INVESTORS NATIONWIDE BEWARE OF AFFINITY FRAUD SCHEMES THAT TARGET MEMBER GROUPS!

Affinity fraud exploits the trust and friendship that exist in groups of people who have something in common. Some of the common interests include a religious beliefs, ethnic groups, immigrant communities, racial minorities, and members of a workforce. Various methods are used to access or target the groups. One common way is to persuade leaders from within to endorse the scheme. Sometimes the leaders do not even know that they are endorsing a scam, and they may end up becoming one of the victims of the fraud themselves. Because of the tight-knit structure of some of the groups, it can be quite challenging for regulators or law enforcement officials to detect affinity scams. Fraud victims often fail to notify the authorities in time, or they will try and work things out internally. This particularly true where the fraudsters have used respected community or religious leaders to convince members to join in on the investment.
Affinity fraud usually involves either fake investments or lies about important details such as an investment's risk/reward. Most affinity fraud cases stem from Ponzi schemes, where new money raised by the promoter gives money to earlier investors to create the illusion that the investment is yielding successful returns. This particular scheme makes no profit at all. Eventually, when the supply of new investor money dries up, and earlier investors demand to be paid, the scheme collapses and investors discover that they have lost most or all of their money.
The following tips will help investors avoid affinity fraud schemes:
•1) Always research the background of the person making the investment no matter how trustworthy the person seems to be.
•2) Do not make an investment based solely on the recommendation of a fellow member.
•3) Do not fall for investments that tout extravagant profits or guaranteed returns.
•4) Beware of any investment opportunity that cannot be put in writing.
•5) Do not be pressured into buying an investment you have not had time to adequately research.
Do you believe you are a victim of affinity fraud? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

INVESTORS NATIONWIDE BEWARE - ADVISERS MIGHT BE LYING TO YOU ABOUT THEIR CREDENTIALS!

The Securities and Exchange Commission (SEC) is actively reviewing advisers' ADV forms for suspect information used to falsely tout investment expertise. Some of the areas the SEC will be looking at are education, business, and charters/certifications. The credentials listed will be sent out for accuracy - background checks will be performed on an individual's suspect information. The SEC is also using the internet and other filings to verify a registered individual's background information.
The following are examples of some credentials advisers might be falsely alleging they have earned to convince investors to give them business:
-Certified Financial Planner: the Certified Financial Planner (CFP) designation is a professional certification for financial planners conferred by the Certified Financial Planner Board of Standards (CFP Board). To receive authorization to use the designation, the candidate must meet education (minimum bachelor's degree), examination (10-hour multiple choice exam divided into 3 days), work experience (extensive experience in the financial planning field), ethics requirements, and pay an ongoing certification fee. CFPs must also complete continuing education requirements.
-Chartered Financial Analyst: the CFA charter is a qualification for finance and investment professionals, particularly in the fields of investment management and financial analysis of stocks, bonds and their derivative assets. The program focuses on portfolio management and financial analysis, and provides knowledge of other areas of finance. CFA candidates must past three exams and complete 48 months of qualified work experience to earn the CFA charter.
-University Honors: graduates attaining a grade point average (GPA) of 3.5 to 3.8 from an accredited college or university earn "cum laude" honors. Graduates attaining a GPA above 3.8 to 3.89 earn "magna cum laude" honors. The highest honors, or "summa cum laude" honors, are earned by graduates attaining a GPA of 3.9 to 4.0.
Although inconsistent disclosures of experience have not yet resulted in enforcement actions, the potential for embarrassment is certainly imminent. Investors are encouraged to personally verify their adviser's background and credentials if he or she is touting one or more of the aforementioned educational achievements or certifications. This preventative measure may help avoid significant losses if an investor plans on relying on an adviser's expertise, which may turn out to be completely bogus.
Have you suffered losses resulting from reliance on you adviser's false expertise? 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.

STATE SECURITIES REGULATORS COME DOWN HARD ON INVESTMENT ADVISER FIRMS FOR ABUSING SENIOR INVESTORS

The North American Securities Administrators Association (NASAA) has recently reported a major increase in enforcement actions against investment adviser firms last year along with a sharp rise in prison time for securities law violators. According to a NASAA enforcement survey taken every year, the number of enforcement actions involving investment adviser firms nearly doubled to 399 in 2011, which accounted for 15 percent of all enforcement actions handled by state securities regulators. One notable group of investors who faced financial abuses by investment adviser firms was seniors - nearly 600 reported enforcement actions were addressed. Even though state regulators are actively seeking to prevent investment advisers from performing abuses, 6,121 investigations were conducted in 2011, which led to 1,662 years in prison time for convicted violators - up 47 percent from the year before. The report is based on the results of a survey of NASAA members during the spring of 2012.
State securities regulators also took significant investor protection actions by taking away licenses from corrupt broker and investment advisers. In 2011, nearly 2,800 licenses were withdrawn resulting from state action - up 7.7 percent from the year before. In addition, 774 licenses were denied, revoked, suspended, or conditioned - up 20 percent from the previous year. Fortunately, state enforcement actions resulted in more than $2.2 billion in investor restitution orders in 2011 - Most of the restitution resulted from repurchases of auction rate securities stemming from state-led actions. Fines and penalties against investment advisers totaled $126 million.
Apart from the state regulators' efforts to protect senior investors from financial abuses, seniors cannot be urged enough to find a financial advisor or broker they can trust. Unfortunately, it can be difficult to tell whether the broker is acting in his or her best interest. That is why senior investors are also encouraged to employ a trustworthy and financially savvy third-party or family member to monitor a broker's recommendations. Senior investors who feel they are victims of financial abuse should seek the advice of an attorney to review their holdings and initiate an action to recover damages if they have suffered significant losses. All these measures will certainly help prevent significant losses well into retirement, which is when investors need to protect their hard earned money the most.
Do you believe you are a victim of financial abuse because of your status as a senior investor? 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.

LOVE FOR SALE BY RODMAN AND RENSHAW ANALYST LEWIS BOREAS FAN

Research analysts offering a buy rating in exchange for investment banking business has suddenly resurrected after a long dormant period dating back to the dot-com boom. According to FINRA, Rodman and Renshaw LLC analyst Lewis Boreas Fan offered to initiate research coverage in exchange for investment banking business after Mr. Fan was assigned to cover Chinese companies. Contrary to FINRA's allegations, email evidence suggests that Mr. Fan was not seeking investment banking business, but was only seeking to be loved by a Chinese manufacturer of mineral based, heat resistant products. However, FINRA quotes emails that Mr. Fan sent to Rodman's CEO, which includes one that allegedly contains code words to conceal the improper conduct.
According to NASD Rule 2711, it is unlawful for a research analyst to initiate efforts to solicit investment banking business. Rule 2711 is one of the new prohibitions issued after the dot-com crash, which was partially due to the failure to regulate research analysts. The regulatory problem addressed by Rule 2711 is as follows: broker-dealers employ research analysts who cover companies. These analysts study a company's financial statements and issue reports that typically include a buy, sell, or hold recommendation - sometimes market outperform, market perform, or neutral. At the same time, broker-dealers offer investment banking services, which include lucrative engagements to assist companies with IPOs and other securities offerings to investors. Broker-dealers then use their research departments to help generate banking business. An example would be a broker-dealer offering to initiate research coverage of a new company that was not currently covered in exchange for the company's investment banking business, or the broker-dealer agreeing to maintain a buy-rating on the stock.
One notable instance is the Global Analyst Research Settlements of 2003, in which ten large broker-dealers agreed to pay penalties and disgorgement totaling $875 million. Also caught up were Jack Grubman and Henry Blodget, who were barred from the industry and paid $15 million and $4 million respectively for issuing positive reports that were inconsistent with their negative internal views just to keep the companies and investment bankers happy. As a result of this form conduct, broker-dealers were encumbered with Rule 2711 in order to prevent research analysts from being chosen by investment bankers. The rule also contains sections that prohibit investment bankers from strong-arming research analysts. This section prevents investment bankers from retaliating or threatening to retaliate against any research analyst because of an adverse, negative, or otherwise unfavorable research report or public statement.
As for Mr. Fan, the following is the email message about a Chinese company he sent to Rodman's CEO:
"I have just reached out to the management. Here is where things stand. As of right now, they want to divide their love into two: 10 dollars of popcorn for us and 10 dollars of soda for the other guy, on two separate movie dates. But the other guy is providing much better accommodation to them than we are. The management is particularly upset that we are imposing much stricter criteria to them than we did to [another company], such as a divorce settlement. They feel it's discriminatory and they feel insulted. In fact, our love was so tough that their CEO was leaning towards giving his whole love to the other guy. But the other members of the management have persuaded him to share his love. But their opinion is: if we want to even have 50 percent of the love, we've got to sweeten the pot, as the other guy is really showing them a lot of love."
Whether or not the email contains codes referring to investment banking is for you to decide. However, keep in mind that after this email, Mr. Fan initiated coverage of the Chinese company with a market outperform rating. Thereafter, the company announced a $10 million registered direct offering for which Rodman was the exclusive placement agent. To settle the case, Mr. Fan agreed to pay a $10,000.00 fine and serve a 30-day suspension, while Rodman agreed to pay a $315,000.00 fine and hire an independent consultant to straighten up its analyst compliance.
Unfortunately, the Rodman episode is not the only analyst incident to recently occur. Alka Singh, another research analyst, found herself disappointed when a company she initiated coverage on filed to reciprocate with investment banking business. Bound and determined to get paid, Ms. Singh sent the covered company's CEO an email requesting a direct payment for having covered the company. In the email, Ms. Singh advised the company that in such situations, companies have concealed the fees as a consulting fee or banking fee so that the analyst can get something for their effort.
Have you suffered losses resulting from bogus research conducted by an analyst? 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.

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.

THE SEC HITS ICP ASSET MANAGEMENT AND THOMAS C. PRIORE WITH BIG FINES FOR FRAUDULENT PRACTICES RELATED TO COLLATERALIZED DEBT OBLIGATIONS

ICP Asset Management and its founding President, Thomas C. Priore, have reached a settlement agreement with the Securities and Exchange Commission (SEC) for charges alleging that ICP defrauded numerous collateralized debt obligations (CDO) they managed. The SEC argued that ICP and Mr. Priore engaged in fraudulent practices and misrepresentations that cause the CDOs to overpay for securities, which caused losses of millions of dollars. Also, ICP and Mr. Priore obtained fees and undisclosed profits at the expense of the CDOs and their investors. ICP, Priore, and ICP related companies have agreed to pay $23 million to settle the case, which was filed against them in June 2010.
CDOs are a type of structured asset-backed securities with multiple risk "tranches" that are issued by special purpose entities and collateralized by debt obligations including bonds and loans. With the real estate market collapse in 2008, many of these investments plummeted and investors lost billions.
The judgment orders ICP and its holding company, Institutional Credit Partners LLC, to pay disgorgement of $13,916,005.00 and prejudgment interest of $3,709,028. ICP must also pay a penalty of $650,000.00. ICP Securities LLC, an affiliated broker-dealer, is ordered to pay disgorgement of $1,637,581.00, prejudgment interest of $301,893, and penalty of $1,939,474.00. Mr. Priore will pay disgorgement of $797,337.00, prejudgment interest of $215,045.00, and a penalty of $487,618.00. Mr. Priore has also agreed to settle an administrative proceeding against him and be barred from any association with an investment adviser, broker, dealer, transfer agent, and from participating in any penny stock offerings. He is eligible to re-apply for association after a five-year period.
Did you suffer losses resulting from ICP Asset Management's fraudulent practices? 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.

SEC CHARGES NIKOLAI BATTOO OF BC CAPITAL GROUP WITH EXAGGERATING ASSET VALUES AND CONCEALING CLIENT LOSSES

The Securities and Exchange Commission (SEC) announced an emergency action against Nikolai Battoo, an asset manager with BC Capital Group who touted extraordinary investment success during the financial crisis while purportedly exaggerating the amount of assets he manages and concealing major investor losses. According to the SEC's investigations, Mr. Battoo claims to manage $1.5 billion for clients from around the world, including $100 million for clients in the United States. Despite Mr. Battoo's declared track record of extraordinary returns for his clients, he suffered losses in 2008 because of his investments in the Bernard Madoff Ponzi scheme and a derivative investment program that went sour.
A Ponzi scheme is an unsustainable fraud pyramid that inevitably ends in ruin. Schemers use money raised from latter investors or investors higher up the pyramid to pay an earlier investor's returns. Ponzi schemes invariably fall apart when markets deteriorate or when the schemer is unable to raise more cash. A derivative is a financial instrument whose value is based on one or more underlying assets. The most common underlying assets include commodities, stocks, bonds, and currencies. Derivatives function as a contract between two parties that specifies conditions such as the dates and resulting values of the underlying variables under which payments are to be made between the parties. The most common types of derivatives forms are forwards, futures, options, and swaps.
Mr. Battoo continued to overstate the value of his investments instead of admitting losses to investors. In fact, Mr. Battoo was able to attract new investors by simply claiming that he has been able to beat the benchmark. However, during recent months, Mr. Battoo's clients have demanded redemptions on their investments. Rather than pay his clients, Mr. Battoo has provided nothing but excuses ranging from the collapse of MF Global to a hold on his clients' money due to an ongoing government investigation.
Have you been unsuccessful in recovering money invested with Nikolai Battoo at BC Capital Group? 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.