatedly purchased or switched UITs, corporate debt, and mutual funds less than one year after purchasing them. On average, Mr. Thornburg switched the products almost every two months. He often used a strategy where he caused a customer to sell one UIT, mutual fund, or corporate bond and invest all or part of the sales proceeds in another UIT, corporate bond, or mutual fund. The switching strategy was contrary to the design of the UITs, corporate debt and mutual funds. These investments are generally intended to be held long-term and carry substantial transaction fees which can become excessive in an actively traded account. During the time period that Mr. Thornburg churned the customer's accounts there were approximately 200 short-term UIT, corporate debt, and mutual fund transactions.
As a result of the approximately 200 short-term transactions, none of which were held for more than ten months, Mr. Thornburg's customers incurred unnecessary sales charges amounting to over $332,000. By looking the other way the supervisors at NEXT Financial allowed Mr. Thornburg to improperly generate over $301,000 in gross commissions for the firm. During the same time period the five customers collectively lost over $983,000.
Mr. Thornburg was found to have made these recommendations to buy and sell UIT's, corporate debt, and mutual funds without having reasonable grounds for believing that such recommendations were suitable in view of the size and frequency of the transactions, and based upon the facts known to him regarding the five customers' financial situations, objectives, and needs. As a result, the pattern of short-term trading in switching of these investments was undoubtedly unsuitable for all five customers and a violation of NASD Rules 2110 and 2310 and FINRA Rule 2010.
It was further found by FINRA that Mr. Thornburg misrepresented and omitted information concerning the costs of the products, leading these elderly investors to believe that they would not be charged sales charges or commissions. In fact, they were charged duly for the transactions and Mr. Thornburg violated NASD 2110 and FINRA Rule 2010 for his misrepresentations and omissions. Additionally, and in furtherance of his short-term strategy, Mr. Thornburg engaged in discretionary trading in all of the five accounts without prior written authorization, in violation of NASD Rules 2110 and 2510 (b) and FINRA Rule 2010.
To top it off, this unscrupulous stockbroker also forged or caused to be forged the names of at least three customers or their representatives on 19 mutual fund disclosure forms. Mr. Thornburg's forgery and falsification of documents further violated NASD Rule 2110 and FINRA Rule 2010. These forged documents caused NEXT Financial to maintain inaccurate books and records in violation of NASD rules 3110 and 2110 and FINRA Rule 2010.
All of the foregoing begs the question: Does NEXT Financial have a reasonable supervisory system in place and if it does why didn't the brokerage firm detect Mr. Thornburg's egregious violations of industry rules and regulations at an earlier stage and prevent the fraud? Further, why hasn't the firm been sanctioned for its negligent supervision of Mr. Thornburg? Could it be that FINRA is unwilling to take on a fight with a brokerage firm? Too often, brokerage firms receive a pass when their employees engage in an egregious fraud. It's wrong and the FINRA practice of free passes must be stopped by investors and their attorneys!
Have you suffered losses resulting from stockbroker misconduct at NEXT Financial? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
Wednesday, January 2, 2013
FLORIDA MERRILL LYNCH BROKER CHARLES EUGENE BISHOP JR. FINED AND SUSPENDED FOR ATTEMPTING TO MISAPPROPRIATE $3 MILLION FROM ELDERLY CLIENT
Charles Eugene Bishop Jr. has been fined $7,500 and suspended for two years by the Financial Industry Regulatory Authority (FINRA) for attempting to misappropriate approximately $3 million from an elderly client while he was at Merrill Lynch. FINRA's findings stated that Mr. Bishop generated paperwork by which the deceased client's assets would be transferred to a purported entity that was never formed, but whose name was identical to a company the client owned, with a tax identification number assigned by the IRS to a different entity that was never formed, but whose sole member was Mr. Bishop.
In order to carry out his scheme, Mr. Bishop had the client sign a firm form that designated Mr. Bishop's entity. Even though the client's signature was notarized, the client was not present when the form was notarized by the notary. In addition, the tax identification number on another firm form the client signed was changed to the tax identification number associated with Mr. Bishop's entity. Furthermore, the findings stated that after the client passed away, Mr. Bishop filed a notice, through his attorney, with his state's probate division asserting that he had an interest in the deceased client's estate as beneficiary. The court eventually issued an order invalidating the beneficiary designations after Mr. Bishop was terminated from Merrill Lynch.
Broker-dealers must establish and implement a reasonable supervisory system to protect clients from fraudulent practices by their brokers. If broker-dealers do not establish and/or implement a reasonable supervisory system, they may be liable to investors for damages. Therefore, investors who have suffered damages resulting from the misappropriation of their funds by their broker can bring forth claims to recover losses against their broker-dealer for failure to prevent such illegal activity.
Have you suffered damages resulting from a misappropriation of your funds by your broker? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
In order to carry out his scheme, Mr. Bishop had the client sign a firm form that designated Mr. Bishop's entity. Even though the client's signature was notarized, the client was not present when the form was notarized by the notary. In addition, the tax identification number on another firm form the client signed was changed to the tax identification number associated with Mr. Bishop's entity. Furthermore, the findings stated that after the client passed away, Mr. Bishop filed a notice, through his attorney, with his state's probate division asserting that he had an interest in the deceased client's estate as beneficiary. The court eventually issued an order invalidating the beneficiary designations after Mr. Bishop was terminated from Merrill Lynch.
Broker-dealers must establish and implement a reasonable supervisory system to protect clients from fraudulent practices by their brokers. If broker-dealers do not establish and/or implement a reasonable supervisory system, they may be liable to investors for damages. Therefore, investors who have suffered damages resulting from the misappropriation of their funds by their broker can bring forth claims to recover losses against their broker-dealer for failure to prevent such illegal activity.
Have you suffered damages resulting from a misappropriation of your funds by your broker? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
Monday, December 10, 2012
CALIFORNIA EQUITY-INDEXED ANNUITY SALESMAN FINDS HIMSELF IN JAIL
California insurance agent Glenn Neasham has been convicted of a felony and ordered to serve 90 days in jail for selling an equity-indexed annuity to an 83-year-old woman with dementia. Bank officials notified California's adult protection officials when the 83-year-old and a "male friend" were looking to withdraw $175,000 from her bank to buy an annuity. Bank officials also mentioned that the 83-year-old appeared confused and influenced by her male companion.
An annuity is a form of insurance that offers a series of payments for a period of time. An annuity can be either fixed or variable. Fixed annuities are invested in conservative investments, and the return to investors may vary, but a minimum rate of return is established. Variable annuities are higher in risk when compared to fixed annuities and depend on how the stock market is performing. Variable annuity buyers have the option to allocate the cash invested into different asset classes such as mutual funds, indices, fixed income investments or bonds, and money market.
Equity-indexed annuities are complex products that are hybrid of both fixed and variable annuities. Their returns vary more than a fixed annuity, but not as much as a variable annuity. So, equity-indexed annuities are more risky than fixed annuities, but less risky than a variable annuity. Equity-indexed annuities offer a minimum guaranteed interest rate combined with an interest rate linked to a market index. Because of the guaranteed interest rate, equity-indexed annuities have less market risk than variable annuities. Equity-indexed annuities also have the potential to earn returns better than traditional fixed annuities when the stock market is rising. Equity-indexed annuities come with fees that are higher than any investment, and sales commissions to brokers can go as high as 12%. Surrender charges can go as high as 18%.
At the trial, the district attorney presented evidence that the 83-year-old was not mentally competent to agree to the purchase, and Mr. Neasham knew this all along. The district attorney also presented evidence of the $14,000 or 8% sales commission and how it played into Mr. Neasham's criminal intent. The 83-year-old was too ill to appear at the criminal trial. In addition, Allianz agreed to waive any surrender charges and return the principal invested with interest.
Have you suffered a loss of principal in your equity-indexed annuity? 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.
An annuity is a form of insurance that offers a series of payments for a period of time. An annuity can be either fixed or variable. Fixed annuities are invested in conservative investments, and the return to investors may vary, but a minimum rate of return is established. Variable annuities are higher in risk when compared to fixed annuities and depend on how the stock market is performing. Variable annuity buyers have the option to allocate the cash invested into different asset classes such as mutual funds, indices, fixed income investments or bonds, and money market.
Equity-indexed annuities are complex products that are hybrid of both fixed and variable annuities. Their returns vary more than a fixed annuity, but not as much as a variable annuity. So, equity-indexed annuities are more risky than fixed annuities, but less risky than a variable annuity. Equity-indexed annuities offer a minimum guaranteed interest rate combined with an interest rate linked to a market index. Because of the guaranteed interest rate, equity-indexed annuities have less market risk than variable annuities. Equity-indexed annuities also have the potential to earn returns better than traditional fixed annuities when the stock market is rising. Equity-indexed annuities come with fees that are higher than any investment, and sales commissions to brokers can go as high as 12%. Surrender charges can go as high as 18%.
At the trial, the district attorney presented evidence that the 83-year-old was not mentally competent to agree to the purchase, and Mr. Neasham knew this all along. The district attorney also presented evidence of the $14,000 or 8% sales commission and how it played into Mr. Neasham's criminal intent. The 83-year-old was too ill to appear at the criminal trial. In addition, Allianz agreed to waive any surrender charges and return the principal invested with interest.
Have you suffered a loss of principal in your equity-indexed annuity? 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.
Friday, December 7, 2012
INVESTORS NATIONWIDE SHOULD BEWARE OF EQUITY-INDEXED ANNUITIES
Equity-indexed annuities are one of the most abusively sold investments offered by brokers today. This is because their complexity, high fees and commissions, and long lockup periods are oftentimes misrepresented. Brokers are able to sell them to investors because they tout downside protection when markets deteriorate and generous upside potential when markets surge. Unfortunately, investors are never told the truth about equity-indexed annuities, which is also attributable to the brokers themselves not understanding how they work.
An annuity is a form of insurance that offers a series of payments for a period of time. An annuity can be either fixed or variable. Fixed annuities are invested in conservative investments, and the return to investors may vary, but a minimum rate of return is established. Variable annuities are higher in risk when compared to fixed annuities and depend on how the stock market is performing. Variable annuity buyers have the option to allocate the cash invested into different asset classes such as mutual funds, indices, fixed income investments or bonds, and money market.
Equity-indexed annuities are complex products that are hybrid of both fixed and variable annuities. Their returns vary more than a fixed annuity, but not as much as a variable annuity. So, equity-indexed annuities are more risky than fixed annuities, but less risky than a variable annuity. Equity-indexed annuities offer a minimum guaranteed interest rate combined with an interest rate linked to a market index. Because of the guaranteed interest rate, equity-indexed annuities have less market risk than variable annuities. Equity-indexed annuities also have the potential to earn returns better than traditional fixed annuities when the stock market is rising.
But equity-indexed annuities come with fees that are higher than any investment, the greatest sales commissions to brokers, and consequently the greatest surrender charges. Commissions to brokers can go as high as 12%, and surrender charges can be as high as 18%. Investors also take "haircuts" without fully understanding why the value of their account is decreasing. One example of a "haircut" is a performance cap, which limits upside potential, and it is often further reduced by a participation rate. Another example is the market value adjustment, which can significantly reduce an account's value if a client chooses to make withdrawals.
Some insurance companies have chosen not to sell equity-indexed variable annuities. Some of those companies included are New York Life, Prudential, TIAA-CRFF, and Met Life. Reason being is probably because very few people understand equity-indexed annuities, including the brokers who are selling them.
Have you suffered a loss of principal in your equity -indexed annuity? 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.
An annuity is a form of insurance that offers a series of payments for a period of time. An annuity can be either fixed or variable. Fixed annuities are invested in conservative investments, and the return to investors may vary, but a minimum rate of return is established. Variable annuities are higher in risk when compared to fixed annuities and depend on how the stock market is performing. Variable annuity buyers have the option to allocate the cash invested into different asset classes such as mutual funds, indices, fixed income investments or bonds, and money market.
Equity-indexed annuities are complex products that are hybrid of both fixed and variable annuities. Their returns vary more than a fixed annuity, but not as much as a variable annuity. So, equity-indexed annuities are more risky than fixed annuities, but less risky than a variable annuity. Equity-indexed annuities offer a minimum guaranteed interest rate combined with an interest rate linked to a market index. Because of the guaranteed interest rate, equity-indexed annuities have less market risk than variable annuities. Equity-indexed annuities also have the potential to earn returns better than traditional fixed annuities when the stock market is rising.
But equity-indexed annuities come with fees that are higher than any investment, the greatest sales commissions to brokers, and consequently the greatest surrender charges. Commissions to brokers can go as high as 12%, and surrender charges can be as high as 18%. Investors also take "haircuts" without fully understanding why the value of their account is decreasing. One example of a "haircut" is a performance cap, which limits upside potential, and it is often further reduced by a participation rate. Another example is the market value adjustment, which can significantly reduce an account's value if a client chooses to make withdrawals.
Some insurance companies have chosen not to sell equity-indexed variable annuities. Some of those companies included are New York Life, Prudential, TIAA-CRFF, and Met Life. Reason being is probably because very few people understand equity-indexed annuities, including the brokers who are selling them.
Have you suffered a loss of principal in your equity -indexed annuity? 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.
Saturday, December 1, 2012
SENIORS ARE TARGETED IN VARIABLE ANNUITY SALES NATIONWIDE
As investors age, they become more vulnerable to making errors in their finances. This is because the ability to make sound financial decisions begins to peak in one's mid-50s. For this reason, retirees should be prepared to handle the risk of diminished capacity in order to prevent predatory or fraudulent sales tactics against them before it is too late. Some precautionary measures may include preparing a will and empowering an attorney to handle healthcare and financial issues. Still, brokers are able to convince senior investors into buying variable annuities by misrepresenting the true nature and cost of the product. Variable annuities are generally unsuitable for elderly investors, particularly those over 70 years for several reasons.
An annuity is a form of insurance that offers a series of payments for a period of time. Variable annuities are typically higher in risk when compared other types of annuities and depend on how the stock market is performing. Buyers have the option to allocate the cash invested into different types of assets such as mutual funds, indices, fixed income investments or bonds, and cash. Most variable annuities do not have principal protection, so investors can lose money if markets deteriorate.
Variable annuities are also very costly to investors. An agent can collect at least 5% from the moment of sale and 0.5% or more every year for the life of the investment; variable annuities with common riders can take over 3% off annual returns. Surrender charges of as much as 9% may apply if an investor is in need of cash due to an unexpected emergency. On top of all this, insurance companies are offering Guaranteed Lifetime Withdrawal Benefits (GLWB) without clearly telling investors the costs associated with taking early distributions. GLWBs allow percentage withdrawals based on the total amount without having to annuitize the investment. The problem with GLWBs is the immense cost of withdrawal, which is hidden away from investors in the terms of the agreement.
Senior investors cannot be urged enough to find a financial advisor or broker they can trust. Unfortunately, it can be difficult for the investor to tell if the broker is acting his or her best interest when suffering a decline in mental ability. That is why senior financial advisors or investors should also employ a trustworthy and financially savvy third-party or family member to monitor a broker's recommendations, which can help prevent significant investment losses well into retirement.
Have you suffered a loss of principal in your variable annuity? 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.
An annuity is a form of insurance that offers a series of payments for a period of time. Variable annuities are typically higher in risk when compared other types of annuities and depend on how the stock market is performing. Buyers have the option to allocate the cash invested into different types of assets such as mutual funds, indices, fixed income investments or bonds, and cash. Most variable annuities do not have principal protection, so investors can lose money if markets deteriorate.
Variable annuities are also very costly to investors. An agent can collect at least 5% from the moment of sale and 0.5% or more every year for the life of the investment; variable annuities with common riders can take over 3% off annual returns. Surrender charges of as much as 9% may apply if an investor is in need of cash due to an unexpected emergency. On top of all this, insurance companies are offering Guaranteed Lifetime Withdrawal Benefits (GLWB) without clearly telling investors the costs associated with taking early distributions. GLWBs allow percentage withdrawals based on the total amount without having to annuitize the investment. The problem with GLWBs is the immense cost of withdrawal, which is hidden away from investors in the terms of the agreement.
Senior investors cannot be urged enough to find a financial advisor or broker they can trust. Unfortunately, it can be difficult for the investor to tell if the broker is acting his or her best interest when suffering a decline in mental ability. That is why senior financial advisors or investors should also employ a trustworthy and financially savvy third-party or family member to monitor a broker's recommendations, which can help prevent significant investment losses well into retirement.
Have you suffered a loss of principal in your variable annuity? 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.
Wednesday, November 7, 2012
WATCH OUT FLORIDA SENIORS--MORE SWINDLERS THAN EVER WILL PREY ON YOUR GOLDEN YEARS
Senior citizens lose about $2.9 billion annually to scams and other abuses, according to Don Blandin, president and chief executive of Investor Protection Trust, (See "Survey reveals alarming rise in financial abuse of the elderly"), citing a June 2001 study by MetLife Inc. The number of financial scams targeting seniors is dramatically increasing according to the survey conducted by the non-profit Investor Protection Trust.
Financial advisers "have a duty and responsibility to report [abuse] to the authorities, and they have some personal liability if they don't," said Robert Lam, chairman of the Investor Protection Institute and chairman of the Pennsylvania Securities Commission. Lam added: "The results are often devastating, depriving older Americans of the opportunity to enjoy their golden years."
Family members and professionals also need to remain sensitive to a relative's or a client's deteriorating abilities and, when appropriate, take action to protect that person from becoming a victim of financial abuse. Family members, investment advisers and brokers are often the first to notice if their relative or client is declining mentally. In addition to apparent deterioration of memory and cognitive abilities, warning signs may include failure to pay bills, unusual risk taking and abruptly ceding control of their finances. It is very sad to see a lifetime of hard work disappear at the hands of a scam artist.
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.
Financial advisers "have a duty and responsibility to report [abuse] to the authorities, and they have some personal liability if they don't," said Robert Lam, chairman of the Investor Protection Institute and chairman of the Pennsylvania Securities Commission. Lam added: "The results are often devastating, depriving older Americans of the opportunity to enjoy their golden years."
Family members and professionals also need to remain sensitive to a relative's or a client's deteriorating abilities and, when appropriate, take action to protect that person from becoming a victim of financial abuse. Family members, investment advisers and brokers are often the first to notice if their relative or client is declining mentally. In addition to apparent deterioration of memory and cognitive abilities, warning signs may include failure to pay bills, unusual risk taking and abruptly ceding control of their finances. It is very sad to see a lifetime of hard work disappear at the hands of a scam artist.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
Tuesday, October 30, 2012
SENIOR INVESTORS THROUGHOUT FLORIDA AND NATIONWIDE--YOU ARE TARGETS!
"Complaints [involving seniors and financial scammers] are rising," according to Jack Herstein, president of the North American Securities Administrators Association (NASAA) and assistant director of the Nebraska securities regulator. Mr. Herstein added that the increased number of complaints is partly responsible for the increased number of enforcement actions. The association of state securities regulators reportedly filed 1,241 such enforcement actions in 2010, the latest year for which data has been compiled - more than double the 506 enforcement actions filed in 2009 ("Financial Scammers Prey on Seniors," by Anne Teresen, Wall Street Journal).
Unfortunately, older people make attractive targets for investment scams, in part, because they often have more investable assets, and are more susceptible to sales pitches due to factors associated with aging, such as loneliness and cognitive disabilities, according to the article.
Seniors who must rely on a fixed income to meet expenses may experience financial hardship as a result of today's ultralow interest rates and poor investment returns. They are, therefore, more inclined to be lured by promises of higher returns and private (Reg D) investments, which are often promoted as being stable-value investments - i.e., not correlated with the price movements of traditional stocks and bonds.
Since private (Reg D) investments are unregistered and virtually unregulated, it is easy for scam artists to peddle fraudulent securities that promise attractive returns. State enforcement actions involving unregistered securities, including promissory notes and private placements, exceed those involving traditional stock and bond investments by a factor of five to one, according to NASAA.
In addition to outright fraud, NASAA is seeing more cases of unsuitable investment recommendations being made to those over the age of 50. Examples of unsuitable products include variable annuities, which impose substantial "surrender" charges on investors who seek to liquidate their investments within a set number of years of the purchase date.
"Someone who is 85 should not be sold a variable annuity with a 15-year surrender charge. That's not suitable," Mr. Herstein was quoted as saying.
Elderly victims of financial abuse lost $2.9 billion in 2010, up 12% from $2.6 billion in 2008, according to the article, citing a study by MetLife Mature Market Institute. "[M]any of these cases go unreported," Institute director Sandra Timmermann was quoted as saying.
Adult children are often in the best position to recognize potential investment fraud and take preventive or corrective action. It may be beneficial for seniors to sign up for the National Do Not Call Registry (888-382-1222) in order to minimize unsolicited calls from potential scammers. What to do with the telemarketing calls that make it through anyway? Just hang up on them - without saying a word. Zero tolerance for unsolicited sales calls is the best policy.
Depending on the circumstances, adult children may offer to monitor a parent's bank, brokerage and credit-card statements. "You might volunteer to help a parent go through the bills," Ms. Timmermann was quoted as saying. (On the other hand, the financial abuser is sometimes an adult child, so this can be a complicated, touchy subject.)
Unpaid bills, an increase in the use of ATM or credit cards, or disappearing valuables are red flags that may signal a serious problem, according to the article.
For more information, the article refers those who suspect financial abuse to www.eldercare.gov, 800-677-1116 for a referral to adult protective services, local police departments, and state securities regulators, which can be found at www.nasaa.org.
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.
Unfortunately, older people make attractive targets for investment scams, in part, because they often have more investable assets, and are more susceptible to sales pitches due to factors associated with aging, such as loneliness and cognitive disabilities, according to the article.
Seniors who must rely on a fixed income to meet expenses may experience financial hardship as a result of today's ultralow interest rates and poor investment returns. They are, therefore, more inclined to be lured by promises of higher returns and private (Reg D) investments, which are often promoted as being stable-value investments - i.e., not correlated with the price movements of traditional stocks and bonds.
Since private (Reg D) investments are unregistered and virtually unregulated, it is easy for scam artists to peddle fraudulent securities that promise attractive returns. State enforcement actions involving unregistered securities, including promissory notes and private placements, exceed those involving traditional stock and bond investments by a factor of five to one, according to NASAA.
In addition to outright fraud, NASAA is seeing more cases of unsuitable investment recommendations being made to those over the age of 50. Examples of unsuitable products include variable annuities, which impose substantial "surrender" charges on investors who seek to liquidate their investments within a set number of years of the purchase date.
"Someone who is 85 should not be sold a variable annuity with a 15-year surrender charge. That's not suitable," Mr. Herstein was quoted as saying.
Elderly victims of financial abuse lost $2.9 billion in 2010, up 12% from $2.6 billion in 2008, according to the article, citing a study by MetLife Mature Market Institute. "[M]any of these cases go unreported," Institute director Sandra Timmermann was quoted as saying.
Adult children are often in the best position to recognize potential investment fraud and take preventive or corrective action. It may be beneficial for seniors to sign up for the National Do Not Call Registry (888-382-1222) in order to minimize unsolicited calls from potential scammers. What to do with the telemarketing calls that make it through anyway? Just hang up on them - without saying a word. Zero tolerance for unsolicited sales calls is the best policy.
Depending on the circumstances, adult children may offer to monitor a parent's bank, brokerage and credit-card statements. "You might volunteer to help a parent go through the bills," Ms. Timmermann was quoted as saying. (On the other hand, the financial abuser is sometimes an adult child, so this can be a complicated, touchy subject.)
Unpaid bills, an increase in the use of ATM or credit cards, or disappearing valuables are red flags that may signal a serious problem, according to the article.
For more information, the article refers those who suspect financial abuse to www.eldercare.gov, 800-677-1116 for a referral to adult protective services, local police departments, and state securities regulators, which can be found at www.nasaa.org.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
Monday, October 29, 2012
DAVID LERNER ASSOCIATES AND SLOPPY "POPPY" GET NAILED BY FINRA FOR $12 MILLION FOR SALES OF APPLE REITS TO INVESTORS IN FLORIDA AND NATIONWIDE
Over the past 20 years, David Lerner Associates (DLA) has sold $20 billion worth of non-traded Real Estate Investment Trusts (REIT) such as Apple REITs 7, 8, 9, and 10. Although FINRA has taken no formal action on behalf of investors for losses stemming from REITs 7, 8, and 9, it recently ordered DLA to pay $12 million in restitution to customers who purchased Apple REIT 10, a $2 billion non-traded REIT. As the sole distributor of the APPLE REIT, DLA targeted thousands of unsophisticated and elderly customers to sell the illiquid REIT without performing adequate due diligence to determine whether the REIT was suitable for its investors. In its sales campaign, DLA used deceptive marketing materials that did not disclose to customers that the income from the REIT was insufficient to support distributions to investors. FINRA spokeswoman Michelle Ong said that the action is the largest single restitution payment for investors involving REIT sales.
FINRA also fined David "Poppy" Lerner, DLA's founder, President and CEO, $250,000.00 and suspended him from the securities industry for one year, followed by a two-year suspension from acting as a principal. Mr. Lerner made false claims about the investment's return, value, and prospects of the REIT at various DLA investment seminars and letters to clients. FINRA also fined William Mason, the firm's head trader, $200,000.00 and suspended him from the industry for six months for charging excessive municipal bond and CMO markups. Mr. Lerner and DLA consented to the entry of FINRA's findings against them. The fines and restitution put closure on two long-running FINRA investigations into the firm, which has 190 registered representatives and six branches in New York and Florida.
FINRA's first action against DLA started with a FINRA complaint, which alleged that DLA engaged in improper sales practices of Apple REIT 10. DLA sold more than $442 million of Apple REIT between January and December 2011 without performing adequate due diligence in violation of its suitability obligations. Earlier Apple REITs under the same management wrongfully valued the REITs shares notwithstanding years of market fluctuations, performance declines, increased leverage, and excessive return of capital to investors. FINRA has required DLA to hire independent consultants to review and propose changes to its supervisory systems and training of non-trade REITs, and DLA has agreed to changes its advertising procedures and pre-file all advertisements and sales literature with FINRA at least 10 days prior to use.
To date, FINRA has not taken any formal action for restitution on behalf of investors in Apple REITs 7, 8, and 9. This does not mean that Apple REIT investors cannot make personal claims for their losses. Investors who have suffered losses in Apple REITs 7, 8, and/or 9 are encouraged to, and are certainly entitled to, file arbitration claims for damages against DLA in order to recover their lost principal.
Have you suffered losses in Apple REITs 7, 8, and/or 9 sold by David Lerner Associates? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
FINRA also fined David "Poppy" Lerner, DLA's founder, President and CEO, $250,000.00 and suspended him from the securities industry for one year, followed by a two-year suspension from acting as a principal. Mr. Lerner made false claims about the investment's return, value, and prospects of the REIT at various DLA investment seminars and letters to clients. FINRA also fined William Mason, the firm's head trader, $200,000.00 and suspended him from the industry for six months for charging excessive municipal bond and CMO markups. Mr. Lerner and DLA consented to the entry of FINRA's findings against them. The fines and restitution put closure on two long-running FINRA investigations into the firm, which has 190 registered representatives and six branches in New York and Florida.
FINRA's first action against DLA started with a FINRA complaint, which alleged that DLA engaged in improper sales practices of Apple REIT 10. DLA sold more than $442 million of Apple REIT between January and December 2011 without performing adequate due diligence in violation of its suitability obligations. Earlier Apple REITs under the same management wrongfully valued the REITs shares notwithstanding years of market fluctuations, performance declines, increased leverage, and excessive return of capital to investors. FINRA has required DLA to hire independent consultants to review and propose changes to its supervisory systems and training of non-trade REITs, and DLA has agreed to changes its advertising procedures and pre-file all advertisements and sales literature with FINRA at least 10 days prior to use.
To date, FINRA has not taken any formal action for restitution on behalf of investors in Apple REITs 7, 8, and 9. This does not mean that Apple REIT investors cannot make personal claims for their losses. Investors who have suffered losses in Apple REITs 7, 8, and/or 9 are encouraged to, and are certainly entitled to, file arbitration claims for damages against DLA in order to recover their lost principal.
Have you suffered losses in Apple REITs 7, 8, and/or 9 sold by David Lerner Associates? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
Wednesday, October 17, 2012
ELDER FINANCIAL ABUSE EPIDEMIC NOT ONLY IN FLORIDA BUT NATIONWIDE
Elder financial abuse is an "epidemic" and likely to become much worse given that 77 million baby boomers are entering their so-called "retirement" years (See "Golden years? Financial elder-abuse now epidemic," Andrew Osterland, InvestmentNews). Between 500,000 and 5 million elders are abused, neglected or exploited each year, and the abuse is often unreported. "Elders can be afraid to report abuse, for a variety of reasons," one practitioner was quoted as saying, adding: "In many cases, they may depend on the abuser and fear reprisals from them. They may be afraid of being placed in a nursing home or dread the stigma of domestic violence."
Fifty eight percent of elder abuse involves financial exploitation. Financial abuse is often accompanied by emotional abuse. In many cases, the abuser is a family member who has been appointed as attorney-in-fact or guardian for the elder, or one who is offended at not being so appointed.
The abuser is a spouse, child or relative in 78% of elder-abuse cases according to 2010 statistics from the Illinois Department on Aging. In one infamous example, actor Mickey Rooney reportedly said he had food and water withheld from him by his stepson, who allegedly stole over $400,000 from him.
Professionals often have occasion to suspect that a client, friend or family member is being abused or is losing the capacity to make financial decisions. If diminished mental capacity or abuse is suspected, the professional should express those concerns to family and friends of the victim and, where appropriate, to legal counsel.
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, Mr. Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. Our law firm is 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.
Fifty eight percent of elder abuse involves financial exploitation. Financial abuse is often accompanied by emotional abuse. In many cases, the abuser is a family member who has been appointed as attorney-in-fact or guardian for the elder, or one who is offended at not being so appointed.
The abuser is a spouse, child or relative in 78% of elder-abuse cases according to 2010 statistics from the Illinois Department on Aging. In one infamous example, actor Mickey Rooney reportedly said he had food and water withheld from him by his stepson, who allegedly stole over $400,000 from him.
Professionals often have occasion to suspect that a client, friend or family member is being abused or is losing the capacity to make financial decisions. If diminished mental capacity or abuse is suspected, the professional should express those concerns to family and friends of the victim and, where appropriate, to legal counsel.
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, Mr. Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. Our law firm is 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.
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