WHY WOULD YOU WANT TO INVEST IN HEDGE FUNDS?

Warren Buffett has called hedge funds "manager compensation schemes." According to a recent article in The Economist, "Rich Managers, Poor Clients," investors pay for manager expertise, but controlling costs is a better way of having a successful investment than betting on a manager's track record. Some hedge funds charge performance fees of 20% of the gains plus another fixed 2-3% management fee regardless of whether the fund is profitable - a total of 22% in fees. In other words, the hedge fund would have to gain over 22% for investors just to breakeven. The only way to achieve those types of returns is to take extraordinary risk with your investment capital. As The Economist article stated: "It is easy to think of people who have become billionaire's by managing these hedge funds; it is far harder to think of any of their clients who have got as rich."
It is not only the costs associated with hedge funds that trouble me. The reality is they have performed poorly over the last 10 years, while they have made hedge fund managers very wealthy. As measured by the HFRX Indices (widely used benchmarks for hedge fund performance), hedge funds returned just 3% in 2012 compared to an 18% return of the S & P 500 stock Index. The major problem all hedge funds suffer these days is that they have attracted so much money that they cannot invest as they did in the past. There are too many dollars chasing too few market opportunities. And now, hedge funds are "going retail" and becoming widely available to small investors in Funds of Funds and becoming embedded in variable annuities, pension funds, endowments, foundations and other retirement plans. There are nearly 8000 hedge funds on the market and more coming online every day.
The biggest problem we have with hedge funds is a lack of transparency and the lack of due diligence that many brokers perform prior to offering and selling these investments to their biggest and best clients. The complexity and lack of transparency of hedge funds makes them the vehicle of choice for fraudsters. The United States Securities and Exchange Commission (SEC) has become especially concerned and set up a special unit "The Market Abuse Unit" to investigate the problems and abuses in the hedge fund industry. The SEC and the attorneys at our law firm are concerned about unregistered investment advisers engaging in general solicitations to unaccredited investors to put their capital in unregistered hedge funds. Too many retired, income-oriented investors, in search of higher yields have been misled into a number of hedge fund frauds such as the MAT/ASTA funds offered by Smith Barney and Citibank advisers.
Have you suffered losses resulting from an investment in any hedge fund? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is actively investigating and accepting clients with valid claims against hedge fund salespersons who fraudulently offered and sold the fund to investors.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

THE SYNERGY INVESTMENT GROUP LACKS SUPERVISION

The Synergy Investment Group, LLC ("Synergy"), a securities broker-dealer headquartered in Charlotte, North Carolina with 37 branch offices has been the subject of numerous disciplinary actions brought by the Financial Industry Regulatory Authority ("FINRA") F/K/A the National Association of Securities Dealers ("NASD"). The recent complaints have focused on Synergy's inability to manage its branch offices and their offer and sale of private placement investments without management's knowledge and/or adequate due diligence.
At the beginning of this year, FINRA censored and fined Synergy and two of its representatives, including its Director of Compliance, in connection with the offer and sale of securities issued by Medical Provider Funding Corporation VI, a subsidiary of Medical Capital Holdings, Inc. (Medcap). FINRA found that Synergy failed to conduct reasonable due diligence in connection with a Medcap offering and that the brokerage firm's written supervisory procedures (WSPs) were inadequate and failed to protect public investors. Further, FINRA found that the firm's Compliance Director did not even follow the existing WSP's in approving the offering for sale to customers. The failure of Synergy to follow FINRA and long-standing NASD rules allowed the selling broker to misrepresent and conceal important facts from investors.
Recently, FINRA charged Synergy and another one of its branch office's representatives with fraud and other violations of FINRA and NASD rules relating to the prior approval of any securities to be sold by the brokerage firm's representatives. The securities involved were issued by Surety Partners, LLC, The Broyhill All-Weather Fund, LP, and Broyhill Asset Management (F/K/A Broyhill DW Capital Advisors).
FINRA requires all of its members to conduct due diligence and approve all securities beforehand. When a brokerage firm's representatives skirt around the rules and offer securities that have not been approved, those individuals engage in a violation known as "selling away". This practice is the product of a brokerage firm's failure to enact and enforce supervisory procedures.
Apparently, supervision is a major problem at the Synergy brokerage firm, and the FINRA regulators are pursuing an investigation of all Synergy's branch offices. Unfortunately, FINRA is not in the business of recovering funds for investors lost as a result of a brokerage firm's failure to supervise its representatives.
Have you suffered losses resulting from an investment in any private placement offered and sold by a Synergy sales representative? 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 Synergy salespersons who fraudulently offered and sold the fund to investors.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

THE WILLOW FUND FRAUD AND MISMANAGEMENT INVESTIGATION

In 2000, UBS Financial Services, Inc. (UBS) and Bond Street Capital (BSC) formed a closed-end mutual fund to purchase debt and other securities of distressed (near bankrupt) companies restructuring their debt financing. Since 2007, the net asset value of the Fund declined by over 300 million dollars. Some investors have lost over 85% of their initial investment capital as a result of gross misrepresentations and mismanagement of the fund.
It appears that many UBS advisors are misinformed by the company about the nature, mechanics and risks of the Willow Fund and in turn, misinformed their clients. Some of UBS's best clients invested in what they were led to believe to be a "safe" and "secure" investment with a "guaranteed income stream." They were unaware of the extensive leverage through the use of derivatives and credit swap contracts. This was a highly speculative investment and unsuitable for many of those clients with income as their primary investment objective.
The Willow Fund managers ratcheted up the risk by failing to perform the rigorous credit analysis on the company's restructuring of their debt financing. In addition, the managers failed to limit the risk positions and diversify the portfolio as represented. It appears that a gross breach of fiduciary duty and negligence occurred in the management of the fund.
Have you suffered losses resulting from an investment in the Willow Fund? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is actively investigating and accepting clients with valid claims against UBS and other stockbrokers who fraudulently offered and sold the fund to investors.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

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

T. Rowe Price Investment Services, Inc. (T. Rowe Price) has been fined by the Financial Industry Regulatory Authority (FINRA) for violation of securities industry rules and regulations relating to the protection of investors. T. Rowe Price failed to implement and maintain adequate supervisory systems and procedures to monitor and ensure the timely delivery of mutual fund prospectuses as required by Section 5 of the Securities Act of 1933 (the "Securities Act"), NASD Conduct Rule 3010 and FINRA Rule 2010. FINRA investigators discovered that T. Rowe Price failed to provide prospectuses to its customers who purchased mutual funds and other securities products during the period of its investigation - 2009 through 2011 (the "relevant period"). FINRA estimated that T. Rowe Price may have failed to deliver at least 2,500 prospectuses to its customers in a timely manner during that period.
The federal and state securities laws require the delivery of a prospectus to investors because it provides them with important information about the product being purchased. Our federal and state securities laws require disclosure of the details of the enterprise in which an investor's putting money so that he can be fully apprised and can intelligently appraise the risks involved in his or her particular investment. Not only has T. Rowe Price violated the Section 5 of the Securities Act, but it has also violated Section 10 (b) of the Securities Exchange Acts of 1934 (the "Exchange Act"), which states the time a prospectus must be delivered. A prospectus is required to be delivered by securities broker-dealer before the transaction is complete on the settlement date of the transaction, which in the case of mutual fund transactions and most stock transactions is no later than 3 business days after the order is placed.
The failure to deliver prospectuses in a timely manner is an extremely serious violation. It is not only a violation that can result in sanctions by securities regulator such as FINRA, but it can also give rise to a civil action or arbitration claim by an investor for rescission (to unwind the transaction) under both federal and state securities laws. Alternatively, an investor may recover damages for losses suffered in connection with an investment he or she made through T. Rowe Price if that investor did not receive a prospectus in a timely manner.
Have you suffered losses resulting from a T. Rowe Price stockbroker's failure to deliver a prospectus relating to an investment made through that brokerage firm? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

STATE FARM VP MANAGEMENT CORP. FINED FOR FAILURE TO DELIVER PROSPECTUSES TO INVESTORS

State Farm VP Management Corp. (State Farm) has been fined by the Financial Industry Regulatory Authority (FINRA) for violation of securities industry rules and regulations relating to the protection of investors. State Farm failed to implement and maintain adequate supervisory systems and procedures to monitor and ensure the timely delivery of mutual fund prospectuses as required by Section 5 of the Securities Act of 1933 (the "Securities Act"), NASD Conduct Rule 3010 and FINRA Rule 2010. FINRA investigators discovered that State Farm failed to provide prospectuses to its customers who purchased mutual funds and other securities products during the period of its investigation - 2009 through 2011 (the "relevant period"). FINRA estimated that State Farm may have failed to deliver at least 150,000 prospectuses to its customers in a timely manner during that period. Further, FINRA investigators found that State Farm failed to send updated prospectuses, which is also required under the law and industry rules to thousands of investors from 2001 through 2012.
The federal and state securities laws require the delivery of a prospectus to investors because it provides them with important information about the product being purchased. Our federal and state securities laws require disclosure of the details of the enterprise in which an investor's putting money so that he can be fully apprised and can intelligently appraise the risks involved in his or her particular investment. Not only has State Farm violated Section 5 of the Securities Act but it has also violated Section 10 (b) of the Securities Exchange Acts of 1934 (the "Exchange Act"), which states the time a prospectus must be delivered. A prospectus is required to be delivered by securities broker-dealer before the transaction is complete on the settlement date of the transaction, which in the case of mutual fund transactions and most stock transactions is no later than 3 business days after the order is placed.
The failure to deliver prospectuses in a timely manner is an extremely serious violation. It is not only a violation that can result in sanctions by securities regulators such as FINRA, but it can also give rise to a civil action or arbitration claim by an investor for rescission (to unwind the transaction) under both federal and state securities laws. Alternatively, an investor may recover damages for losses suffered in connection with an investment he or she made through State Farm if that investor did not receive a prospectus in a timely manner.
Have you suffered losses resulting from a State Farm stockbroker's failure to deliver a prospectus relating to an investment made through that brokerage firm? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

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

Deutsche Bank Securities Inc. (DBSI) has been fined by the Financial Industry Regulatory Authority (FINRA) for violation of securities industry rules and regulations relating to the protection of investors. DBSI failed to implement and maintain adequate supervisory systems and procedures to monitor and ensure the timely delivery of mutual fund prospectuses as required by Section 5 of the Securities Act of 1933 (the "Securities Act"), NASD Conduct Rule 3010 and FINRA Rule 2010. FINRA investigators discovered that DBSI failed to provide prospectuses to its customers who purchased mutual funds and other securities products during the period of its investigation - 2009 through 2011 (the "relevant period"). FINRA estimated that DBSI may have failed to deliver at least 75,000 prospectuses to its customers in a timely manner during that period.
The federal and state securities laws require the delivery of a prospectus to investors because it provides them with important information about the product being purchased. Our federal and state securities laws require disclosure of the details of the enterprise in which an investor's putting money so that he can be fully apprised and can intelligently appraise the risks involved in his or her particular investment. Not only has DBSI violated the Section 5 of the Securities Act, but it has also violated Section 10 (b) of the Securities Exchange Acts of 1934 (the "Exchange Act"), which states the time prospectus must be delivered. A prospectus is required to be delivered by a securities broker-dealer before the transaction is complete on the settlement date of the transaction, which in the case of mutual fund, other initial public offering (IPO) transactions and most stock transactions is no later than 3 business days after the order is placed.
The failure to deliver prospectuses in a timely manner is an extremely serious violation. It is not only a violation that can result in sanctions by securities regulator such as FINRA, but it can also give rise to a civil action or arbitration claim by an investor for rescission (to unwind the transaction) under both federal and state securities laws. Alternatively, an investor may recover damages for losses suffered in connection with an investment he or she made through DBSI if that investor did not receive a prospectus in a timely manner.
Have you suffered losses resulting from a DBSI stockbroker's failure to deliver a prospectus relating to an investment made through that brokerage firm? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

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

LPL Financial, LLC (LPL), for the third time in the last thirty days, has been fined by the Financial Industry Regulatory Authority (FINRA) for violation of securities industry rules and regulations relating to the protection of investors. This time LPL failed to implement and maintain adequate supervisory systems and procedures to monitor and ensure the timely delivery of mutual fund prospectuses as required by Section 5 of the Securities Act of 1933 (the "Securities Act"), NASD Conduct Rule 3010 and FINRA Rule 2010. FINRA investigators discovered that LPL failed to provide prospectuses to its customers who purchased mutual funds during the period of its investigation - 2009 through 2011 (the "relevant period"). FINRA estimated that LPL may have failed to deliver at least 3.4 million mutual fund prospectuses to its customers during that two year period. There is a high probability that LPL failed to deliver prospectuses in connection with the sale of other products during the relevant period and did not have procedures in place to ensure delivery of any prospectuses to its customers prior to the relevant period. The FINRA investigators found that at least as early as 2007, LPL was aware that its procedures were failing to ensure that its registered representatives were delivering the prospectuses as required under the federal and state securities laws.
The federal and state securities laws require the delivery of a prospectus to investors because it provides them with important information about the product being purchased. Our federal and state securities laws require disclosure of the details of the enterprise in which an investor's putting money so that he can be fully apprised and intelligently appraise the risks involved in his or her particular investment. Not only has LPL violated Section 5 of the Securities Act, but it has also violated Section 10 (b) of the Securities Exchange Acts of 1934 (the "Exchange Act"), which states the time prospectus must be delivered. A prospectus is required to be delivered by a securities broker-dealer before the transaction is complete on the settlement date of the transaction, which in the case of mutual fund transactions, and in most stock transactions, is no later than 3 business days after the order is placed.
The failure to deliver prospectuses in a timely manner is an extremely serious violation. It is not only a violation that can result in sanctions by securities regulator such as FINRA, but it can also give rise to a civil action or arbitration claim by an investor for rescission (to unwind the transaction) under both federal and state securities laws. Alternatively, an investor may recover damages for losses suffered in connection with an investment he or she made through LPL if that investor did not receive a prospectus in a timely manner.
Have you suffered losses resulting from an LPL stockbroker's failure to deliver a prospectus relating to an investment made through that brokerage firm? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.