Español Inner

Articles Posted in Massachusetts

Published on:

Securities fraud attorneys continue to investigate claims on behalf of investors who suffered losses in nontraded real estate investment trusts purchased from LPL Financial between 2006 and 2009. The recent announcement that LPL is being sued by the State of Massachusetts over sales practices related to nontraded REITs has helped inform investors about the issues concerning the sales of these risky, illiquid products.

Cole Credit Property Trust II and Dividend Capital Total Realty Named in Complaints Against LPL Financial

Cole Credit Property Trust II and Dividend Capital Total Realty were named in the list of complaints filed by investors, in addition to REIT giant Inland American Real Estate Trust. Shares of these nontraded REITs were purchased through LPL-affiliated financial advisors. Currently, there are 13,170 financial advisors who are LPL-affiliated advisors. Stock fraud lawyers say Wells Real Estate Investment Trust II, Cole Credit Property III, 1031 Exchange and W.P. Carey Corporate Property Associates 17 were also named.

LPL compliance documents state that the broker-dealer “cannot make exceptions to prospectus suitability requirements or the regulatory imposed limit of 10 percent of net worth in public managed futures.” However, the state regulator alleges that advisors affiliated with LPL “frequently made transactions in violation of product prospectus and Massachusetts requirements.” In addition, the complaint alleges that a LPL supervision employee was “completely unaware of Massachusetts’ requirements concerning the sale of non-traded REITs” for a minimum of two years.

Published on:

On December 12, 2012, Massachusetts securities regulators announced that they are suing LPL Financial in connection with sales of risky investments known as non-traded REITs. LPL Financial has been charged with improper sales practices and inadequate supervision of registered representatives who sold non-traded REITs.

The Fight Against LPL Financial Nontraded REIT Fraud Continues

These charges are in connection with the sales of $28 million in non-traded REITs between 2006 and 2009, which were sold to nearly 600 clients in Massachusetts. According to the Massachusetts Securities Division, 569 of those transactions had regulatory violations, including violations of prospectus requirements, violations of Massachusetts concentration limits and violations of LPL’s compliance practices.

Inland American Real Estate Trust Inc. accounted for the largest amount of sales of all the REITs listed in the complaint. With real estate assets amounting to $11.2 billion, this REIT was the largest non-traded REIT in the industry. 

Published on:

Investment fraud lawyers are currently investigating claims on behalf of individuals who invested with Stephen B. Blankenship and were, as a result of Blankenship’s actions, victims of securities fraud. A recent announcement by the Securities and Exchange Commission stated that it has charged Blankenship and his company with stealing from customers. These customers, who were persuaded by Blankenship to make withdrawals from their brokerage accounts to invest directly with him, lost at least $600,000 to his fraud. The accounts from which they withdrew these funds were managed by Blankenship but were held at other firms.

Victim of Stephen B. Blankenship Fraud Could Recover Losses

According to the SEC’s allegations, Blankenship lured customers in with assurances of greater rates of return if they would transfer their money to Deer Hill Financial Group, Blankenship’s firm. Furthermore, he claimed to be investing in publicly-traded mutual funds and other established securities but, instead, made no such investments and transferred his customer’s money to his personal bank account. The money was then allegedly used to pay various personal expenses, including travel, grocery bills and mortgage payments.

“Blankenship took advantage of fellow churchgoers and senior citizens who relied on their savings for retirement and placed their trust in him,” says David P. Bergers, director of the SEC’s Boston Regional Office. “He betrayed that trust by using their money to make personal credit card payments and home improvements.”

Published on:

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses as a result of their investment in an Inofin promissory note or Inofin offering. A recent announcement by the Securities and Exchange Commission (SEC) stated that on July 23 and 24, final judgments were entered in a civil injunctive action against Michael J. Cuomo and Kevin Mann Sr. This action was filed in the United States District Court of Massachusetts.

Unregistered Securities: Inofin Investors Could Recover Losses

Allegations included in the SEC complaint were that Inofin and Inofin executives illegally raised money from investors in 25 states and the District of Columbia totaling at least $110 million. These funds were raised through unregistered note sales. Furthermore, Inofin allegedly materially misrepresented the company’s financial performance as well as how it was using investors’ money. Thomas K. Keough and David Affeldt, two sales agents, were also charged by the SEC. Allegations against Affeldt and Keough stated that they offered and sold the aforementioned unregistered securities.

Stock fraud lawyers say Keough’s FINRA Broker Report stated that he was registered with FINRA during a significant portion of the time that he sold these unregistered securities. As a result, investors who, in accordance with Keough’s recommendation, purchased an Inofin investmentvcould be able to recover losses through securities arbitration.

Published on:

According to investment fraud lawyers, the Financial Industry Regulatory Authority (FINRA) will bring enforcement cases related to the selling of exchange-traded funds (ETFs) that were not appropriate for customers, against certain brokerages. Bradley Bennett, FINRA’s enforcement chief, said this month that the cases will involve leveraged and inverse exchange-traded funds, and the unsuitable sales of said funds. Furthermore, allegations of inadequate or improper training for brokers who sell exchange-traded funds will be involved in the cases.

FINRA Cracking Down on Leveraged and Inverse ETFs

Securities fraud attorneys say that leveraged and inverse ETFs amplify short-term returns. They do so by using derivatives and debt. These investments are more suitable for professional traders and are usually unsuitable for long-term retail investors. These investments only make up $29.3 billion of the $1.15 trillion United States ETF market. FINRA has raised concerns that these products are being sold to long-term retail investors, despite the risk involved when holding leveraged and inverse ETFs for more than one day.

“We don’t have a qualm with the product,” Bennett says. “We just want to make sure that people who are selling them understand them.”

Published on:

According to an announcement on April 12, 2012, from the Financial Industry Regulatory Authority (FINRA), Goldman Sachs & Co. has been fined $22 million for “failing to supervise equity research analyst communications with traders and clients and for failing to adequately monitor trading in advance of published research changes to detect and prevent possible information breaches by its research analysts.” A related settlement with Goldman was announced by the Securities and Exchange Commission on the same day. Securities fraud attorneys say Goldman will pay $11 million each to the SEC and FINRA.

News: FINRA Fines Goldman, Sachs over “Trading Hurdles”

Goldman established “trading huddles” as a business process in 2006, according to FINRA’s statement. These “trading huddles” were designed to allow weekly meetings for research analysts, in which they would share trading ideas with traders for the firm. These traders worked with clients and, occasionally, equity salespersons. In addition, analysts apparently discussed specific securities while they were considering changing the conviction list status or published research rating of the security. Clients had access to the “trading huddle” information and were not restricted from direct participation through calls placed by analysts to high priority clients of the firm.

Unsurprising to investment fraud lawyers, a significant risk was created by trading huddles: material non-public information could be disclosed by analysts. Such information includes conviction list status and rating changes. Despite this risk, Goldman failed to have adequate controls to monitor communications before and after the trading huddles. Furthermore, an adequate monitoring system was not in place to detect possible trading in advance of conviction list and research rating changes in proprietary or employee training, institutional customer or client-facilitation and market-making accounts. Had these practices been allowed to continue, insider trading could have resulted, according to securities fraud attorneys.

Published on:

Investment attorneys turn their eyes to Bank of America once again, only two months into the New Year. Bank of America Corp. has been subpoenaed by William Gavin, the Massachusetts securities regulator, over LCM VII Ltd. and Bryn Mawr CLO II Ltd., two related collateralized loan obligations. These two CLOs led to investor losses totaling $150 million. The subpoena will, hopefully, help authorities in determining if Bank of America knew it was overvaluing the assets of the portfolios. Both Bryn Mawr and LCM were sold in 2007, prior to the 2008 merger between Bank of America Securities and Merrill Lynch.

News: Bank of America Faces More Allegations In 2012

Bank of America held commercial loans from small banks amounting to around $400 million in 2006. In 2007, securities packages were put together from these loans and then sold to investors. The subpoena arrives only one day after Bank of America, JP Morgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc. settled allegations of engaging in abusive mortgage practices. These abusive practices included engaging in deceptive practices in the offering of loan modifications, a failure to offer other options before closing on borrowers with federally insured mortgages, submitting improper documents to the bankruptcy court and robo-signing foreclosure documents without proper review of the paperwork.

The settlement amounted to $25 billion and involved federal agencies plus authorities in 49 states. This settlement is designed to give $2,000 to around 750 borrowers whose homes were foreclosed upon after the home values dropped 33 percent from their 2006 worth, and to provide mortgage relief. In addition, all five banks will pay $766.5 million in penalties to the Federal Reserve. This is considered to be the biggest federal-state settlement ever. Bank of America will also pay $1 billion to settle allegations that it, together with its Countrywide Financial unit, engaged in fraudulent and wrongful conduct.

Contact Information