SEAN FRANCIS SHERIDAN BARRED FROM THE SECURITIES INDUSTRY BY FINRA FOR MUTUAL FUND ABUSE

Sean Francis Sheridan, a former broker with Atlanta, Georgia based J.P Turner & Company, L.L.C., submitted an Offer of Settlement in which he consented to the entry of the Financial Industry Regulatory Authority's (FINRA) findings that he recommended and effected unsuitable mutual fund switches in customers' accounts. FINRA said that Mr. Sheridan only recommended Class A mutual fund shares to the customers, which resulted in them having to pay additional sales charges with each new purchase. In addition, Mr. Sheridan engaged in the short-term trading of mutual fund positions in the customers' accounts. FINRA also said that Mr. Sheridan recommended and effected the transactions in the customers' accounts without having reasonable grounds to believe that such transactions were suitable for the customers in view of the size and frequency of the transactions, the transaction costs incurred, and in light of the customers' financial situations, their investment objectives and needs. The customers lost a total of approximately $1,048,856, and Mr. Sheridan received commissions of approximately $267,000. FINRA further stated Mr. Sheridan failed to disclose to the customers that they could avoid a sales charge for each new Class A mutual purchase through the use of a free exchange, which was material information. Because Mr. Sheridan failed to provide the customers with the option of utilizing free exchanges, the customers paid front-end sales loads of approximately 4 to 5 percent for each mutual fund transaction. Mr. Sheridan, of Oakhurst, New Jersey, was barred from association with any FINRA member in any capacity.

In addition to the above described activity, FINRA found that Mr. Sheridan provided false information to J.P Turner & Company regarding the mutual fund transactions involving the customers. Mr. Sheridan had solicited the mutual funds, but he falsely identified those sales as unsolicited when placing the trades through the firm's electronic order entry system, which caused inaccuracies in the firm's records.

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. Sheridan's mutual fund abuse activities can bring forth claims to recover losses against J.P Turner & Company, which should have prevented Mr. Sheridan from committing the described illegal acts. Have you suffered losses in your J.P Turner & Company, L.L.C. account due to mutual fund abuse? 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.

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

T. Rowe Price Investment Securities, Inc., a Baltimore, Maryland based brokerage firm, submitted a letter of acceptance, waiver, and consent after the Financial Industry Regulatory Authority (FINRA) entered findings alleging that it failed to deliver prospectuses to mutual fund customers within three business days of their purchases. FINRA stated that the firm's clearing firm contracted with a third-party service provider for the delivery of mutual fund prospectuses for some of the clearing firm's introducing brokers, including the firm. On a daily basis, the clearing firm provided the service provider with electronic information regarding mutual fund transactions requiring delivery of a prospectus to the firm's customers. The clearing firm also provided daily and monthly reports to the firm. The firm did not establish or implement adequate systems or procedures for review of the daily reports. Although the firm's procedures required review of the monthly reports, they did not adequately describe what the reviewer was required to look for or what actions the reviewer was required to take in the event that prospectus delivery deficiencies were identified. FINRA further stated that the firm did not take sufficient actions to ensure that all of its customers were receiving prospectuses on time. In addition, FINRA stated that because of the firm's failure to timely deliver prospectuses to certain customers who purchased mutual funds, these customers were not provided with important disclosures about these products by settlement date in contravention of the Securities Act. The firm was censured and fined a total of $40,000 for all violations.
A prospectus is a document that discloses important information about an investment. It typically provides investors with material information about mutual funds, stocks, bonds, and other investments. Such information generally includes a description of the company's business, financial statements, biographies of officers and directors, detailed information about their compensation, any litigation that is taking place, a list of material properties, and any other material information.
T. Rowe Price Investment Securities was required to establish and maintain a supervisory system and written supervisory procedures (WSPs) reasonably designed to monitor and ensure the timely delivery of mutual fund prospectuses. FINRA found that the firm's WSPs did not require an adequate review of the service provider's performance of its prospectus deliveries. Instead, the firm's system for supervising the timely delivery of mutual fund prospectuses involved substantial reliance on the clearing firm and the service provider. FINRA concluded that the firm lacked an adequate supervisory system or procedure that was reasonably designed to ensure that mutual fund prospectuses were being delivered on a timely basis consistent with the Securities Act, and failed to implement and maintain such a supervisory system and WSPs.
Have you suffered losses in your T. Rowe Price Investment Securities brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against T. Rowe Price Investment Securities stockbrokers who may have engaged in misconduct and caused investors losses.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

LPL FINANCIAL CENSURED AND FINED FOR FAULTY SUPERVISORY SYSTEMS GOVERNING DELIVERIES OF MUTUAL FUND PROSPECTUSES

LPL Financial LLC, a Boston, Massachusetts based brokerage firm, submitted a letter of acceptance, waiver, and consent to resolve Financial Industry Regulatory Authority (FINRA) findings that it failed to establish and maintain an adequate supervisory system and written supervisory procedures (WSPs) reasonably designed to ensure timely delivery of mutual fund prospectuses. FINRA's findings stated that the firm was required to provide each of its customers who purchased a mutual fund with a prospectus for that fund no later than three business days after the transaction. The firm executed approximately 16 million mutual fund purchase or exchange transactions, and several million of these transactions required the firm to deliver a mutual fund prospectus to the purchasing customer. Therefore, the firm was required to establish and maintain a supervisory system and WSPs reasonably designed to monitor and ensure the timely delivery of mutual fund prospectuses. FINRA censured and fined the firm a total of $400,000 for all violations committed.
A prospectus is a document that discloses important information about an investment. It typically provides investors with material information about mutual funds, stocks, bonds, and other investments. Such information generally includes a description of the company's business, financial statements, biographies of officers and directors, detailed information about their compensation, any litigation that is taking place, a list of material properties, and any other material information.
In addition, FINRA's findings stated that the firm relied on its brokers for the delivery of mutual fund prospectuses. Each broker was required to obtain the customer's signature on a prospectus receipt form to have a record of the delivery. However, the firm did not have a supervisory system in place that was reasonably designed to ensure that prospectus receipts had been obtained in connection with mutual fund purchases or that a prospectus had actually been delivered timely. The firm's WSPs did not require an adequate review of its brokers' performance of their prospectus delivery obligations. Instead, the firm's procedures consisted of inadequate measures. FINRA further stated that for some time, the firm was aware that its procedures were failing to ensure that brokers consistently obtained prospectus receipts or other evidence of mutual fund prospectus delivery. On at least two occasions, the firm contemplated proposals to adjust its procedures for tracking prospectus delivery compliance, but the firm did not modify or enhance its procedures and continued to rely upon brokers without adequate safeguards to ensure and monitor mutual fund prospectus delivery.
Have you suffered losses in your LPL Financial brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against LPL Financial 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.

WAS THE OPPENHEIMER GLOBAL RESOURCE PRIVATE EQUITY FUND, L. P. MISREPRESENTED?

The Oppenheimer Global Resource Private Equity Fund, L.P. (the "Global Resources Fund") was launched by Oppenheimer Holdings, Inc. (Oppenheimer) in April 2008. Oppenheimer raised over $200 million for the Global Resources Fund from investors throughout the United States. Over the life of the fund, Oppenheimer has reported valuations and performance to existing and new investors. The question recently raised by the United States Securities and Exchange Commission (SEC) is whether Oppenheimer misrepresented the valuation and performance of the Global Resources Fund to retain old investors, to avoid lawsuits, and attract new investors. The SEC and Massachusetts Attorney General's office have been actively investigating Oppenheimer and the Global Resources Fund.
It has been reported that the investigation of Oppenheimer is focused on its overvaluation of a single holding within the Global Resource Fund. Apparently, the overvaluation transforms the fund's actual loss of 6.3% in 2009 into a profit of over 38%. If that is what Oppenheimer did, then the overstatement is nothing short of a gross misrepresentation of the fund's performance.
During the relevant period, Oppenheimer continued to market and sell investments in the Global Resource Fund. It appears that Oppenheimer raised an additional $55 million from investors with false and misleading information during the same period. If true, investors relying on the false and misleading performance information would have a good claim for fraudulent misrepresentations and omissions, breach of fiduciary duty, negligence and breach of contract.
Have you suffered losses resulting from an investment in the Global Resources Fund? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is actively investigating and accepting clients with valid claims against Oppenheimer and it's stockbrokers who fraudulently offered and sold the fund to 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, 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.

T. ROWE PRICE FINED FOR FAILURE TO DELIVER PROSPECTUSES TO INVESTORS

T. Rowe Price Investment Services, Inc. (T. Rowe Price) has been fined by the Financial Industry Regulatory Authority (FINRA) for violation of securities industry rules and regulations relating to the protection of investors. T. Rowe Price failed to implement and maintain adequate supervisory systems and procedures to monitor and ensure the timely delivery of mutual fund prospectuses as required by Section 5 of the Securities Act of 1933 (the "Securities Act"), NASD Conduct Rule 3010 and FINRA Rule 2010. FINRA investigators discovered that T. Rowe Price failed to provide prospectuses to its customers who purchased mutual funds and other securities products during the period of its investigation - 2009 through 2011 (the "relevant period"). FINRA estimated that T. Rowe Price may have failed to deliver at least 2,500 prospectuses to its customers in a timely manner during that period.
The federal and state securities laws require the delivery of a prospectus to investors because it provides them with important information about the product being purchased. Our federal and state securities laws require disclosure of the details of the enterprise in which an investor's putting money so that he can be fully apprised and can intelligently appraise the risks involved in his or her particular investment. Not only has T. Rowe Price violated the Section 5 of the Securities Act, but it has also violated Section 10 (b) of the Securities Exchange Acts of 1934 (the "Exchange Act"), which states the time a prospectus must be delivered. A prospectus is required to be delivered by securities broker-dealer before the transaction is complete on the settlement date of the transaction, which in the case of mutual fund transactions and most stock transactions is no later than 3 business days after the order is placed.
The failure to deliver prospectuses in a timely manner is an extremely serious violation. It is not only a violation that can result in sanctions by securities regulator such as FINRA, but it can also give rise to a civil action or arbitration claim by an investor for rescission (to unwind the transaction) under both federal and state securities laws. Alternatively, an investor may recover damages for losses suffered in connection with an investment he or she made through T. Rowe Price if that investor did not receive a prospectus in a timely manner.
Have you suffered losses resulting from a T. Rowe Price stockbroker's failure to deliver a prospectus relating to an investment made through that brokerage firm? 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 FARM VP MANAGEMENT CORP. FINED FOR FAILURE TO DELIVER PROSPECTUSES TO INVESTORS

State Farm VP Management Corp. (State Farm) has been fined by the Financial Industry Regulatory Authority (FINRA) for violation of securities industry rules and regulations relating to the protection of investors. State Farm failed to implement and maintain adequate supervisory systems and procedures to monitor and ensure the timely delivery of mutual fund prospectuses as required by Section 5 of the Securities Act of 1933 (the "Securities Act"), NASD Conduct Rule 3010 and FINRA Rule 2010. FINRA investigators discovered that State Farm failed to provide prospectuses to its customers who purchased mutual funds and other securities products during the period of its investigation - 2009 through 2011 (the "relevant period"). FINRA estimated that State Farm may have failed to deliver at least 150,000 prospectuses to its customers in a timely manner during that period. Further, FINRA investigators found that State Farm failed to send updated prospectuses, which is also required under the law and industry rules to thousands of investors from 2001 through 2012.
The federal and state securities laws require the delivery of a prospectus to investors because it provides them with important information about the product being purchased. Our federal and state securities laws require disclosure of the details of the enterprise in which an investor's putting money so that he can be fully apprised and can intelligently appraise the risks involved in his or her particular investment. Not only has State Farm violated Section 5 of the Securities Act but it has also violated Section 10 (b) of the Securities Exchange Acts of 1934 (the "Exchange Act"), which states the time a prospectus must be delivered. A prospectus is required to be delivered by securities broker-dealer before the transaction is complete on the settlement date of the transaction, which in the case of mutual fund transactions and most stock transactions is no later than 3 business days after the order is placed.
The failure to deliver prospectuses in a timely manner is an extremely serious violation. It is not only a violation that can result in sanctions by securities regulators such as FINRA, but it can also give rise to a civil action or arbitration claim by an investor for rescission (to unwind the transaction) under both federal and state securities laws. Alternatively, an investor may recover damages for losses suffered in connection with an investment he or she made through State Farm if that investor did not receive a prospectus in a timely manner.
Have you suffered losses resulting from a State Farm stockbroker's failure to deliver a prospectus relating to an investment made through that brokerage firm? 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.

DEUTSCHE BANK SECURITIES INC. FINED FOR FAILURE TO DELIVER PROSPECTUSES TO INVESTORS

Deutsche Bank Securities Inc. (DBSI) has been fined by the Financial Industry Regulatory Authority (FINRA) for violation of securities industry rules and regulations relating to the protection of investors. DBSI failed to implement and maintain adequate supervisory systems and procedures to monitor and ensure the timely delivery of mutual fund prospectuses as required by Section 5 of the Securities Act of 1933 (the "Securities Act"), NASD Conduct Rule 3010 and FINRA Rule 2010. FINRA investigators discovered that DBSI failed to provide prospectuses to its customers who purchased mutual funds and other securities products during the period of its investigation - 2009 through 2011 (the "relevant period"). FINRA estimated that DBSI may have failed to deliver at least 75,000 prospectuses to its customers in a timely manner during that period.
The federal and state securities laws require the delivery of a prospectus to investors because it provides them with important information about the product being purchased. Our federal and state securities laws require disclosure of the details of the enterprise in which an investor's putting money so that he can be fully apprised and can intelligently appraise the risks involved in his or her particular investment. Not only has DBSI violated the Section 5 of the Securities Act, but it has also violated Section 10 (b) of the Securities Exchange Acts of 1934 (the "Exchange Act"), which states the time prospectus must be delivered. A prospectus is required to be delivered by a securities broker-dealer before the transaction is complete on the settlement date of the transaction, which in the case of mutual fund, other initial public offering (IPO) transactions and most stock transactions is no later than 3 business days after the order is placed.
The failure to deliver prospectuses in a timely manner is an extremely serious violation. It is not only a violation that can result in sanctions by securities regulator such as FINRA, but it can also give rise to a civil action or arbitration claim by an investor for rescission (to unwind the transaction) under both federal and state securities laws. Alternatively, an investor may recover damages for losses suffered in connection with an investment he or she made through DBSI if that investor did not receive a prospectus in a timely manner.
Have you suffered losses resulting from a DBSI stockbroker's failure to deliver a prospectus relating to an investment made through that brokerage firm? 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.

LPL FINANCIAL, LLC FINED FOR FAILURE TO DELIVER PROSPECTUSES TO INVESTORS

LPL Financial, LLC (LPL), for the third time in the last thirty days, has been fined by the Financial Industry Regulatory Authority (FINRA) for violation of securities industry rules and regulations relating to the protection of investors. This time LPL failed to implement and maintain adequate supervisory systems and procedures to monitor and ensure the timely delivery of mutual fund prospectuses as required by Section 5 of the Securities Act of 1933 (the "Securities Act"), NASD Conduct Rule 3010 and FINRA Rule 2010. FINRA investigators discovered that LPL failed to provide prospectuses to its customers who purchased mutual funds during the period of its investigation - 2009 through 2011 (the "relevant period"). FINRA estimated that LPL may have failed to deliver at least 3.4 million mutual fund prospectuses to its customers during that two year period. There is a high probability that LPL failed to deliver prospectuses in connection with the sale of other products during the relevant period and did not have procedures in place to ensure delivery of any prospectuses to its customers prior to the relevant period. The FINRA investigators found that at least as early as 2007, LPL was aware that its procedures were failing to ensure that its registered representatives were delivering the prospectuses as required under the federal and state securities laws.
The federal and state securities laws require the delivery of a prospectus to investors because it provides them with important information about the product being purchased. Our federal and state securities laws require disclosure of the details of the enterprise in which an investor's putting money so that he can be fully apprised and intelligently appraise the risks involved in his or her particular investment. Not only has LPL violated Section 5 of the Securities Act, but it has also violated Section 10 (b) of the Securities Exchange Acts of 1934 (the "Exchange Act"), which states the time prospectus must be delivered. A prospectus is required to be delivered by a securities broker-dealer before the transaction is complete on the settlement date of the transaction, which in the case of mutual fund transactions, and in most stock transactions, is no later than 3 business days after the order is placed.
The failure to deliver prospectuses in a timely manner is an extremely serious violation. It is not only a violation that can result in sanctions by securities regulator such as FINRA, but it can also give rise to a civil action or arbitration claim by an investor for rescission (to unwind the transaction) under both federal and state securities laws. Alternatively, an investor may recover damages for losses suffered in connection with an investment he or she made through LPL if that investor did not receive a prospectus in a timely manner.
Have you suffered losses resulting from an LPL stockbroker's failure to deliver a prospectus relating to an investment made through that brokerage firm? 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.

MUTUAL FUNDS INVESTORS NATIONWIDE MIGHT BE ENTITLED TO BREAKPOINT DISCOUNTS THEY NEVER RECEIVED

Investors nationwide might be eligible for a refund of the front-end sales charge they paid when they purchased Class A shares of a mutual fund from their respective securities firms. An industry-wide survey taken showed that investors did not receive discounts in one out of every five transactions that were eligible for discounts. Front-end sales discounts are offered to customers who are making large mutual fund investments - usually between $25,000.00 and $50,000.00. The Financial Industry Regulatory Authority (FINRA) is expecting firms to make refunds to their customers where they are aware that their customers did not receive a discount to which they were entitled. In addition, FINRA is expecting firms to make refunds when clients come forward and show that they did not receive all applicable discounts.
Mutual funds typically offer more than one "class" of shares to investors. Each class represents the same interest in the mutual fund, but the sales charges, fees, and expenses will vary. For example, Class A shares require investors to pay a front-end sales charge or "load" that is deducted from the initial investment amount - a 5% front-end sales load at a cost of $1,000 will generate a $50 sales load with $950 remaining invested in the mutual fund. Investors may qualify for a breakpoint discounts in a number of ways: 1) the amount invested exceeds a breakpoint threshold; 2) a letter of intent is written stating that the customer will invest an amount greater than a break-point threshold within a specified time established by the fund; and 3) having rights of accumulation, which allow customers to combine future purchases with earlier ones to exceed a break-point threshold. Each mutual fund family sets its own breakpoint discounts and sets the rules regarding which accounts will count towards breakpoint discounts.
Securities firms must make a refund if an investor has a valid claim that he or she was overcharged. In fact, many firms have already begun to refund excessive front-end sales load charges to their customers. FINRA is directing more than 450 securities firms to notify customers who purchased Class A mutual fund shares since 1999 that they may be due discounts resulting from their respective firms' failure to provide breakpoint discounts. FINRA is also requiring nearly 175 of those firms with poor records of providing breakpoint discounts to complete a comprehensive review of transactions since 2001 for possible missed discount opportunities.
Do you believe you are entitled to breakpoint discounts, but have not yet received a refund? 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 - CLASS B MUTUAL FUND SHARES MAY NOT BE RIGHT FOR YOU!

When investors buy mutual funds through their brokers, it usually involves choosing among different share classes. The only difference between share classes is the amount of fees the broker will be paid and the amount of expenses the funds will charge. Oftentimes, investors are persuaded into purchasing Class B mutual fund shares when it may not be cost-effective for them, particularly when the trade plus assets already managed by that family exceeds $100,000.00. By purchasing B shares, investors may also be forgoing breakpoint discounts they are eligible for.
Class B shares do not impose a front-end sales fee or "load" that is deducted at the moment of investment - unlike Class A shares, all of the investor's money will be put to work. B share owners do incur higher 12b-1 fees (to cover marketing and distribution costs) than A shares, and B shares also impose a contingent deferred sales charge (CDSC), which the investors will pay if he or she sells shares within a certain number of years. The CDSC typically reduces each year, and is usually eliminated after six or more years. Selling class B shares during the period in which the CDSC applies can significantly diminish the overall return of the investment.
Mutual fund investors must be aware that when purchasing large amounts of B shares, normally over $50,000, they cannot take advantage of breakpoint discounts that may be available to them in A shares. Abuses regarding B share sales have been reported and are currently under investigation. That is why investors interested in investing an amount of cash large enough to qualify for breakpoints should discuss with their brokers whether A shares would be a better option than B shares.
Do you believe your purchase of Class B shares resulted from an improper sale? 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.

WATCH OUT INVESTORS--FINRA WARNS INVESTORS ABOUT FLOATING RATE BOND FUNDS

The Financial Industry Regulatory Authority (FINRA) warns that floating rate bank loans come with significant risks, including potential credit, valuation and liquidity problems. Contrary to popular belief, bank loan funds are more correlated with the stocks than bonds. In good economic times floating rate loans may gain in value, though not nearly as much as stocks. But in bad economic times, funds of floating rate loans may perform worse than junk bond funds ("A Risky Reach for Yield," Bloomberg Businessweek).
The bank loans are typically made to buyout firms. These firms have a practice of "piling debt on to companies they own to extract payouts," which "may reduce the credit-worthiness of borrowers and make defaults more likely," according to the article.

As always, investors and their financial advisors need to carefully assess the risks and the investor's investment objective and risk tolerance before investing.

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.

WATCH OUT INVESTORS--FLOATING-RATE BOND FUNDS ARE A "RISKY YIELD PLAY"

According to Jonnelle Marte of the Wall Street Journal, floating rate funds are a "Risky Yield Play." They have significant risks and investors must be aware of the downside. The increased demand for floating rate bonds has the effect of driving down yields. For example, during the credit crunch triple-C-rated companies paid as much as 47 percent for loans, but today that is down to 14 percent. Thus most of the returns have already been made.

Not so obvious is the fact that higher demand also results in looser restrictions for borrowers. These so-called "covenant-lite" loans, which have more relaxed repayment terms that are good for high-risk borrowers but bad for investors, now comprise 20 percent of the market - near the peak of 25 percent in 2007, according to the article.

Investors should be skeptical of the credit quality of floating rate loans. If the economy worsens, investors could experience significant 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.

JPMORGAN PUSHED PROPRIETARY FUNDS ON INVESTORS

JPMorgan, one of the nation's largest mutual fund managers, reportedly pushed its proprietary products as other parts of the bank were shrinking. JPMorgan was motivated to put its financial interest ahead of its clients (mostly ordinary investors) by the slump after the financial crisis and the firm's need to make up for lost profits.

The primary benefit to JPMorgan of selling proprietary funds is the fees the firm collects for managing them. The aggressive sales push allowed JPMorgan to gather assets on which to earn fees, despite the industry trend of ordinary investors leaving stock funds in droves, and despite the overall poor performance of its funds. Approximately 42 percent of its funds failed to beat the average performance of funds that make similar investments over the last three years, according to Morningstar.

JPMorgan financial advisers say that they were encouraged to push the firm's proprietary products despite the availability of less expensive, better performing alternatives, and that the firm exaggerated the returns of at least one crucial offering (See "Former Brokers Say JPMorgan Favored Selling Banks' Own Funds Over Others," by Susanne Craig and Jessica Silver-Greenberg).

"I was selling JPMorgan funds that often had weak performance records, and I was doing it for no other reason than to enrich the firm," Geoffrey Tomes, who left JPMorgan last year and is now an adviser at an independent firm, was quoted as saying, adding: "I couldn't call myself objective."

"It said financial adviser on my business card, but that's not what JPMorgan actually let me be," Mathew Goldberg, a former JPMorgan broker was quoted as saying, adding: "I had to be a salesman even if what I was selling wasn't that great."

Many other firms have discontinued offering their own funds because of the conflicts of interest, according to the article, which names Morgan Stanley and Citigroup as having largely exited the business.

One of JPMorgan's core products, Chase Strategic Portfolio, contains a mix of both proprietary and non-proprietary mutual funds. JPMorgan receives an annual fee as high as 1.6 percent of the $20 billion of assets in the Chase Strategic Portfolio, compared with 1% typically charged by an independent investment advisor, and also earns a fee on the underlying JPMorgan funds.

Experts are concerned that JPMorgan is recommending proprietary funds for profit reasons rather than client needs. "There is a real concern about conflicts of interest," Andrew Metrick, a professor at the Yale School of Management, was quoted as saying.

Experts are also concerned that investors are being misled. Marketing materials for the Chase Strategic Portfolio emphasize hypothetical returns when the actual returns are significantly lower.

Advisers are reportedly pressured to recommend the firm's proprietary products by an "intense sales culture." The article relates how one branch supervisor sent a congratulatory note with the header "KABOOM" to an adviser who had persuaded a client to put $75,000 into the Chase Strategic Portfolio with the comment: "Nice to know someone is taking advantage of the best-selling day of the week!" JPMorgan also circulates a list of top-performing brokers.

"It was all about the money, not the client," said Warren Rockmacher, a former JPMorgan broker was quoted as saying, adding that if a customer did not invest in the Chase Strategic Portfolio, a manager would ask him why not.

In summary, pushing proprietary products is a way for the firm to make money at the client's expense. It is incompatible with the image of a "trusted adviser" that firms try to project in their advertising.

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.