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

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

WAS FLORIDA BROKER DONALD HORRAS RUN OUT OF MORGAN STANLEY?

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

TEXAS PONZI SCHEMES: INVESTORS SUE MORGAN STANLEY SMITH BARNEY AND PROVIDENT ROYALTIES

11 investors in Dallas, Texas are suing Morgan Stanley Smith Barney and one of its financial advisers, Delsa Thomas, for running a Ponzi scheme. 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. The investors alleged that Ms. Thomas took advantage of their trust by suggesting that they invest in Tejas Eagle Financial LLC; Ms. Thomas established an investment range of $125,000.00 to $250,000.00, which was made up of her investors' retirement and savings money. Investors also contended that Ms. Thomas' recommendation was unsuitable and was bound to destroy whatever amount they had invested and that Morgan Stanley Smith Barney breached its duty of care by allowing her to give investment advice that was unsuitable. Damages are being sought under vicarious liability, fraud, negligent misrepresentation, and negligent supervision.

On another note, a federal court in Texas has sentenced Joseph Blimine to 20 years for running two oil and gas Ponzi schemes that began in Michigan in 2003. Mr. Blimine and other fraudsters made over $28 million before starting Provident Royalties in 2006 for the purpose of carrying on with their Ponzi scheme in Texas; close to 7,700 investors were defrauded out of over $400 million. Mr. Blimine pled guilty to the criminal charges brought against him by the Securities and Exchange Commission following a lawsuit against Provident Royalties, Provident Asset Management, and 21 other entities that offered and sold the investment.

Due diligence requires a reasonable investigation of all material facts before entering into an agreement or transaction with another person or entity. It is a measure taken to prevent unnecessary harm to an innocent party. The measure would require an entity offering and selling a security to analyze the legitimacy, nature, and risks associated with the product. An investor in Provident Royalties can claim damages against the entity that sold the investment for not performing its due diligence prior to the offer and sale.

Have you suffered investment losses in the Delsa Thomas or Provident Royalties Ponzi scheme? 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 FINES MORGAN STANLEY, CITIGROUP, WELLS FARGO, AND UBS $9.1M OVER LEVERAGED AND INVERSE ETFS

Wells Fargo & Co. (WFC), UBS AG (UBSN), Morgan Stanley (MS), and Citigroup Inc. (C) have consented to pay a combined $9.1 million to settle Financial Industry Regulatory Authority claims that they did not adequately supervise the sale of leveraged and inverse exchange-traded funds in 2008 and 2009. $7.3 million of this is fines. The remaining $1.8 million will go to affected customers. The SRO says that the four financial firms had no reasonable grounds for recommending these securities to the investors, yet they each sold billions of dollars of ETFs to clients. Some of these investors ended up holding them for extended periods while the markets were exhibiting volatility.

It was in June 2009 that FINRA cautioned brokers that long-term investors and leveraged and inverse ETFs were not a good match. While UBS suspended its sale of these ETFs after the SRO issued its warning, it eventually resumed selling them but doesn't recommend them to clients anymore. Morgan Stanley also had announced that it would place restrictions on ETF sales. Meantime, Wells Fargo continues to sell leveraged and inverse ETFs. However, a spokesperson for the financial firm says that it has implemented enhanced procedures and policies to ensure that it meets its regulatory responsibilities. Citigroup also has enhanced its policies, procedures, and training related to the sale of these ETFs. (FINRA began looking into how leveraged and inverse ETFs are being marketed to clients in March after one ETN, VelocityShares Daily 2x VIX Short-Term (TVIX), which is managed by Credit Suisse (CS), lost half its worth in two days.)

The Securities and Exchange Commission describes ETFs as (usually) registered investment companies with shares that represent an interest in a portfolio with securities that track an underlying index or benchmark. While leveraged ETFs look to deliver multiples of the performance of the benchmark or index they are tracking, inverse ETFs seek to do the opposite. Both types of ETFs seek to do this with the help of different investment strategies involving future contracts, swaps, and other derivative instruments. The majority of leveraged and inverse ETFs "reset" daily. How they perform over extend time periods can differ from how well their benchmark or underlying index does during the same duration. Per Bloomberg, leveraged and inverse ETFs hold $29.3 billion in the US.

For investors, it is important that they understand the risks involved in leveraged and inverse ETFs. Depending on what investment strategies the ETF employs, the risks may vary. Long-term investors should be especially careful about their decision to invest in leveraged and inverse ETFs.
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 FINES MORGAN STANLEY FOR FAILING TO HAVE STRUCTURED PRODUCT SUITABILITY GUIDELINES NATIONWIDE

Morgan Stanley & Co. LLC recently submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and fined $600,000.

Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it did not have a firm-wide structured product-specific suitability policy. The findings stated that, instead, it had an overall suitability guideline that directed supervisors to consider concentration when reviewing all securities purchases.

The firm issued selling memoranda specific to each of its proprietary structured product offerings; some of the selling memoranda included a 10 percent concentration guideline with respect to the specific issue and a $100,000 minimum net worth recommendation.

The findings also stated that the firm developed standard concentration and net worth guidelines, which were posted on its structured products website. Despite the concentration and net worth guidelines, the firm sold structured products at concentrated levels and to customers who did not meet the firm's minimum net worth recommendation.

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.

DID WALL STREET RIP-OFF UNITED STATES FACEBOOK INVESTORS?

Troubling signs that emerged days before the IPO were hidden from the public by Wall Street, according to an article in The Motley Fool by Eric Bleeker entitled "The Tragedy of Facebook: How Wall Street Robbed Main Street." While Wall Street helped Facebook promote its IPO, and brought it public at a falsely elevated price, analysts at the underwriter firms cut their earnings estimates for Facebook. That was unprecedented for an IPO. But it was only disclosed to a few favored clients, while the rest, who were encouraged to buy Facebook stock in the IPO, were kept in the dark. The banks' analysts apparently didn't even cut their estimates based on their own due diligence. A Facebook executive had to tell them they should cut their estimates, according to the article.

After Facebook shares popped up, and then quickly began to sink, while Morgan Stanley, the lead underwriter, was buying shares to try to temporarily prop up the price, underwriters Goldman Sachs and JPMorgan were lending out Facebook shares to be sold short by the few institutional clients who had been tipped off about Facebook's lowered earnings estimates, further exacerbating the slide. So much for Wall Street's claim that it can manage its conflicts of interest while millions of dollars are in play.

Morgan Stanley's buying of Facebook shares did not result in a loss for Morgan Stanley. It sold more shares into the IPO than it bought, and therefore made a profit even though Facebook shares plummeted. Indeed the Wall Street underwriters made $100 million from trading Facebook as retail investors lost $630 million and counting. Thus Wall Street wins even if investors lose because the game is rigged against the investors and in favor of Wall Street.

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.

WELLS FARGO, CITIGROUP, MORGAN STANLEY, UBS FINED FOR IMPROPER SALES OF HIGH-RISK ETFS NATIONWIDE

The Financial Industry Regulatory Authority (FINRA) announced that it ordered Wells Fargo Advisors, Citigroup Global Markets, Morgan Stanley, and UBS Financial Services to pay more than $9.1 million for failure to supervise and failure to have a reasonable basis for recommending selling leveraged and inverse exchange traded funds. Each of the four firms sold billions of dollars of these leveraged and inverse exchange traded funds.

The payments consist of more than $7.3 million in fines and $1.8 million in restitution to customers who purchased the leveraged and inverse exchange traded funds. The breakdown is as follows:

• Wells Fargo - $2.1 million fine and $641,489 in restitution
• Citigroup - $2 million fine and $146,431 in restitution
• Morgan Stanley - $1.75 million fine and $604,584 in restitution
• UBS - $1.5 million fine and $431,488 in restitution

Brad Bennett, FINRA Executive Vice President and Chief of Enforcement, was quoted as saying: "The added complexity of leveraged and inverse exchange-traded products makes it essential that brokerage firms have an adequate understanding of the products and sufficiently train their sales force before the products are offered to retail customers. Firms must conduct reasonable due diligence and ensure that their representatives have an understanding of these products."

In addition, FINRA found that the firms' registered representatives made unsuitable recommendations of leveraged and inverse exchange-traded funds to some customers with conservative investment objectives and/or risk profiles, some of whom held them for extended periods during January 2008 through June 2009 when the markets were volatile.

Leveraged and inverse exchange-traded funds have risks not found in traditional exchange traded funds. Those risks flow from the daily reset, leverage and compounding of leveraged and inverse exchange traded funds, which caused them to differ significantly from the performance of the underlying index or benchmark when held for longer periods of time. That was particularly true in the volatile markets that existed during January 2008 through June 2009.

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.

WATCH OUT - UNITED STATES AND INTERNATIONAL ETF AND ETN INVESTORS!

The SEC and FINRA are finally stepping up to regulate nontraditional ETFs and ETNs and to ensure that these complicated products are not sold to unsophisticated investors.

Citigroup Global Markets Inc., Morgan Stanley, UBS Financial Services Inc. and Wells Fargo recently agreed to pay $9.1 million to settle allegations that they sold leveraged and inverse exchange-traded funds to clients who had no business investing in the complex instruments.

In its first actions against firms that put clients in these products, FINRA said the four wirehouses experienced supervisory failures and lacked a "reasonable basis" for recommending the securities to certain clients. Together, the firms bought and sold $27 billion of the nontraditional ETFs from January 2008 through June 2009, FINRA said.

The firms agreed to pay the fines of $7.3 million and restitution of $1.8 million without admitting or denying the allegations.

These sanctions are likely only the beginning as it is now clear that ETFs and ETNs are a significant problem for the brokerage industry.

In March 2010, the SEC stopped approving applications for ETFs that use derivatives and indicated that it wants to review whether additional investor protections are warranted, particularly for leveraged and inverse ETFs.

FINRA and the SEC's involvement in these products is a result of the leverage and risks associated with these investments and the concern that such investments can be confused with less risky and more traditional ETFs.

The more exotic ETFs are riskier because they reset daily and use leverage and compounding. Results of leveraged and inverse ETFs can differ significantly from the performance of the underlying index, especially when held for long periods of time and during volatile markets.

FINRA and the SEC published a joint investor alert in 2009 warning that leveraged and inverse ETFs are complicated investments that focus on meeting daily performance goals. The agencies said long-term performance is likely to be very different than the investment's stated daily objectives, and recommended that investors discuss the products with an investment professional.

The following is a list of some of the ETFs and ETNs currently available:

BGZ - Direxion Daily Large Cap Bear 3X Shares ETF
BIS - UltraShort NASDAQ Biotechnology ETF
BRIS - Direxion Daily BRIC Bear 3x Shares ETF
BXDB - Barclays Short B Leveraged Inverse S&P 500 Total Return ETN
COWS - Direxion Daily Agribusiness Bear 3x Shares ETF
DDG - Short Oil & Gas ProShares ETF
DGLD - 3x Inverse Gold ETN
DLBS - iPath US Treasury Long Bond Bear ETN
DMM - MacroShares Housing Down ETF
DNO - United States Short Oil ETF
DOG - Short Dow30 ProShares ETF
DOY - MacroShares $100 Oil Down ETF
DPK - Direxion Daily Devloped Markets Bear 3X Shares ETF
DSLV - 3x Inverse Silver ETN
DSTJ - JP Morgan 2X Short US Long Treasury Futures ETN
DSXJ - JP Morgan 2X Short US 10 Year Treasury Futures ETN
DUG - UltraShort Oil & Gas ProShares ETF
DUST - Direxion Daily Gold Miners Bear 3x Shares ETF
DXD - UltraShort Dow 30 ProShares ETF
EDZ - Direxion Daily Emerging Markets Bear 3X Shares ETF
EEV - UltraShort MSCI Emerging Markets ProShares ETF
EFU - UltraShort MSCI EAFE ProShares ETF
EFZ - Short MSCI EAFE ProShares ETF
ERY - Direxion Daily Energy Bear 3X Shares ETF
EUM - Short MSCI Emerging Markets ProShares ETF
EUO - ProShares UltraShort Euro ETF
EWV - UltraShort MSCI Japan ProShares ETF
FAZ - Direxion Daily Financial Bear 3X Shares ETF
FXP - UltraShort FTSE/Xinhua China25 Proshares ETF
GASX - Direxion Daily Natural Gas Related Bear 3X Shares ETF
GLL - UltraShort Gold ProShares ETF
INDZ - Direxion Daily India Bear 3x Shares ETF
IPAL - 2x Inverse Palladium ETN
IPLT - 2x Inverse Platinum ETN
KRS - Short KBW Regional Banking ETF
KOLD - UltraShort DJ-UBS Natural Gas ETF
LHB - Direxion Daily Latin America 3x Bear Shares ETF
MATS - Direxion Daily Basic Materials Bear 3X Shares ETF
MWN - Direxion Daily Mid Cap Bear 3X Shares ETF
MYY - Short MidCap400 ProShares ETF
MZZ - UltraShort MidCap400 ProShares ETF
PSQ - Short QQQ ProShares ETF
PST - ProShares UltraShort 7-10 Year Treasury ETF
QID - UltraShort QQQ ProShares ETF
QLD - Ultra QQQ ProShares ETF
REK - ProShares Short Real Estate ETF
RETS - Direxion Daily Retail Bear 3X Shares ETF
REW - UltraShort Technology ProShares ETF
RINF - ProShares 30 Year TIPS/TSY Spread ETF
RSW - Rydex Inverse 2x S&P 500 ETF
RUSS - Direxion Daily Russia Bear 3x Shares ETF
RWM - Short Russell2000 ProShares ETF
RXD - UltraShort Health Care ProShares ETF
SAGG - Daily Total Bond Market Bear 1x Shares ETF
SBB - ProShares Short S&P SmallCap600 ETF
SBM - ProShares Short Basic Materials ETF
SCC - ProShares UltraShort Consumer Services ETF
SCO - ProShares UltraShort DJ-AIG Crude Oil ETF
SDD - ProShares UltraShort SmallCap600 ETF
SDK - ProShares UltraShort MidCap Growth ETF
SDOW - UltraPro Short Dow 30 ETF
SDP - ProShares UltraShort Utilities ETF
SDS - ProShares UltraShort S&P500 ETF
SEF - Short Financials ProShares ETF
SFK - ProShares UltraShort Russell1000 Growth ETF
SH - ProShares Short S&P500 ETF
SICK - Direxion Daily Healthcare Bear 3X Shares ETF
SIJ - ProShares UltraShort Industrials ETF
SJB - ProShares Short High Yield ETF
SJH - UltraShort Russell2000 Value ProShares ETF
SJL - ProShares UltraShort MidCap Value ETF
SFK - UltraShort Russell1000 Growth ProShares ETF
SKK - UltraShort Russell 2000 Growth ProShares ETF
SMDD - UltraPro Short Mid-Cap 400 ETF
SMN - ProShares UltraShort Basic Materials ETF
SOXS - Direxion Daily Semiconductor Bear 3x Shares ETF
SPXU - ProShares Ultra Pro Short S&P 500 ETF
SQQQ - UltraPro Short QQQ ETF
SRS - ProShares UltraShort Real Estate ETF
SRTY - UltraPro Short Russell 2000 ETF
SSG - ProShares UltraShort SemiConductor ETF
SVXY - ProShares Short VIX Short-Term Futures ETF
SZK - ProShares UltraShort Consumer Goods ETF
TBF - ProShares Short 20+ Year Treasury ETF
TBT - ProShares UltraShort 20+ Year Treasury ETF
TBX - Short 7-10 Year Treasury ETF
TBZ - UltraShort 3-7 Year Treasury ETF
TLL - ProShares UltraShort Telecommunications ETF
TMV - Direxion Daily 30-year Treasury Bear 3x Shares ETF
TOTS - Direxion Daily Total Market Bear 1X Shares ETF
TPS - ProShares UltraShort TIPS ETF
TTT - UltraPro Short 20+ Year Treasury ETF
TWM - UltraShort Russell 2000 ProShares ETF
TYBS - Daily 20 Year Plus Treasury Bear 1x Shares ETF
TYNS - Daily 7-10 Year Treasury Bear 1x Shares ETF
TYO - Direxion Daily 10-year Treasury Bear 3x Shares ETF
TYP - Direxion Daily Technology Bear 3x Shares ETF
TZA - Direxion Daily SmallCap Bear 3x Shares ETF
TWQ - ProShares UltraShort Russell 3000 Index ETF
UDN - PowerShares US Dollar Bearish ETF
YCS - ProShares UltraShort Yen ETF
YXI - Proshares Short FTSE / Xinhua China 25 ETF
ZSL - ProShares UltraShort Silver ETF
AGA - PowerShares DB Agriculture Double Short ETN
BOM - PowerShares DB Base Metals Double Short ETN
DDP - PowerShares DB Commodity Short ETN
DEE - PowerShares DB Commodity Double Short ETN
DGZ - PowerShares DB Gold Short ETN
DRR - Market Vectors Double Short Euro ETN
DTO - PowerShares DB Crude Oil Double Short ETN
DTUS - iPath US Treasury 2-year Bear ETN
DTYS - iPath US Treasury 10-year Bear ETN
DZZ - PowerShares DB Gold Double Short ETN
EMSA - iPath Short Enhanced MSCI Emerging Markets Index ETN
IVOP - iPath Inverse S&P 500 VIX Short-Term Futures ETN
JGBS - PowerShares DB Inverse Japanese Government Bond Futures ETN
JGBD - PowerShares DB 3x Inverse Japanese Government Bond Futures ETN
MFSA - iPath Short Enhanced MSCI EAFE Index ETN
MLPS - UBS E-TRACS 1x Monthly Short Alerian MLP Infrastructure Total Return Index ETN
ROSA - iPath Short Extended Russell 1000 TR Index ETN
RTSA - iPath Short Extended Russell 2000 TR Index ETN
SBND - PowerShares DB 3X Short 25+ Year Treasury Bond Exchange Traded Note ETN
SFSA - iPath Short Extended S&P 500 TR Index ETN
SZO - PowerShares DB Crude Oil Short ETN
UDNT - PowerShares DB 3x Short US Dollar Index Futures ETN
XXV - Barclays ETN+ Inverse S&P 500 VIX Short-Term Futures ETN
XIV - VelocityShares Daily Inverse VIX Short Term ETN
ZIV - VelocityShares Daily Inverse VIX Mid Term ETN

Each of these investments are examples of some of the high-risk inverse ETFs and ETNs which are not suitable for unsophisticated, long-term investors.

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.

MORGAN STANLEY MAKES MILLIONS - FACEBOOK INVESTORS THROUGHOUT FLORIDA AND THE COUNTRY LOSE THEIR SHIRTS

In addition to substantial IPO fees, the Facebook underwriters headed by Morgan Stanley made "a profit of about $100 million" through an options bet which benefits the banks when the IPO price is too high and the stock value plummets. (See "Morgan Stanley, Others Make Profit of $100 Million Stabilizing Facebook," Gina Chon, Aaron Luchetti and Ryan Dezember, The Wall Street Journal). This profit comes at the expense of individual investors who buy the overpriced stock at or above its initial purchase price.

On May 9th Facebook told its underwriting banks that its growth prospects were slowing down due to an increasing mobile user base.  Instead of releasing this information to the public, the underwriters set the price to $38 representing a historically high price to earnings ratio. This may seem strange for a company with questionable growth prospects. The Facebook Underwriters, headed by Morgan Stanley, also had an "overallotment option" which effectively made them short Facebook stock (See "Morgan Stanley's $2.4 Billion Facebook Short," Felix Salmon, Seeking Alpha). This scheme gave the banks a huge payout if the stock price tanked; unfortunately, these profits come at the expense of individual investors who overpaid for their stock.

Lawsuits have been filed against Facebook and its bank underwriters less than one week after the IPO. The banks are being investigated for withholding information to individual investors for the benefit of personal profit and their larger clients (See "Lawsuit says investors didn't get all Facebook data," Adam Shell, USA Today). There is a push for a class action lawsuit which seeks to remedy all individual investors who were hurt by Facebook's plummeting stock value.

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 nationwide! 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.