Blake Richards, a broker formerly with LPL Financial LLC, was charged by the Securities and Exchange Commission (SEC) with defrauding investors and misappropriating $2 million from at least six clients. According to the complaint filed in U.S. District Court for the Northern District of Georgia., Mr. Richards misappropriated client money that constituted retirement savings and/or life insurance proceeds from deceased spouses. The SEC complaint also stated that in order to gain one investor's trust, Mr. Richards went so far as to deliver pain medication during a snowstorm to a client's husband who had been diagnosed with terminal pancreatic cancer. Mr. Richards was an LPL Financial broker from May 2009 until May 2013.
According to the SEC's complaint, Mr. Richards' customers told him they had funds to invest from retirement accounts or proceeds from a life insurance policy. Mr. Richards allegedly told them to write out checks to an entity called "Blake Richards Investments" or "BMO Investments." As a result, the SEC's complaint stated that "Richards, whose production at LPL Financial had been virtually nonexistent over the past few years, began siphoning off funds from clients, and converting them for his personal use."
The charges against Mr. Richards came not too long after LPL Financial, the largest independent broker-dealer with more than 13,000 reps and advisers, was hit with fines and restitution orders. In May 2013, the Financial Industry Regulatory Authority (FINRA) fined LPL Financial $7.5 million for 35 separate e-mail system failures. Also in May 2013, Massachusetts securities regulators said LPL Financial had been ordered to pay $4.8 million in restitution to investors over improper sales of non-traded real estate investment trusts, which was more than double the amount originally revealed - Massachusetts regulators in February 2013 had said LPL would be required to set aside at least $2.2 million in restitution.
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. Therefore, investors who have suffered damages due to Mr. Richards' illegal conduct can bring forth claims to recover losses against LPL Financial, which should have prevented Mr. Richards from committing the described illegal acts.
Have you suffered losses in your LPL Financial investment resulting from broker misconduct? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against stockbrokers who have defrauded investors and/or misappropriated investors' funds.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
Showing posts with label SEC News. Show all posts
Showing posts with label SEC News. Show all posts
Friday, October 25, 2013
Friday, March 1, 2013
INVESTORS NATIONWIDE BEWARE - ACTIVELY TRADED ETFS WILL ADD RISK TO YOUR PORTFOLIO!
The Securities and Exchange Commission (SEC) recently unveiled a policy change that could have a major impact on an exchange traded fund's (ETFs) risk profile. In essence, the SEC has lifted its suspension on the use of derivatives by certain ETFs. This move is in response to pressure from the industry, and it is expected to result in a major increase in the number of actively managed ETFs. Managers will now be able to use derivatives in their investment strategies in order to hedge against risk. Problem is derivatives are also widely used to speculate in order to increase profits, which most certainly increases risk. Fortunately, the SEC is keeping its freeze in place for leveraged and inverse exchange traded funds - funds that can deal a bigger blow to investors because of their use of borrowed funds to increase profits.
ETFs are investment funds that are traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds, and trades close to its net asset value over the course of the trading day. Most ETFs track an index, such as a stock index or bond index and are attractive investments because of their low costs, tax efficiency, and stock-like features. By owning an ETF, investors benefit from the diversification of an index fund as well as the ability to purchase as little as one share. In addition, expense ratios for most ETFs are lower than those of the average mutual fund. When buying and selling ETFs, investors pay the same commission to their brokers that they would pay on any regular stock order.
Investors should be concerned with the lifting of the derivatives suspension for ETFs because it will most likely affect management's investment strategy and investors' portfolios. Currently, there are 7,149 mutual funds and 1,444 ETFs. Approximately 6,836 mutual funds are actively managed, and only 54 ETFs are actively managed thus far. With expectations of a rise in actively traded ETFs, Investors and their advisors should review their ETF holdings for any changes in investment strategy and determine whether it is suitable for them. That way, investors can avoid learning the hard way what actively traded ETFs are all about and prevent future monetary losses.
Have you suffered losses resulting from actively traded ETFs? 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 stockbrokers who misrepresented and sold unsuitable investments such as actively traded ETFs 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.
ETFs are investment funds that are traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds, and trades close to its net asset value over the course of the trading day. Most ETFs track an index, such as a stock index or bond index and are attractive investments because of their low costs, tax efficiency, and stock-like features. By owning an ETF, investors benefit from the diversification of an index fund as well as the ability to purchase as little as one share. In addition, expense ratios for most ETFs are lower than those of the average mutual fund. When buying and selling ETFs, investors pay the same commission to their brokers that they would pay on any regular stock order.
Investors should be concerned with the lifting of the derivatives suspension for ETFs because it will most likely affect management's investment strategy and investors' portfolios. Currently, there are 7,149 mutual funds and 1,444 ETFs. Approximately 6,836 mutual funds are actively managed, and only 54 ETFs are actively managed thus far. With expectations of a rise in actively traded ETFs, Investors and their advisors should review their ETF holdings for any changes in investment strategy and determine whether it is suitable for them. That way, investors can avoid learning the hard way what actively traded ETFs are all about and prevent future monetary losses.
Have you suffered losses resulting from actively traded ETFs? 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 stockbrokers who misrepresented and sold unsuitable investments such as actively traded ETFs 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.
Tuesday, January 1, 2013
TEXAS INVESTORS SHOULD BEWARE OF LIFE PARTNERS VIATICAL SETTLEMENTS
The Securities and Exchange Commission (SEC) is investigating Life Partners Holdings Inc., a Texas based company, for arranging several billions worth of viatical settlements sales. The SEC's main concern is how Life Partners calculated its mortality estimates, which is what investors use to value a viatical settlement investment. This comes as no surprise since 90% of the insured individuals, many of whom were HIV positive, outlived company estimates.
A viatical settlement is the sale of an owner's life insurance policy to a third party for more than the cash surrender value, but less than its net death benefit. The seller of the policy is benefited with a lump sum payment. The buyer of the policy pays the monthly premium and receives the benefit of the policy when the seller or the insured dies. Viatical settlement transactions typically involve an insured who is terminally or chronically ill. A person who is terminally or chronically ill has a life expectancy of less than two years. From an investor's perspective, the return will depend on the seller's life expectancy and date of death. Therefore, viatical settlements cannot be equated with zero coupon bonds because the date of death or maturity is uncertain.
Shorter mortality estimates would result in an investor anticipating lower costs and a higher return on investment. In the case of Life Partners, almost all of the insured individuals lived beyond the company's estimates, which forced higher costs and lower returns upon investors. This led the SEC to investigate a Nevada physician, who was responsible for calculating mortality rates for Life Partners. After its investigation, the SEC concluded that one Dr. Cassidy used an unrealistic approach that produced short life expectancies.
Companies like Life Partners do better than the clients they purport to serve. Life Partners has sold 6,400 policies worth $2.8 billion to 27,000 clients since 1991. Also, fees to Life Partners have averaged as high as $308,000.00 per policy in some years. In return, investors were told they would earn 10 to 15% on their money, which was not the case since returns were driven down due to longer than expected mortality rates. Clearly, viatical settlements were made to benefit Life Partners' bottom line.
Brokers have a duty to make recommendations that are suitable for its clients. This duty includes informing clients of the risks associated with an investment. If brokers fail to adhere to their duties, their brokerage firms can be held liable to investors for damages even if they did not know of the brokers' conduct.
Have you suffered a loss in a viatical settlement? 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.
A viatical settlement is the sale of an owner's life insurance policy to a third party for more than the cash surrender value, but less than its net death benefit. The seller of the policy is benefited with a lump sum payment. The buyer of the policy pays the monthly premium and receives the benefit of the policy when the seller or the insured dies. Viatical settlement transactions typically involve an insured who is terminally or chronically ill. A person who is terminally or chronically ill has a life expectancy of less than two years. From an investor's perspective, the return will depend on the seller's life expectancy and date of death. Therefore, viatical settlements cannot be equated with zero coupon bonds because the date of death or maturity is uncertain.
Shorter mortality estimates would result in an investor anticipating lower costs and a higher return on investment. In the case of Life Partners, almost all of the insured individuals lived beyond the company's estimates, which forced higher costs and lower returns upon investors. This led the SEC to investigate a Nevada physician, who was responsible for calculating mortality rates for Life Partners. After its investigation, the SEC concluded that one Dr. Cassidy used an unrealistic approach that produced short life expectancies.
Companies like Life Partners do better than the clients they purport to serve. Life Partners has sold 6,400 policies worth $2.8 billion to 27,000 clients since 1991. Also, fees to Life Partners have averaged as high as $308,000.00 per policy in some years. In return, investors were told they would earn 10 to 15% on their money, which was not the case since returns were driven down due to longer than expected mortality rates. Clearly, viatical settlements were made to benefit Life Partners' bottom line.
Brokers have a duty to make recommendations that are suitable for its clients. This duty includes informing clients of the risks associated with an investment. If brokers fail to adhere to their duties, their brokerage firms can be held liable to investors for damages even if they did not know of the brokers' conduct.
Have you suffered a loss in a viatical settlement? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
Saturday, December 22, 2012
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.
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.
THE SEC CHARGES FORMER JP TURNER COMPANY BROKER JASON KONNER FOR CHURNING CLIENT ACCOUNTS
The Securities and Exchange Commission (SEC) has charged former JP Turner and Company broker Jason Konner for churning client accounts with conservative investment objectives. Mr. Konner's churning activity caused severe losses for clients, while he collected hefty fees. He served as a JP Turner registered representative from September 2006 until December 2011, and he is currently a registered representative at DPEC Capital, Inc.
Churning is a fraudulent practice in which brokers ignore their clients' investment objectives and engage in excessive trading for the purpose of generating commissions. The SEC alleged that between January 2008 and December 2009, Mr. Konner churned two client accounts, which suffered approximate losses of $134,000.00. The SEC said that the trading in the accounts were excessive in light of Mr. Konner's customers' objectives, experience, age, and needs. Mr. Konner split commissions, fees, and margin interest totaling $845,000.00 with two other brokers accused by the SEC for churning client accounts at JP Turner. An administrative proceeding by the SEC against Mr. Konner is currently pending.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from churning and similar abuses. If broker-dealers do not establish a reasonable supervisory system, they may be liable to investors for damages. In the case of JP Turner, the SEC found that adequate procedures were not implemented to detect and prevent churning. Therefore, investors who have suffered damages can bring forth claims to recover losses against JP Turner due to Mr. Konner's churning.
Have you suffered losses as a result of Jason Konner's churning? Did you have an actively traded account with Mr. Konner that the SEC did not review? 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.
Churning is a fraudulent practice in which brokers ignore their clients' investment objectives and engage in excessive trading for the purpose of generating commissions. The SEC alleged that between January 2008 and December 2009, Mr. Konner churned two client accounts, which suffered approximate losses of $134,000.00. The SEC said that the trading in the accounts were excessive in light of Mr. Konner's customers' objectives, experience, age, and needs. Mr. Konner split commissions, fees, and margin interest totaling $845,000.00 with two other brokers accused by the SEC for churning client accounts at JP Turner. An administrative proceeding by the SEC against Mr. Konner is currently pending.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from churning and similar abuses. If broker-dealers do not establish a reasonable supervisory system, they may be liable to investors for damages. In the case of JP Turner, the SEC found that adequate procedures were not implemented to detect and prevent churning. Therefore, investors who have suffered damages can bring forth claims to recover losses against JP Turner due to Mr. Konner's churning.
Have you suffered losses as a result of Jason Konner's churning? Did you have an actively traded account with Mr. Konner that the SEC did not review? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
Friday, December 21, 2012
THE SEC AND FINRA WARN INVESTORS NATIONWIDE ABOUT PRINCIPAL PROTECTED NOTES
Both the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) have issued an alert to investors titled Structured Notes with Principal Protection: Note the Terms of Your Investment. The alert contains information pertaining to how principal protected notes are structured and the risks associated with investing in them. A few examples of what the SEC and FINRA want investors to know about principal protected notes is that they can have complex payout structures, principal lockup periods, and caps on returns. Most importantly, they want investors to know that principal protection is sometimes limited to just 10% of the original investment, and payment will depend on the financial strength of the issuing institution.
A Principal protected note is an investment contract with a guaranteed rate of return of at least the amount invested. Traditional fixed-income investments such as CDs and bonds provide investment security and modest returns with little or no risk of capital loss, while stocks have the potential to deliver greater returns, but with much greater risk. In recent years, investors have turned to structured products such as principal protected notes that offer both security and potential growth for their principal. Principal protected notes are linked to a broad range of underlying investments that may include indices, mutual funds, equities, and even alternative offerings such as hedge funds. At the heart of a principal protected note is a guarantee - typically guaranteeing 100% of invested capital, as long as the note is held to maturity. This means that regardless of market conditions, investors receive back all money they invested plus appreciation from the underlying assets, if any.
The alert recommends that investors consider the following questions before investing in a principal protected note:
-What are the costs?
-Are there any conditions for protection?
-What type of principal protection is offered?
-What are the potential risks?
-Will the product meet investment objectives?
-Are there alternative investment options?
-What is the payout structure?
-Are there tax implications?
-Is there a cap on gains?
-Is a call feature provided?
-Is liquidation permitted prior to maturity?
-For how long will the money be locked up?
Investors must also understand that principal protected notes are subject to the credit risk of the issuer. Consequently, if an issuer is not financially sound, it cannot guarantee 100% redemption of principal at maturity to an investor if the underlying investment deteriorates in value. That is why investors, especially those in retirement, should not be misled by the words "principal protected," no matter how appealing the investment is perceived to be.
Have you suffered a loss in a principal protected note? 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.
A Principal protected note is an investment contract with a guaranteed rate of return of at least the amount invested. Traditional fixed-income investments such as CDs and bonds provide investment security and modest returns with little or no risk of capital loss, while stocks have the potential to deliver greater returns, but with much greater risk. In recent years, investors have turned to structured products such as principal protected notes that offer both security and potential growth for their principal. Principal protected notes are linked to a broad range of underlying investments that may include indices, mutual funds, equities, and even alternative offerings such as hedge funds. At the heart of a principal protected note is a guarantee - typically guaranteeing 100% of invested capital, as long as the note is held to maturity. This means that regardless of market conditions, investors receive back all money they invested plus appreciation from the underlying assets, if any.
The alert recommends that investors consider the following questions before investing in a principal protected note:
-What are the costs?
-Are there any conditions for protection?
-What type of principal protection is offered?
-What are the potential risks?
-Will the product meet investment objectives?
-Are there alternative investment options?
-What is the payout structure?
-Are there tax implications?
-Is there a cap on gains?
-Is a call feature provided?
-Is liquidation permitted prior to maturity?
-For how long will the money be locked up?
Investors must also understand that principal protected notes are subject to the credit risk of the issuer. Consequently, if an issuer is not financially sound, it cannot guarantee 100% redemption of principal at maturity to an investor if the underlying investment deteriorates in value. That is why investors, especially those in retirement, should not be misled by the words "principal protected," no matter how appealing the investment is perceived to be.
Have you suffered a loss in a principal protected note? 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.
Thursday, December 20, 2012
THE SEC CHARGES FORMER JP TURNER COMPANY BROKER RALPH CALABRO FOR CHURNING CLIENT ACCOUNTS
The Securities and Exchange Commission (SEC) has charged former JP Turner and Company broker Ralph Calabro for churning client accounts with conservative investment objectives. Mr. Calabro's churning activity caused severe losses for clients, while he collected hefty fees. He served as a registered representative of the Parlin, NJ branch office from March 2004 until January 2007, and he is currently a registered representative at National Securities Corp.
Churning is a fraudulent practice in which brokers ignore their clients' investment objectives and engage in excessive trading for the purpose of generating commissions. The SEC alleged that between January 2008 and December 2009, Mr. Calabro churned three client accounts, which suffered approximate losses of $2.3 million. The SEC said that the trading in the accounts were excessive in light of Mr. Calabro's customers' objectives, experience, age, and needs. Mr. Calabro split commissions, fees, and margin interest totaling $845,000.00 with two other brokers accused by the SEC for churning client accounts at JP Turner. An administrative proceeding by the SEC against Mr. Calabro is currently pending.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from churning and similar abuses. If broker-dealers do not establish a reasonable supervisory system, they may be liable to investors for damages. In the case of JP Turner, the SEC found that adequate procedures were not implemented to detect and prevent churning. Therefore, investors who have suffered damages can bring forth claims to recover losses against JP Turner due to Mr. Calabro's churning.
Have you suffered losses as a result of Ralph Calabro's churning? Did you have an actively traded account with Mr. Calabro that the SEC did not review? 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.
Churning is a fraudulent practice in which brokers ignore their clients' investment objectives and engage in excessive trading for the purpose of generating commissions. The SEC alleged that between January 2008 and December 2009, Mr. Calabro churned three client accounts, which suffered approximate losses of $2.3 million. The SEC said that the trading in the accounts were excessive in light of Mr. Calabro's customers' objectives, experience, age, and needs. Mr. Calabro split commissions, fees, and margin interest totaling $845,000.00 with two other brokers accused by the SEC for churning client accounts at JP Turner. An administrative proceeding by the SEC against Mr. Calabro is currently pending.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from churning and similar abuses. If broker-dealers do not establish a reasonable supervisory system, they may be liable to investors for damages. In the case of JP Turner, the SEC found that adequate procedures were not implemented to detect and prevent churning. Therefore, investors who have suffered damages can bring forth claims to recover losses against JP Turner due to Mr. Calabro's churning.
Have you suffered losses as a result of Ralph Calabro's churning? Did you have an actively traded account with Mr. Calabro that the SEC did not review? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
Tuesday, December 18, 2012
THE SEC CONTINUES ITS EFFORTS TO PROTECT SENIOR INVESTORS NATIONWIDE AGAINST VIATICAL SETTLEMENT SCAMS
The Securities and Exchange Commission (SEC) is continuing to focus on the sale and marketing of retirement products to help combat fraud against senior investors. These efforts stem from the fact that seniors are oftentimes sold unsuitable investments because a broker has failed to disclose or misrepresented the risks associated with a product. One such product is a Viatical settlement, which is among the SEC's top priorities since the industry has experienced stellar growth and will likely surpass $150 billion in value within the next few decades.
A viatical settlement is the sale of an owner's life insurance policy to a third party for more than the cash surrender value, but less than its net death benefit. The seller of the policy is benefited with a lump sum payment. The buyer of the policy pays the monthly premium and receives the benefit of the policy when the seller or the insured dies. Viatical settlement transactions typically involve an insured who is terminally or chronically ill. A person who is terminally or chronically ill has a life expectancy of less than two years. From an investor's perspective, the return will depend on the seller's life expectancy and date of death. Therefore, viatical settlements cannot be equated with zero coupon bonds because the date of death or maturity is uncertain.
Viatical settlements are of emerging interest since they may very well become Wall Street's next big securitized products. Still, the SEC has limited authority over viatical settlements. A task force has been established to examine whether sufficient regulation is in place to protect senior investors against fraudulent activity. Apart from fraud, the SEC has expressed concern that many seniors may not understand the consequences of selling their life insurance policies to investors. These consequences include the loss of tax benefits and the inability to obtain life insurance in the future.
Have you suffered a loss in a viatical settlement? 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.
A viatical settlement is the sale of an owner's life insurance policy to a third party for more than the cash surrender value, but less than its net death benefit. The seller of the policy is benefited with a lump sum payment. The buyer of the policy pays the monthly premium and receives the benefit of the policy when the seller or the insured dies. Viatical settlement transactions typically involve an insured who is terminally or chronically ill. A person who is terminally or chronically ill has a life expectancy of less than two years. From an investor's perspective, the return will depend on the seller's life expectancy and date of death. Therefore, viatical settlements cannot be equated with zero coupon bonds because the date of death or maturity is uncertain.
Viatical settlements are of emerging interest since they may very well become Wall Street's next big securitized products. Still, the SEC has limited authority over viatical settlements. A task force has been established to examine whether sufficient regulation is in place to protect senior investors against fraudulent activity. Apart from fraud, the SEC has expressed concern that many seniors may not understand the consequences of selling their life insurance policies to investors. These consequences include the loss of tax benefits and the inability to obtain life insurance in the future.
Have you suffered a loss in a viatical settlement? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
Saturday, December 15, 2012
THE SEC RECOMMENDS THAT CONGRESS CHARACTERIZE VIATICAL SETTLEMENTS AS SECURITIES IN ORDER TO PROTECT INVESTORS NATIONWIDE
In order to provide viatical settlement investors with federal securities law protection, the Securities and Exchange Commission (SEC) is recommending that Congress define viatical settlements as securities. The following benefits were proposed in the SEC's report: 1) the SEC and the Financial Industry Regulatory Authority (FINRA) would have authority to oversee the viatical settlement market, which could aid in detecting fraud and dishearten abuses; 2) the states and federal government would be able to deal with viatical settlement issues in a more consistent manner; and 3) viatical settlement market intermediaries would fall under the regular framework of both the SEC and FINRA. The task force created the report due to the inconsistent regulation of market participants.
A viatical settlement is the sale of an owner's life insurance policy to a third party for more than the cash surrender value, but less than its net death benefit. The seller of the policy is benefited with a lump sum payment. The buyer of the policy pays the monthly premium and receives the benefit of the policy when the seller or the insured dies. Viatical settlement transactions typically involve an insured who is terminally or chronically ill. A person who is terminally or chronically ill has a life expectancy of less than two years. From an investor's perspective, the return will depend on the seller's life expectancy and date of death. Therefore, viatical settlements cannot be equated with zero coupon bonds because the date of death or maturity is uncertain.
The SEC is also urging Congress to regulate life expectancy underwriters in a more consistent manner, enforce legal standards of conduct upon brokers and providers, and look for the development of a viatical settlement securitization market.
The subject of viatical settlements has not gone unnoticed within Congress, as well. US Senator Herb Kohl released a General Accountability Office report expressing his concern for the inconsistent regulation of viatical settlements. Some of the challenges mentioned are less protection for investors in certain states, the lack information and risk disclosure, and broker dilemmas due to inconsistent laws across the states.
Have you suffered a loss in a viatical settlement? 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.
A viatical settlement is the sale of an owner's life insurance policy to a third party for more than the cash surrender value, but less than its net death benefit. The seller of the policy is benefited with a lump sum payment. The buyer of the policy pays the monthly premium and receives the benefit of the policy when the seller or the insured dies. Viatical settlement transactions typically involve an insured who is terminally or chronically ill. A person who is terminally or chronically ill has a life expectancy of less than two years. From an investor's perspective, the return will depend on the seller's life expectancy and date of death. Therefore, viatical settlements cannot be equated with zero coupon bonds because the date of death or maturity is uncertain.
The SEC is also urging Congress to regulate life expectancy underwriters in a more consistent manner, enforce legal standards of conduct upon brokers and providers, and look for the development of a viatical settlement securitization market.
The subject of viatical settlements has not gone unnoticed within Congress, as well. US Senator Herb Kohl released a General Accountability Office report expressing his concern for the inconsistent regulation of viatical settlements. Some of the challenges mentioned are less protection for investors in certain states, the lack information and risk disclosure, and broker dilemmas due to inconsistent laws across the states.
Have you suffered a loss in a viatical settlement? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
Tuesday, December 11, 2012
U.S. DISTRICT COURT GRANTS MORE PROTECTION TO WHISTLEBLOWERS
U.S. District Judge J. Paul Oetken recently issued a ruling strengthening corporate whistleblower protections. The case before Judge Oetken was Leshinsky v. Telvent GIT SA et al, U.S. District Court, Southern District of New York, No. 10-04511. It involved Phillip Leshinsky, who had worked for the non-public Caseta subsidiary of Telvent GIT (a Spanish company), and sued over his alleged wrongful termination in July 2008. The court held that the Dodd-Frank financial reform act provides protection to employees of subsidiaries as well as those who work directly for the parent companies, and that the protection applies retroactively to cases that predate the enactment of Dodd-Frank.
Leshinsky alleged he was fired in retaliation for objecting to a fraudulent scheme in connection with Caseta's bid for a Metropolitan Transportation Authority contract in the New York City area. Telvent denied that Leshinsky was fired because of whistleblowing activity, and denied the existence of the alleged scheme to defraud the MTA.
Without deciding the merits of the case, Judge Oetken stated that Congress considered it important to protect whistleblowers in order to root out financial fraud within "large, complexly structured" companies. Judge Oetken wrote: "In light of the fact that corporate malfeasance can -- and often does -- occur within subsidiaries of a public company, and that such malfeasance was precisely what precipitated the passage of Sarbanes-Oxley, it is certainly reasonable to infer that, in enacting whistleblower protections, Congress intended to protect the employees of a corporation's subsidiaries in addition to employees of the parent itself." Judge Oetken concluded: "[I]t seems quite unlikely" that Congress would distinguish between employees of parents and subsidiaries, "even though the consequences of his reporting misconduct would be exactly the same in both situations."
This is another breath of fresh air for whistleblowers, who need as much protection as they can get from corporate retaliation. The whistleblower program, a product of Dodd Frank legislation, may be the best strategy the SEC has deployed since it has been formed. People now have an incentive to report fraud. The tipsters can remain confidential and justice can be served at the same time through attorney representation. Robert Pearce, a former SEC Enforcement Division attorney, has close ties with the Division and his firm is well equipped to represent confidential informants and secure their reward for helping to protect the integrity of the financial markets!
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.
Leshinsky alleged he was fired in retaliation for objecting to a fraudulent scheme in connection with Caseta's bid for a Metropolitan Transportation Authority contract in the New York City area. Telvent denied that Leshinsky was fired because of whistleblowing activity, and denied the existence of the alleged scheme to defraud the MTA.
Without deciding the merits of the case, Judge Oetken stated that Congress considered it important to protect whistleblowers in order to root out financial fraud within "large, complexly structured" companies. Judge Oetken wrote: "In light of the fact that corporate malfeasance can -- and often does -- occur within subsidiaries of a public company, and that such malfeasance was precisely what precipitated the passage of Sarbanes-Oxley, it is certainly reasonable to infer that, in enacting whistleblower protections, Congress intended to protect the employees of a corporation's subsidiaries in addition to employees of the parent itself." Judge Oetken concluded: "[I]t seems quite unlikely" that Congress would distinguish between employees of parents and subsidiaries, "even though the consequences of his reporting misconduct would be exactly the same in both situations."
This is another breath of fresh air for whistleblowers, who need as much protection as they can get from corporate retaliation. The whistleblower program, a product of Dodd Frank legislation, may be the best strategy the SEC has deployed since it has been formed. People now have an incentive to report fraud. The tipsters can remain confidential and justice can be served at the same time through attorney representation. Robert Pearce, a former SEC Enforcement Division attorney, has close ties with the Division and his firm is well equipped to represent confidential informants and secure their reward for helping to protect the integrity of the financial markets!
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
Saturday, December 8, 2012
WHISTLEBLOWER PAYDAY COMING SOON!
The SEC is expected to pay hundreds of millions of dollars to whistleblowers very soon. In fact, according to a New York Post article, "SEC set to hand out up to $452M to whistleblowers." Whistleblowers can collect from 10 percent to 30 percent of what the government recovers when a tip has helped the government obtain the recovery. So far, tips have exposed all manner of corporate wrongdoing, ranging from insider trading and rigged bonds deals to cover-ups of cooked books and bribes. SEC officials are eager to pay out and publicize the first whistleblower award, as they anticipate the news will result in a flurry of new tips.
A case against Wachovia Bank is illustrative of how the program works. Last December the bank paid a penalty of $25 million to settle a probe into rigging municipal bond sales. If a whistleblower's tip helped the SEC bring the case, it could be worth up to 30 percent of the SEC's take to the whistleblower - or $7.5 million.
Other large whistleblower awards could flow from the following SEC recoveries, among others:
• $92.8 million in penalties from convicted hedge fund boss Raj Rajaratnam,
• $59.6 million from Hungarian telecom Magyar Telekon to settle charges of bribing officials,
• $22 million from RBC Capital Markets to settle a probe into rigging muni bond deals, and
• $32.5 million from JP Morgan Securities to end a probe into irregularities in bond sales.
SEC investigators received nine tips per day on average during the first two months the program was launched.
The whistleblower program, a product of Dodd Frank legislation, may be the best strategy the SEC has deployed since it has been formed. People now have an incentive to report fraud. The tipsters can remain confidential and justice can be served at the same time through attorney representation. Robert Pearce, a former SEC Enforcement Division attorney, has close ties with the Division and his firm is well equipped to represent confidential informants and secure their reward for helping to protect the integrity of the financial markets!
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.
A case against Wachovia Bank is illustrative of how the program works. Last December the bank paid a penalty of $25 million to settle a probe into rigging municipal bond sales. If a whistleblower's tip helped the SEC bring the case, it could be worth up to 30 percent of the SEC's take to the whistleblower - or $7.5 million.
Other large whistleblower awards could flow from the following SEC recoveries, among others:
• $92.8 million in penalties from convicted hedge fund boss Raj Rajaratnam,
• $59.6 million from Hungarian telecom Magyar Telekon to settle charges of bribing officials,
• $22 million from RBC Capital Markets to settle a probe into rigging muni bond deals, and
• $32.5 million from JP Morgan Securities to end a probe into irregularities in bond sales.
SEC investigators received nine tips per day on average during the first two months the program was launched.
The whistleblower program, a product of Dodd Frank legislation, may be the best strategy the SEC has deployed since it has been formed. People now have an incentive to report fraud. The tipsters can remain confidential and justice can be served at the same time through attorney representation. Robert Pearce, a former SEC Enforcement Division attorney, has close ties with the Division and his firm is well equipped to represent confidential informants and secure their reward for helping to protect the integrity of the financial markets!
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
Wednesday, December 5, 2012
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.
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.
Sunday, December 2, 2012
INVESTORS NATIONWIDE SHOULD BEWARE OF THE PERILS OF FOREX TRADING
Last year, the Securities and Exchange Commission (SEC) approved a temporary rule allowing the sale of retail Forex contracts to unsophisticated investors until it reaches a decision on whether it will issue more extensive rules. The SEC could impose new rules to protect investors, allow brokers to continue transacting as they are, or prohibit retailers from trading. In the interim, the SEC's Office of Investor Education and Advocacy issued an alert to all retail investors warning them of the risks associated with trading off-exchange foreign currency contracts.
The Forex market is the global market in which participants buy and sell world currencies. Market participants include commercial banks, government banks, hedge funds, asset management firms, and retail Forex brokers and investors. There is a significant amount of speculation, and it is among the most efficient markets in the world due to its size.
Investors should be concerned about the risks of investing in the Forex market. On such risk is the fact that the Forex market has been flooded by fraudsters who have operated a slew of foreign exchange investment scams. In many cases, the perpetrators are not even registered as broker-dealers. Another risk is the use of leverage, which can go as high as 50:1. If the market does not trade in favor of the investor's position, leverage can dramatically increase the risk of a complete loss of principal. Investors should also note that only 30% of retail trades are profitable.
During uncertain economic times, it is common for investors to seek higher returns through alternative means of investing. Forex trading is most certainly not the solution. Rather than listen to brokers who tout large returns or the need to diversify and hedge risk through Forex, investors should abide by the core principles of diligent and intelligent investing. This will effectively help avoid falling prey to the various schemes that attract investors during such times.
Have you suffered losses due to Forex trading? 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 Forex market is the global market in which participants buy and sell world currencies. Market participants include commercial banks, government banks, hedge funds, asset management firms, and retail Forex brokers and investors. There is a significant amount of speculation, and it is among the most efficient markets in the world due to its size.
Investors should be concerned about the risks of investing in the Forex market. On such risk is the fact that the Forex market has been flooded by fraudsters who have operated a slew of foreign exchange investment scams. In many cases, the perpetrators are not even registered as broker-dealers. Another risk is the use of leverage, which can go as high as 50:1. If the market does not trade in favor of the investor's position, leverage can dramatically increase the risk of a complete loss of principal. Investors should also note that only 30% of retail trades are profitable.
During uncertain economic times, it is common for investors to seek higher returns through alternative means of investing. Forex trading is most certainly not the solution. Rather than listen to brokers who tout large returns or the need to diversify and hedge risk through Forex, investors should abide by the core principles of diligent and intelligent investing. This will effectively help avoid falling prey to the various schemes that attract investors during such times.
Have you suffered losses due to Forex trading? 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.
WHAT SHOULD DESERT CAPITAL REAL ESTATE INVESTMENT TRUST INVESTORS DO?
Many investors in the non-traded Desert Capital REIT have inquired about their ability to recover their losses after learning that: (1) Desert Capital REIT suspended its dividend and redemption programs in or about 2008; (2) Desert Capital REIT filed for Chapter 11 bankruptcy in the summer of 2011; and (3) Desert Capital REIT has been subpoenaed by the Securities and Exchange Commission reportedly due to fraudulent payments and transactions between Desert Capital and CM Capital (a related entity). Our answer is: file a FINRA arbitration. Many claims are being filed by Desert Capital REIT and other REIT investors for misrepresentation, unsuitable recommendations and/or overconcentrations of their investment funds in the Desert Capital REIT and other REIT investments to recover their REIT losses.
At first blush, one may think that the best claim is against the Desert Capital REIT itself and its management but one needs to remember why they first invested. Undoubtedly, the Desert Capital REIT and other REIT investments were recommended by your brokerage firm and financial advisor who have a fiduciary duty to not misrepresent or omit to state important facts, perform due diligence on any REIT and first make sure that the investment is suitable at all for any investor and then specifically ensure that the investment is appropriate in light of the investor's actual age, investment experience, investment objectives, tax and financial condition. If the brokerage firm and its advisor fail in fulfilling any one of these duties under common law and under the FINRA Code of Conduct, investors will have the right to recover their investment losses against them through a FINRA arbitration proceeding and/or court if no arbitration agreement has been executed.
The most common misrepresentation and misleading statement claims that the Desert Capital REIT and other REIT investors have been making relate to the risk associated with the non-traded REITs. Many investors have complained that the Desert Capital REIT and other REITs were not adequately represented before purchase and that they did not know the real truth about the valuations, performance, prospects, liquidity, or distribution and redemption practices of management relating to their investment. Many elderly investors seeking income were overconcentrated in the Desert Capital REIT and other REITs because they needed income. Sadly they learned too late that there were no guarantees that distributions would be made. Some REIT investors have just learned that they would no longer be receiving distributions or that the distributions they actually received were derived from loans and not the true cash flow of the REIT.
Brokerage firms and their financial advisors were eager to push REIT investments on their clients for the high commissions compared to other products. Desert Capital REIT paid an extremely high commission to the brokerage firms that sold the investment (somewhere between 7-10% depending on whether the brokerage firm was entitled to an additional "due diligence" fee). This likely explains the financial advisors and broker-dealers' motivation in recommending and selling this investment. Unfortunately, many investors are locked in and unable to sell their REIT investments without suffering without selling into deeply discounted secondary market for some other REIT investments. If you are a Desert Capital REIT investor with the same complaints, we believe we can help you recover your REIT 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.
At first blush, one may think that the best claim is against the Desert Capital REIT itself and its management but one needs to remember why they first invested. Undoubtedly, the Desert Capital REIT and other REIT investments were recommended by your brokerage firm and financial advisor who have a fiduciary duty to not misrepresent or omit to state important facts, perform due diligence on any REIT and first make sure that the investment is suitable at all for any investor and then specifically ensure that the investment is appropriate in light of the investor's actual age, investment experience, investment objectives, tax and financial condition. If the brokerage firm and its advisor fail in fulfilling any one of these duties under common law and under the FINRA Code of Conduct, investors will have the right to recover their investment losses against them through a FINRA arbitration proceeding and/or court if no arbitration agreement has been executed.
The most common misrepresentation and misleading statement claims that the Desert Capital REIT and other REIT investors have been making relate to the risk associated with the non-traded REITs. Many investors have complained that the Desert Capital REIT and other REITs were not adequately represented before purchase and that they did not know the real truth about the valuations, performance, prospects, liquidity, or distribution and redemption practices of management relating to their investment. Many elderly investors seeking income were overconcentrated in the Desert Capital REIT and other REITs because they needed income. Sadly they learned too late that there were no guarantees that distributions would be made. Some REIT investors have just learned that they would no longer be receiving distributions or that the distributions they actually received were derived from loans and not the true cash flow of the REIT.
Brokerage firms and their financial advisors were eager to push REIT investments on their clients for the high commissions compared to other products. Desert Capital REIT paid an extremely high commission to the brokerage firms that sold the investment (somewhere between 7-10% depending on whether the brokerage firm was entitled to an additional "due diligence" fee). This likely explains the financial advisors and broker-dealers' motivation in recommending and selling this investment. Unfortunately, many investors are locked in and unable to sell their REIT investments without suffering without selling into deeply discounted secondary market for some other REIT investments. If you are a Desert Capital REIT investor with the same complaints, we believe we can help you recover your REIT 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.
Saturday, December 1, 2012
SECURITIES AND EXCHANGE COMMISSION WARNS REVERSE CONVERTIBLE INVESTORS NATIONWIDE
The Securities and Exchange Commission (SEC) has recently reported that broker-dealers are conducting sales of risky structured products, which ultimately hurt their clients. A sweep of more than 10 broker-dealers revealed that firms are steering clients into complex investments such as reverse convertibles that are not suitable for their portfolios. In many cases, the brokers did not disclose the risks associated with investing in reverse convertibles, misrepresented their values on client statements, and charged excessively high transaction fees. The SEC is recommending that brokers disclose the true nature of reverse convertibles to their clients, establish a supervisory system to avoid potential abuses, and perform adequate training of their sales representatives. Although this report touches upon faulty sales practices of risky products, it does not address what investors should really be concerned about.
Reverse convertibles are alternative investments that are not suitable for all investors. Their complexity is hardly ever understood, and they are oftentimes misrepresented as fixed income products. Reverse convertibles are made of a note and a derivative. The note is a loan by the investor to the issuer that pays an income stream to the investor, while the derivative establishes the payment at maturity. The derivative can either be a put option, which would allow the issuer to sell the underlying derivative or security back to the investor, or it can be a call option, which would allow the issuer the right to buy the underlying security at a predetermined price.
Most investors are not capable of evaluating whether reverse convertibles are suitable investments. What investors should recognize is that reverse convertibles put principal at risk if the price of the underlying security rises above or falls below a predetermined amount. The issuer will either sell or buy the security, which may cause investors to lose a significant amount of principal. However, investors are attracted to reverse convertibles because of their yields; reverse convertibles have averaged 13% in certain years. This comes as no surprise since yields on CDs and other conservative investments are near all-time lows, and fixed income investors need to generate income to pay bills and keep up with increasing costs. Still, investors must realize that reverse convertibles are not the solution. Rather than chase yields and risk losing hard earned savings, investors need to stick to what is suitable for them in order to avoid financial calamity.
Have you suffered a loss in a reverse convertible? 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.
Reverse convertibles are alternative investments that are not suitable for all investors. Their complexity is hardly ever understood, and they are oftentimes misrepresented as fixed income products. Reverse convertibles are made of a note and a derivative. The note is a loan by the investor to the issuer that pays an income stream to the investor, while the derivative establishes the payment at maturity. The derivative can either be a put option, which would allow the issuer to sell the underlying derivative or security back to the investor, or it can be a call option, which would allow the issuer the right to buy the underlying security at a predetermined price.
Most investors are not capable of evaluating whether reverse convertibles are suitable investments. What investors should recognize is that reverse convertibles put principal at risk if the price of the underlying security rises above or falls below a predetermined amount. The issuer will either sell or buy the security, which may cause investors to lose a significant amount of principal. However, investors are attracted to reverse convertibles because of their yields; reverse convertibles have averaged 13% in certain years. This comes as no surprise since yields on CDs and other conservative investments are near all-time lows, and fixed income investors need to generate income to pay bills and keep up with increasing costs. Still, investors must realize that reverse convertibles are not the solution. Rather than chase yields and risk losing hard earned savings, investors need to stick to what is suitable for them in order to avoid financial calamity.
Have you suffered a loss in a reverse convertible? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
Friday, November 30, 2012
UNIVERSITIES NOT SPARED FROM PONZI SCHEME EPIDEMIC
A Texas based money manager has been charged with running a Ponzi scheme that defrauded the Houston Athletics Foundation, a University of Houston entity which funds athletic scholarships. David Salinas, who took his life after the Securities and Exchange Commission (SEC) filed a suit against him and his associate Brian Bjork, was charged with perpetrating a $39 million Ponzi scheme that involved over 100 investors, which included high-profile college coaches. 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. Around $2.2 million of the Foundations assets, having supposedly been invested in bonds, are still unaccounted for.
In Georgia, the SEC charged ex-University of Georgia football coach, Jim Donnan, for his involvement in a Ponzi scheme that defrauded close to 100 investors between August 2007 and October 2010. Mr. Donnan, a College Football Hall of Famer, and his business partner Gregory Crabtree, were charged with perpetrating an $80 million Ponzi scheme through GLC Limited. Investors were told that GLC was in the wholesale liquidation business or reselling damaged retail goods in bulk to discount retailers. Investors were offered short term investments ranging from 2 to 12 months and promised returns between 50 and 380%. It was later discovered that the only $12 million of investors' money was used to buy goods, but the goods ended up being dumped into warehouses in Ohio and West Virginia. The rest of the funds were used to pay returns to investors or were used by Mr. Donnan and Mr. Crabtree for other purposes.
Have you suffered investment losses in one of the above mentioned Texas Ponzi schemes? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
In Georgia, the SEC charged ex-University of Georgia football coach, Jim Donnan, for his involvement in a Ponzi scheme that defrauded close to 100 investors between August 2007 and October 2010. Mr. Donnan, a College Football Hall of Famer, and his business partner Gregory Crabtree, were charged with perpetrating an $80 million Ponzi scheme through GLC Limited. Investors were told that GLC was in the wholesale liquidation business or reselling damaged retail goods in bulk to discount retailers. Investors were offered short term investments ranging from 2 to 12 months and promised returns between 50 and 380%. It was later discovered that the only $12 million of investors' money was used to buy goods, but the goods ended up being dumped into warehouses in Ohio and West Virginia. The rest of the funds were used to pay returns to investors or were used by Mr. Donnan and Mr. Crabtree for other purposes.
Have you suffered investment losses in one of the above mentioned Texas Ponzi schemes? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
Wednesday, November 28, 2012
CAN I RECOVER MY INLAND WESTERN REAL ESTATE INVESTMENT TRUST LOSSES?
The Wall Street Journal has reported that the Securities and Exchange Commission is investigating Inland American Real Estate Trust (Inland American REIT) to determine if the REIT committed securities law violations related to management fees, the timing and amount of distributions paid to investors, and transactions with affiliates. Now that the SEC is involved, many investors in the non-traded Inland Western REIT (now known as Retail Properties of America, Inc.) have inquired about their ability to recover their losses. There are a number of things investors must understand about the SEC, its investigations are incredibly slow and rarely do investors ever benefit from them. Investors need to take matters in their own hands. Many claims are now being filed by Inland Western REIT and other REIT investors for misrepresentation, unsuitable recommendations and/or overconcentrations of their investment funds in Inland Western REITs and other REIT investments to recover their REIT losses.
At first blush, one may think that the best claim is against the Inland Western REIT itself and its management but one needs to remember why they first invested. Undoubtedly, the Inland Western REIT and other REIT investments were recommended by your brokerage firm and financial advisor who have a fiduciary duty to not misrepresent or omit to state important facts, perform due diligence on any REIT and first make sure that the investment is suitable at all for any investor and then specifically ensure that the investment is appropriate in light of the investor's actual age, investment experience, investment objectives, tax and financial condition. If the brokerage firm and its advisor fail in fulfilling any one of these duties under common law and under the FINRA Code of Conduct, investors will have the right to recover their investment losses against them through a FINRA arbitration proceeding and/or court if no arbitration agreement has been executed.
The most common misrepresentation and misleading statement claims that the Inland Western REIT and other REIT investors have been making relate to the risk associated with the non-traded REITs. Many investors have complained that Inland Western REIT and other REITs were not adequately represented before purchase and that they did not know the real truth about the valuations, performance, prospects, liquidity, or distribution and redemption practices of management relating to their investment. Many elderly investors seeking income were overconcentrated in Inland Western REITs and other REITs because they needed income. Sadly they learned too late that there were no guarantees that distributions would be made. Some REIT investors have just learned that they would no longer be receiving distributions or that the distributions they actually received were derived from loans and not the true cash flow of the REIT. Brokerage firms and their financial advisors were eager to push REIT investments on their clients for the high commissions compared to other products. Unfortunately, many investors are locked in and unable to sell their REIT investments without suffering without selling into deeply discounted secondary market for some other REIT investments. If you are an Inland Western REIT investor with the same complaints, we believe we can help you recover your REIT 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.
At first blush, one may think that the best claim is against the Inland Western REIT itself and its management but one needs to remember why they first invested. Undoubtedly, the Inland Western REIT and other REIT investments were recommended by your brokerage firm and financial advisor who have a fiduciary duty to not misrepresent or omit to state important facts, perform due diligence on any REIT and first make sure that the investment is suitable at all for any investor and then specifically ensure that the investment is appropriate in light of the investor's actual age, investment experience, investment objectives, tax and financial condition. If the brokerage firm and its advisor fail in fulfilling any one of these duties under common law and under the FINRA Code of Conduct, investors will have the right to recover their investment losses against them through a FINRA arbitration proceeding and/or court if no arbitration agreement has been executed.
The most common misrepresentation and misleading statement claims that the Inland Western REIT and other REIT investors have been making relate to the risk associated with the non-traded REITs. Many investors have complained that Inland Western REIT and other REITs were not adequately represented before purchase and that they did not know the real truth about the valuations, performance, prospects, liquidity, or distribution and redemption practices of management relating to their investment. Many elderly investors seeking income were overconcentrated in Inland Western REITs and other REITs because they needed income. Sadly they learned too late that there were no guarantees that distributions would be made. Some REIT investors have just learned that they would no longer be receiving distributions or that the distributions they actually received were derived from loans and not the true cash flow of the REIT. Brokerage firms and their financial advisors were eager to push REIT investments on their clients for the high commissions compared to other products. Unfortunately, many investors are locked in and unable to sell their REIT investments without suffering without selling into deeply discounted secondary market for some other REIT investments. If you are an Inland Western REIT investor with the same complaints, we believe we can help you recover your REIT 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.
Saturday, November 17, 2012
FLORIDA TD BANK AIDED AND ABETTED ROTHSTEIN IN PONZI SCHEME
A jury has awarded Texas-based Coquina Investments $67 million against TD bank for its involvement in Scott Rothstein's $1.2 Billion Ponzi scheme. Scott Rothstein, the once-high flying South Florida attorney, pleaded guilty in 2010 for defrauding investors out of $1.2 Billion from 2005 to 2009. Mr. Rothstein told investors that they were purchasing interests in settlements involving sexual and employment discrimination, which was later discovered to be a sham. Coquina alleged that TD Bank officers assisted Mr. Rothstein by meeting with victims and telling them that the business was legitimate and that the scam could not have worked without TD Bank's assistance.
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. In Mr. Rothstein's case, earlier investors were issued returns with money accumulated from new investors. TD bank provided Mr. Rothstein with documents to disguise the scheme and bring in new investors, keep investors involved, and get investors to reinvest.
An investor can claim damages against an entity charged with aiding and abetting a crime. An agent of the charged entity does not have to be present when the crime was being committed, but he or she knows of the crime before or after the fact, and may assist in the crime's completion through advice, actions, or financial support. TD Bank may be liable to investors for aiding and abetting due to its involvement in the Scott Rothstein Ponzi scheme.
Have you suffered investment losses due to TD Bank's involvement in Scott Rothstein's 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.
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. In Mr. Rothstein's case, earlier investors were issued returns with money accumulated from new investors. TD bank provided Mr. Rothstein with documents to disguise the scheme and bring in new investors, keep investors involved, and get investors to reinvest.
An investor can claim damages against an entity charged with aiding and abetting a crime. An agent of the charged entity does not have to be present when the crime was being committed, but he or she knows of the crime before or after the fact, and may assist in the crime's completion through advice, actions, or financial support. TD Bank may be liable to investors for aiding and abetting due to its involvement in the Scott Rothstein Ponzi scheme.
Have you suffered investment losses due to TD Bank's involvement in Scott Rothstein's 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.
Wednesday, November 14, 2012
SEC WHISTLEBLOWER TIPS ON THE RISE!
An average of 7 whistleblower tips per day has forced the Securities and Exchange Commission to triage the tips it receives daily. Whistleblowers stand to receive substantial monetary awards for tips that lead to successful SEC action ("SEC Enforcement Division Buried in Whistleblower Tips," by Ian Thoms, Law360). In accordance with the Dodd-Frank financial reform act, whistleblowers may receive from 10 percent to 30 percent of SEC recoveries greater than $1 million.
The whistleblower rewards program appears to offer great promise. It gives the SEC a head start in identifying and dealing with fraudulent conduct. While the securities and financial services industries initially complained that these financial incentives would prevent companies from dealing with violations in-house, as employees hoping to "strike it rich" would go straight to the SEC, the benefits of the program clearly outweigh the negatives. "I've seen great tips come in," Thomas Sporkin, chief of the SEC's Office of Market Intelligence," was quoted as saying, adding: "There is a feeling here that we want to pay awards."
The SEC expects to issue its first series of awards very soon. "This is going to explode once the first award comes down," Fogel was quoted as saying, adding: "The program is only going to get bigger and bigger."
Under the SEC's rules, whistleblowers must tip through an attorney in order to remain anonymous. Fogel said that attorneys would probably handle whistleblower tips on a contingent fee basis (i.e., attorney's fees would be a percentage of any award; no award, no attorney's fees).
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 whistleblower rewards program appears to offer great promise. It gives the SEC a head start in identifying and dealing with fraudulent conduct. While the securities and financial services industries initially complained that these financial incentives would prevent companies from dealing with violations in-house, as employees hoping to "strike it rich" would go straight to the SEC, the benefits of the program clearly outweigh the negatives. "I've seen great tips come in," Thomas Sporkin, chief of the SEC's Office of Market Intelligence," was quoted as saying, adding: "There is a feeling here that we want to pay awards."
The SEC expects to issue its first series of awards very soon. "This is going to explode once the first award comes down," Fogel was quoted as saying, adding: "The program is only going to get bigger and bigger."
Under the SEC's rules, whistleblowers must tip through an attorney in order to remain anonymous. Fogel said that attorneys would probably handle whistleblower tips on a contingent fee basis (i.e., attorney's fees would be a percentage of any award; no award, no attorney's fees).
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
Thursday, November 8, 2012
THE SEC SHOULD MAKE BROKERS THROUGHOUT THE UNITED STATES ABIDE BY 1940 INVESTMENT ADVISERS ACT'S FIDUCIARY DUTY!
The SEC should make stockbrokers abide by the 1940 Investment Advisers Act's fiduciary duty rules. Currently, broker-dealers have to abide by the "suitability" standard, which is considered a less strict standard of care. For example, under the suitability standard, brokers don't have to reveal the majority of conflicts of interest to a client to get out of any obligation to control investment expenses.
Last year, the SEC recommended that its staff engage in rulemaking to create a uniform fiduciary standard. The finding was a result of a study mandated by the 2010 Dodd-Wall Street Reform and Consumer Protection Act. After the study was released, the brokerage industry started advocating for a completely new standard. Last summer, the Securities Industry and Financial Markets Association also recommended that the Commission set up a framework that is separate and distinct from the existing statutory standard.
Several industry and consumer groups have written a letter to the Securities and Exchange Commission asking it to put into effect a uniform fiduciary standard for both investment advisers and broker-dealers. The groups are AARP, National Association of Personal Financial Advisors, Fund Democracy, Certified Financial Planner Board of Standards, Inc., Consumer Federation of America, Financial Planning Association, and the Investment Adviser Association. They want the SEC to extend the duty as it exists under the 1940 Investment Advisers Act to brokerage industry members and not just investment advisers.
SIFMA wants the SEC to create "detail and structure" that would let broker-dealers apply the standard according to their own business models. The securities industry trade group also recommended that key principles be tackled, including the three main principals of a uniform standard, the definition of "personalized investment advice," clear specification regarding obligations, preservation of principal transactions, and the setup of distinct guidance on disclosure.
In their letter to the SEC, the groups said that although they were in agreement with many components of the framework that SIFMA is recommending, there are others that they strongly oppose. For example, they are concerned that the proposed framework fails to meet Dodd-Frank's requirement for brokerage firms and investment advisers to have the same standard and that it be "no less stringent" than any standard that is already in place. They also didn't like the recommendation that the Commission give clear guidance about disclosure for the new fiduciary framework.
Financial Planning Association, Certified Financial Planner Board of Standards, and the National Association of Personal Financial Advisors-all adviser groups-don't want there to be an advisor SRO, which SEC staff had recommended in another Dodd-Frank mandated study.
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.
Last year, the SEC recommended that its staff engage in rulemaking to create a uniform fiduciary standard. The finding was a result of a study mandated by the 2010 Dodd-Wall Street Reform and Consumer Protection Act. After the study was released, the brokerage industry started advocating for a completely new standard. Last summer, the Securities Industry and Financial Markets Association also recommended that the Commission set up a framework that is separate and distinct from the existing statutory standard.
Several industry and consumer groups have written a letter to the Securities and Exchange Commission asking it to put into effect a uniform fiduciary standard for both investment advisers and broker-dealers. The groups are AARP, National Association of Personal Financial Advisors, Fund Democracy, Certified Financial Planner Board of Standards, Inc., Consumer Federation of America, Financial Planning Association, and the Investment Adviser Association. They want the SEC to extend the duty as it exists under the 1940 Investment Advisers Act to brokerage industry members and not just investment advisers.
SIFMA wants the SEC to create "detail and structure" that would let broker-dealers apply the standard according to their own business models. The securities industry trade group also recommended that key principles be tackled, including the three main principals of a uniform standard, the definition of "personalized investment advice," clear specification regarding obligations, preservation of principal transactions, and the setup of distinct guidance on disclosure.
In their letter to the SEC, the groups said that although they were in agreement with many components of the framework that SIFMA is recommending, there are others that they strongly oppose. For example, they are concerned that the proposed framework fails to meet Dodd-Frank's requirement for brokerage firms and investment advisers to have the same standard and that it be "no less stringent" than any standard that is already in place. They also didn't like the recommendation that the Commission give clear guidance about disclosure for the new fiduciary framework.
Financial Planning Association, Certified Financial Planner Board of Standards, and the National Association of Personal Financial Advisors-all adviser groups-don't want there to be an advisor SRO, which SEC staff had recommended in another Dodd-Frank mandated study.
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.
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