InvestorLawyers.net http://www.investorlawyers.net Fighting to recover investor losses since 2004 Thu, 27 Jul 2017 19:37:02 +0000 en-US hourly 1 https://wordpress.org/?v=4.5.10 PROMESA Filing May Give Rise to Claims Against Puerto Rico Brokerage Firms http://www.investorlawyers.net/promesa-filing-may-give-rise-to-claims-against-puerto-rico-brokerage-firms/ Thu, 27 Jul 2017 19:34:25 +0000 http://www.investorlawyers.net/?p=4321

On May 3, 2017, Puerto Rico filed for a form of bankruptcy protection pursuant to a federal law passed in 2016 known as Promesa. This law allows for Puerto Rico to facilitate a debt restructuring process in court that is akin to U.S. bankruptcy protection. This marks the first time in our nation’s history that a U.S. state or territory has taken such extreme fiscal measures. As it stands, Puerto Rico owes approximately $123 billion in debt and pension obligations, a huge figure that dwarfs the $18 billion bankruptcy filed by the city of Detroit in late 2013.
While some of the investors in Puerto Rico debt include sophisticated banks and hedge funds (many sophisticated investors did not start aggressively snapping up Puerto Rico debt until 2014, when many bonds were already trading at a deep discount), numerous retail investors were solicited by their broker or investment advisor to purchase Puerto Rico bonds due to their tax free nature and hefty yields. While the lure of triple tax exempt income (income on Puerto Rico bonds is exempt from federal, state, and local taxes) helped firms like UBS, Merrill Lynch, Morgan Stanley and Santander in their sales pitch to prospective retail investors, often Mom and Pop investors were left unaware and uninformed as to the significant risks associated with investing in Puerto Rico bonds.
Puerto Rico map with shadow effect presentation
SANTANDER’S ROLE IN THE CRISIS

In late 2015, Banco Santander’s broker-dealer subsidiary, Santander Securities, agreed to pay as restitution $4.3 million to certain of its clients who suffered losses on investments in Puerto Rico bonds. In addition, the Financial Industry Regulatory Authority (“FINRA”) indicated that Santander’s brokerage unit would also be on the hook for $2 million in fines in connection with its failure to properly supervise its employees. FINRA has estimated that, in total, restitution and penalties levied against Santander will total approximately $6.42 million.
Santander’s violations go back to 2012, when Moody’s downgraded Puerto Rico’s General Obligation Bonds to a notch above junk status, in light of the island’s growing fiscal crisis. Only one month prior to this downgrade, Santander had begun selling off its own inventory of Puerto Rico bonds. Despite the fact that Santander recognized the real risks embedded in these Puerto Rico bonds, Santander’s brokers and investment advisors nevertheless continued to push Puerto Rico debt as an appropriate investment to its retail clients.
In ordering Santander to pay fines and restitution for losses incurred by retail investors (retail clients purchased about $180 million of the bonds directly and approximately $101 million through various closed end fund offerings at Santander) FINRA noted that Santander had failed to disclose any of the risks embedded in the bonds to its clients, and moreover, that the bank had failed to supervise the use of margin loans to leverage the purchase of even more bonds. FINRA further noted that this risky use of margin loans resulted in certain retail investors piling margin debt on top of shaky Puerto Rico debt. In some instances, Santander brokers even sold Puerto Rico bonds directly from their own accounts to retail investors.

FINRA ARBITRATION AS AN AVENUE OF RECOVERY

Certain arbitration cases filed with FINRA allege that Santander Securities, and other banks and broker-dealers including UBS, Merrill Lynch and Popular Securities, sold unsuitable Puerto Rico bonds to its retail clients or over-concentrated customer accounts in PR-linked investments. In particular, Santander Securities often concentrated its clients in Puerto Rico closed end bond funds. Even after the 2012 downgrade, Santander and other similarly situated banks and broker-dealers failed to adequately supervise their customer’s purchases of Puerto Rico bonds, the concentration of these investments, and the use of margin by some investors to purchase even more Puerto Rico bonds through leverage.

If you have invested in Puerto Rico bonds and you have suffered significant losses as a result, you may be able to recover your losses in FINRA arbitration. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation. On May 3, 2017, Puerto Rico filed for a form of bankruptcy protection pursuant to a federal law passed in 2016 known as Promesa. This law allows for Puerto Rico to facilitate a debt restructuring process in court that is akin to U.S. bankruptcy protection. This marks the first time in our nation’s history that a U.S. state or territory has taken such extreme fiscal measures. As it stands, Puerto Rico owes approximately $123 billion in debt and pension obligations, a huge figure that dwarfs the $18 billion bankruptcy filed by the city of Detroit in late 2013.
While some of the investors in Puerto Rico debt include sophisticated banks and hedge funds (many sophisticated investors did not start aggressively snapping up Puerto Rico debt until 2014, when many bonds were already trading at a deep discount), numerous retail investors were solicited by their broker or investment advisor to purchase Puerto Rico bonds due to their tax free nature and hefty yields. While the lure of triple tax exempt income (income on Puerto Rico bonds is exempt from federal, state, and local taxes) helped firms like UBS, Merrill Lynch, Morgan Stanley and Santander in their sales pitch to prospective retail investors, often Mom and Pop investors were left unaware and uninformed as to the significant risks associated with investing in Puerto Rico bonds.

SANTANDER’S ROLE IN THE CRISIS

In late 2015, Banco Santander’s broker-dealer subsidiary, Santander Securities, agreed to pay as restitution $4.3 million to certain of its clients who suffered losses on investments in Puerto Rico bonds. In addition, the Financial Industry Regulatory Authority (“FINRA”) indicated that Santander’s brokerage unit would also be on the hook for $2 million in fines in connection with its failure to properly supervise its employees. FINRA has estimated that, in total, restitution and penalties levied against Santander will total approximately $6.42 million.
Santander’s violations go back to 2012, when Moody’s downgraded Puerto Rico’s General Obligation Bonds to a notch above junk status, in light of the island’s growing fiscal crisis. Only one month prior to this downgrade, Santander had begun selling off its own inventory of Puerto Rico bonds. Despite the fact that Santander recognized the real risks embedded in these Puerto Rico bonds, Santander’s brokers and investment advisors nevertheless continued to push Puerto Rico debt as an appropriate investment to its retail clients.
In ordering Santander to pay fines and restitution for losses incurred by retail investors (retail clients purchased about $180 million of the bonds directly and approximately $101 million through various closed end fund offerings at Santander) FINRA noted that Santander had failed to disclose any of the risks embedded in the bonds to its clients, and moreover, that the bank had failed to supervise the use of margin loans to leverage the purchase of even more bonds. FINRA further noted that this risky use of margin loans resulted in certain retail investors piling margin debt on top of shaky Puerto Rico debt. In some instances, Santander brokers even sold Puerto Rico bonds directly from their own accounts to retail investors.

FINRA ARBITRATION AS AN AVENUE OF RECOVERY

Santander Securities, and other banks and broker-dealers including UBS and Merrill Lynch often sold unsuitable Puerto Rico bonds to its retail clients. In particular, Santander Securities often concentrated its clients in Puerto Rico closed end bond funds. Even after the 2012 downgrade, Santander and other similarly situated banks and broker-dealers failed to adequately supervise their customer’s purchases of Puerto Rico bonds, the concentration of these investments, and the use of margin by some investors to purchase even more Puerto Rico bonds through leverage.
If you have invested in Puerto Rico bonds and you have suffered significant losses as a result, you may be able to recover your losses in FINRA arbitration. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation. The attorneys at Law Office of Christopher J. Gray, P.C. are admitted in New York and New Jersey but will also accept cases in other jurisdictions, including Puerto Rico, often working with co-counsel who are admitted in those jurisdictions.

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Puerto Rico COFINA and PREPA Bonds May Give Rise to Investor Claims http://www.investorlawyers.net/puerto-rico-cofina-and-prepa-bonds-may-give-rise-to-investor-claims/ Thu, 27 Jul 2017 19:23:41 +0000 http://www.investorlawyers.net/?p=4319

On May 3, 2017, Puerto Rico filed for a form of bankruptcy protection pursuant to a federal law passed in 2016 known as Promesa, thereby allowing Puerto Rico to facilitate a debt restructuring process in court akin to U.S. bankruptcy protection.
As recently reported in Barron’s, Puerto Rico’s bonds backed by sales tax revenue, known as COFINAS, witnessed significant price depreciation since initiation of the bankruptcy-like proceeding in early May 2017. And on May 30, 2017, U.S. District Judge Laura Taylor Swain ordered that interest payments on COFINAS be suspended, pending anticipated litigation concerning whether holders of Puerto Rico’s General Obligation Bonds (“GOs”) or COFINAS should receive first claim to any payments ordered through a debt restructuring. Amey Stone, Puerto Rico’s Cofina Bond Payments Suspended by Judge, May 31, 2017.
San Juan, Puerto Rico Coast

The Puerto Rico Urgent Interest Fund Corporation, also known as the Puerto Rico Sales Tax Financing Corporation (or Corporacion del Fondo de Interes Apremiante – COFINA in Spanish) issues bonds that are attached to Puerto Rico’s sales tax revenue. Specifically, Puerto Rico’s ‘Sales and Use Tax’, charges a 7% fee on many different transactions occurring on the Island. The revenue raised through COFINA is allocated in the following manner:
• 21.4% of the COFINA tax revenue is allocated to local municipal government;
• 39.2% of the COFINA tax revenue is allocated to state government; and
• 39.2% of the COFINA tax revenue goes to COFINA bondholders.

In light of Judge Taylor Swain’s recent order to stay further payments on COFINAS, bondholders are now left in the lurch, holding Puerto Rico debt instruments that have suffered severe price deterioration and that no longer provide the coupon payments sought by fixed income investors. If you have invested in COFINAS, or other Puerto Rico bonds including bonds issued by the Puerto Rico Electric Power Authority (known as PREPAs) and you have suffered significant losses as a result, you may be able to recover your losses in FINRA arbitration.

Arbitration cases filed with the Financial Industry Regulatory Authority (FINRA) have charged that certain stockbrokers and investment advisors in Puerto Rico have over-concentrated customer accounts in Puerto Rico bonds and other securities including closed-end funds (CEFs), leading to unnecessary losses. Firms named in some of these arbitration cases include UBS, Merrill Lynch, and Popular Securities, among others.

If you believe that you may have a claim relating to recommendations of Puerto Rico COFINA or PREPA bonds, or other securities, you contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation. The attorneys at Law Office of Christopher J. Gray, P.C. are admitted in New York and New Jersey but will also accept cases in other jurisdictions, including Puerto Rico, often working with co-counsel who are admitted in those jurisdictions.

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Private Placements- Know the Risks Before Investing http://www.investorlawyers.net/private-placements-know-the-risks-before-investing/ Thu, 27 Jul 2017 19:13:47 +0000 http://www.investorlawyers.net/?p=4317

With increasing frequency retail investors are encountering scenarios in which they are offered an opportunity to invest in a private placement. A private placement – often referred to as a non-public offering – is an offering of a company’s securities that are not registered with the Securities & Exchange Commission (“SEC”). Under the federal securities laws, a company may not offer or sell securities unless the offering has been registered with the SEC or an exemption from registration applies.

DISTINGUISHING A PRIVATE PLACEMENT FROM OTHER INVESTMENTS

When an investor decides to purchase shares in a publicly traded company, or for that matter purchase shares in a mutual fund or exchange traded fund (“ETF”), he or she will have the opportunity to first review a comprehensive and detailed prospectus required to be filed with the SEC. When it comes to a private placement, however, no such prospectus need be filed with the SEC – rather, these securities are typically offered through a Private Placement Memorandum (“PPM”).

The majority of private placements are offered under an exemption from registration requirements known as SEC Regulation D (“Reg D”). Among other things, Reg D provides certain safe-harbor exemptions to securities registration, and furthermore specifies the amount of money that can be raised in an offering, as well as the type of investor who may be solicited to invest in such a non-public offering. With certain exceptions, only retail investors who meet the “accredited investor” standard are permitted to invest in a private placement. Rule 501 defines an accredited investor as any person whose net worth exceeds $1,000,000 (excluding their residence), or alternatively who has income in excess of $200,000 per year ($300,000 jointly with a spouse) for the two most recent years.

Private placements might involve investing in a company’s stock in the form of shares, preferred stock, or even a debt instrument such as a bond, promissory note or debenture offering. When making an investment in a private placement, you should first receive and carefully review the PPM. The PPM is required to disclose all material facts about the investment. Any misrepresentation or any omission of a material fact necessary to make the statements in the PPM not misleading could give rise to liability where an investor suffers losses and the PPM is misleading or omits certain critical information.

SOME RISKS AND RED FLAGS ASSOCIATED WITH PRIVATE PLACEMENTS

An investor considering a private placement should be aware of their risks and be on the lookout for any potential red flags. In fact, the Financial Industry Regulatory Authority (“FINRA”) has previously issued an investor alert to inform the public about the risks and the potential for fraud and sales abuse concerning private placements.

To begin, FINRA has cautioned that by virtue of their limited offering documents (PPM versus more detailed prospectus), private placements will likely only provide prospective investors with limited information concerning a company and its financials. In addition, FINRA has warned investors about the illiquid nature of most private placement investments — before investing, an informed investor should first determine if he or she can allow their money to remain tied up for an extended period of time (usually several years) because private placement securities cannot be easily resold due to restrictions on their resale and the lack of a public market such as a stock exchange on which to sell them.

FINRA has also alerted investors to be very cautious of any private placements that you hear about through spam email or cold calling. Often, this is a red flag and a sign of fraud, and an investor should proceed with the utmost caution.

HAVE YOU INVESTED IN SECURITIES THROUGH A PRIVATE PLACEMENT?

If you have purchased unregistered securities through a private placement – and you have suffered considerable losses due to what you believe involved fraud, sales abuse or an unsuitable recommendation by a broker – you may be able to recover your losses in FINRA arbitration. To find out more about your legal rights and options, contact a securities arbitration attorney at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

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LPL Fined by State of NH for Alleged Unsuitable REIT Sales http://www.investorlawyers.net/lpl-fined-by-state-of-nh-for-alleged-unsuitable-reit-sales/ Thu, 01 Jun 2017 21:36:18 +0000 http://www.investorlawyers.net/?p=3714

For some time we have been blogging about non-traded REITS (and the real risks associated with investing in these complex investment vehicles.  Many investors are familiar with exchange traded Real Estate Investment Trusts (“REITs”).  Pursuant to federal law, these companies which own and typically operate income-producing real estate, are required to distribute at least 90% of their taxable income to investors in the form of dividends.  Because REITs pay out such a high percentage of their taxable income as dividends, these companies have attracted numerous retail investors (including pensioners and other retirees) seeking to augment their income stream.

15.6.15 money whirlpool

While an appropriate allocation of REITs in a retail investment portfolio may well be suitable and warranted in order to achieve diversification and earn decent income, non-traded REITs are an altogether different and often risky investment vehicle.  The primary risks associated with non-traded REITs include: (1) a lack of liquidity – non-traded REITs do not trade on an exchange, and therefore, any secondary market for resale will be restricted; (2) pricing inefficiency – in lockstep with their lack of liquidity, investors in non-traded REITs may find that the price offered for share redemption is substantially lower than the price at which shares were initially purchased;  (3) high up-front fees – compounding the risk with non-traded REITs are the often steep up-front fees charged investors (as high as 10% for selling compensation) simply to buy in and purchase shares; and (4) confusion over source of income – often, investors in non-traded REITs are unaware that dividend income may actually include return of capital (including possible the proceeds from sale of shares to other, later investors).

THE NEW HAMPSHIRE BUREAU OF SECURITIES REGULATION PROCEEDING AGAINST LPL FINANCIAL

In April 2015, the New Hampshire Bureau of Securities Regulation (the “Bureau”) initiated a regulatory proceeding against LPL Financial (“LPL”) in connection with the Boston-based brokerage firm’s sale of non-traded REITs to numerous investors.  Aware of their complex nature and risks, the Bureau alleged that sales of non-traded REITs to New Hampshire residents were unsuitable under the circumstances and that LPL failed to properly supervise its associated members selling the non-traded REITs.

The case involved an elderly resident of New Hampshire, age 81, who was steered into investing approximately $250,000 in a non-traded REIT by an LPL adviser.  The investor ultimately suffered significant losses in the non-traded REIT.  During the course of its investigation into the matter, the Bureau concluded that LPL sold hundreds of non-traded REITS to New Hampshire residents, often in clear violation of LPL’s own internal policies and guidelines.  LPL allegedly failed to follow its own guidelines concerning gathering accurate financial information from clients, ensuring appropriate concentration in any alternative investments such as non-traded REITs, and conducting a suitability analysis in connection with sales to investors.

As a result of the Bureau’s investigation into LPL, the Boston-based brokerage firm agreed to pay a fine of $750,000 for its alleged misconduct.  Furthermore, LPL agreed to allow for a third-party review of its non-traded REIT sales in order to determine whether and in what amount restitution was warranted.

As of April 2017, based on this third-party review, LPL is responsible for refunding roughly 200 New Hampshire residents who had invested in non-traded REITs in the aggregate amount of $8 million (approx. $40,000 per client).

DO YOU HAVE A CASE INVOLVING A NON-TRADED REIT?

If you have invested in a non-traded REIT that you believe was unsuitably recommended, and you have suffered significant losses as a result, you may be able to recover your losses in FINRA arbitration.  To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

 

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Non-Traded REITs – Investors Should Proceed with Caution! http://www.investorlawyers.net/non-traded-reits-investors-should-proceed-with-caution/ Tue, 23 May 2017 18:41:12 +0000 http://www.investorlawyers.net/?p=3689

With increasing frequency, given the current low interest rate environment, retail investors are steered into investing in products appearing to offer more advantageous yields than are available in traditional interest-bearing investments such as money market funds and CDs.  One example is the publicly registered non-exchange traded real estate investment trust (“REIT”) or “non-traded REIT.”  While non-traded REITS share certain similarities with their exchange-traded brethren, they differ in a number of key respects.

15.6.15 money whirlpool

CHARACTERISTICS AND SOME DISADVANTAGES OF NON-TRADED REITS

To begin, a non-traded REIT is not listed for trading on a securities exchange.  Consequently, the secondary market for non-traded REITs is typically very limited in nature.  Furthermore, while some of an investor’s shares may be eligible for redemption after a certain passage of time (e.g., one year), and, even then, on a limited basis subject to certain restrictions, such redemption offers may well be priced below the purchase price or current price of the non-traded REIT.  Thus, lack of liquidity and pricing inefficiency are two disadvantages to non-traded REITs, as opposed to REITs that trade on an exchange (e.g., NYSE: BXP – Boston Properties).

Beyond such liquidity and pricing concerns, non-traded REITs often are sold with very high front-end fees.  These fees may include selling compensation and expenses (not to exceed 10%), as well as additional offering and organizational costs which are essentially passed along to the investor from the outset.  Conversely, purchasing a REIT which trades on a major exchange will only entail the associated brokerage commission.  Because of the fees associated with non-traded REITs, they are rarely suitable for an investor with a short-term time horizon; even long-term investors must remain mindful of the liquidity issues.

Finally, with non-traded REITs, investors may not always be aware of the anticipated source of returns on the underlying investments.  Often, with a non-traded REIT, income is passed along to the investors from distributions over several years – and it may also be the case that the income distributions include return of capital from other investors.  And upon liquidation, investors in a non-traded REIT may receive less than their initial investment depending on the value of the underlying assets. On the other hand, investors who purchase exchange traded REITS are typically seeking capital appreciation on the share price, in addition to income via dividends or distributions to shareholders.

RESOURCE OFFICE INNOVATION REIT

Recently, one such non-traded REIT – Resource Office Innovation REIT (“Resource Office”) – elected to suspend its public offering, effective April 21, 2017.  Resource Office’s suspension of its offering was approved by its Board in connection with a plan to restructure its $1.1 billion IPO into a NAV REIT, as well as a perpetual life entity that will give the company the ability to conduct offerings for indefinite duration.  In addition to suspending its offering, Resource Office’s Board voted to suspend the company’s distribution reinvestment plan effective May 1, 2017, as well as its share repurchase program effective May 21, 2017.

If you have invested in a non-traded REIT that you believe was an unsuitable recommendation, and you have suffered significant losses as a result, you may be able to recover your losses in FINRA arbitration.  To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

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State of Illinois Charges Thrivent Over Variable Annuity Switching http://www.investorlawyers.net/state-of-illinois-charges-thrivent-over-variable-annuity-switching/ Mon, 22 May 2017 16:47:17 +0000 http://www.investorlawyers.net/?p=3679

The State of Illinois Securities Department (“Department”) recently initiated enforcement proceedings against Thrivent Investment Management, Inc. (“Thrivent”) (CRD #18387) for allegedly violating the Illinois Securities Law of 1953 in connection with sales of unsuitable variable annuity (“VA”) products to certain of its clients who already held Thrivent VA’s.

Abstract Businessman enters a Dollar Maze.

Specifically, the Department alleges that Thrivent violated the Act by “… replacing its clients’ existing variable annuities for new variable annuities which required the clients to pay surrender charges and various fees.”   According to the Department, possible violations of law in the case include (i) failure to maintain and enforce a supervisory system with adequate written procedures to achieve compliance with applicable securities laws and regulations, (ii) failure to adequately review the sales and replacements of VA’s for suitability, (iii) failure to enforce its written procedures regarding documentation of sales and replacements of VA’s, and (iv) failure to adequately train its salespersons, registered representatives and principals.

Prior to 2012, Thrivent rolled out a new feature to its VA.  This feature consisted of adding a Guaranteed Lifetime Withdrawal Benefit (“GLWB”) to the VA in return for a rider fee.  During the time period of January 2011 – June 2012 and July 2013 – June 2014, Thrivent allegedly recommended that certain customers purchase new variable annuities with GLWB riders to replace existing variable annuities, without performing any analysis of whether the customers would economically benefit from the variable annuity switch.  Some customers who were advised to switch allegedly would have received greater payments over the life of the policies if they had kept their original variable annuities in place.

In general, VA products have a checkered history with regulators.   Both the Financial Industry Regulatory Authority (“FINRA”) and the Securities & Exchange Commission (“SEC”) have issued numerous rulings, advisory documents and investor alerts warning that the sale of VA’s might be unsuitable and inappropriate under certain circumstances.  Specifically, the SEC has warned about the risks and costs of switching VA contracts, encouraging investors to consider whether they can buy the insurance features embedded in a VA less expensively as part of the VA or separately.  FINRA has warned investors that switching, or exchanging, a VA contract is generally not a good idea, due to bonus recapture charges, surrender charges, higher charges accompanying the new contract, unnecessary riders on the new contract, and whether the advisor is motivated by commissions.

When a broker or financial advisor recommends that a client purchase or sell a security, the broker must have a reasonable basis for believing that the recommendation is suitable for the investor.  In making this assessment, a broker must consider the investors income and net worth, investment objectives, risk tolerance, and other security holdings.

If you received an unsuitable recommendation of securities from a broker or investment adviser, including variable annuities, and suffered significant losses are a result, you may be able to recover your losses in FINRA arbitration. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

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Former NEXT Financial Broker Douglas P. Simanski Barred for Alleged Theft http://www.investorlawyers.net/former-next-financial-broker-douglas-p-simanski-barred-for-alleged-theft/ Thu, 13 Oct 2016 23:13:21 +0000 http://www.investorlawyers.net/?p=3348

 

Financial Industry Regulatory Authority (FINRA) records indicate that Douglas P. Simanski (Simanski), a former stockbroker who was associated with NEXT Financial Group, has been permanently barred from the brokerage industry.  Simanski’s record also shows 4 currently pending customer disputes, 1 prior final customer dispute and a recent employment separation after allegations.

Misappropriation

FINRA is the agency that licenses and regulates stockbrokers and brokerage firms.  In response to FINRA charges, Simanski, without admitting or denying the findings, consented to a permanent bar from the securities industry and entry of findings that he failed to provide documents and information related to an investigation into allegations related to the conversion of funds.

Four customers of NEXT Financial have also filed arbitration claims involving Simanski, alleging sales of high risk investments, loans to customers, sale of unregistered securities and sale of fictitious investments as part of a scheme to steal money from a customer.

Simanski was registered with NEXT Financial Group from August 1999 through June 2016.

If you believe you may have been the victim of misconduct by Simanski or another stockbroker or financial advisor,  and suffered significant losses are a result, you may be able to recover your losses in FINRA arbitration or in a lawsuit. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 (toll free call) or newcases@investorlawyers.net for a no-cost, confidential consultation.

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Platinum Partners Hedge Funds Under Scrutiny http://www.investorlawyers.net/platinum-partners-hedge-funds-under-scrutiny/ Thu, 13 Oct 2016 22:57:34 +0000 http://www.investorlawyers.net/?p=3346

Platinum Partners LP Funds are under scrutiny after federal agents reportedly raided the funds’ New York offices in July 2016.  Hedge fund entities sponsored by Platinum Partners include the Platinum Partners Value Arbitrage Funds, the Platinum Partners Credit Opportunities Fund, Platinum Credit Holdings LLC, Platinum Credit Management LP, Platinum Partners Value Corp., and Platinum Management (NY) LLC.

15.2.17 piggybank in a cage

In June, the New York-based hedge fund manager reportedly began liquidating its funds, after the firm’s longtime associate Murray Huberfeld (Huberfeld) was accused of arranging for a $60,000 bribe and kickback, in a Salvatore Ferragamo bag, to Norman Seabrook, President of the New York correctional officers’ union.  Seabrook allegedly directed $20 million in union investments into the Platinum Partners Value Arbitrage Fund. Seabrook has denied that he is guilty of any charges.

Later, Cayman Islands Judge ­Andrew Jones reportedly ordered that a new advisor take control of the international arm of Platinum’s flagship fund, which is based in the Caymans, after an investor claimed he has not been able to gain access to his money since 2015.

If improper activity by Platinum Partners is proven, brokers and advisors who sold and recommended the Platinum Funds to investors may possibly be liable.   If you were advised to invest in Platinum Partners funds by broker or investment adviser, and suffered significant losses are a result, you may be able to recover your losses in FINRA arbitration or in a lawsuit. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

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FINRA Fines Investors Capital Over Unit Investment Trust Sales http://www.investorlawyers.net/finra-fines-investors-capital-over-unit-investment-trust-sales/ Thu, 13 Oct 2016 22:39:21 +0000 http://www.investorlawyers.net/?p=3343

The Financial Industry Regulatory Authority (FINRA) recently fined Investors Capital Corporation $250,000 over the sale of unit investment trusts (UITs).  Investors Capital did not admit or deny the allegations leading to the fine, but also agreed to pay $841,500 in restitution to customers, bringing its total payment to over $1 million.

Abstract Businessman enters a Dollar Maze.

FINRA alleged that certain Investors Capital brokers recommended that customers engage in unsuitable short-term transactions in UITs, and also alleged that the firm failed to apply sales charge discounts that should have been available to some customers. FINRA further alleged that Investors Capital Corporation lacked adequate systems and procedures to supervise the sales of UITs, leading to the violations.  Short-term trading in UITs may be uneconomical in many cases due to relatively high up-front sales charges, and UITs are typically recommended only as long-term investments.

Investors Capital’s alleged violations occurred between 2010 and 2015.

When a broker recommends that a client purchase or sell a security, the broker must have a reasonable basis for believing that the recommendation is suitable for the investor.  In making this assessment, a broker must consider the investors income and net worth, investment objectives, risk tolerance, and other security holdings.

If you received an unsuitable recommendation of securities from a broker or investment adviser, and suffered significant losses are a result, you may be able to recover your losses in FINRA arbitration. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

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FINRA Fines Merrill Lynch Over Sales of Strategic Return Notes http://www.investorlawyers.net/finra-fines-merrill-lynch-over-sales-of-strategic-return-notes/ Thu, 06 Oct 2016 17:40:13 +0000 http://www.investorlawyers.net/?p=3338

The Financial Industry Regulatory Authority (FINRA) fined Merrill Lynch, Pierce, Fenner & Smith, Inc. $5 million for alleged negligent disclosure failures in connection with the sale of five-year senior debt notes to retail customers. In particular, Merrill Lynch allegedly failed to adequately disclose certain costs, making it appear that the fixed costs were lower than they actually were.

Abstract Businessman enters a Dollar Maze.

FINRA charges that the notes, known as strategic return notes or “SRNs”, were linked to a Merrill Lynch proprietary volatility index. During 2010 and 2011, the firm allegedly sold approximately $168 million worth of the SRN notes to its retail customers, promoting them as a hedge against potential downturns in the equities markets.

FINRA charges that included in the costs associated with the notes was the “execution factor,” a feature of the Index intended to replicate transaction costs incurred in the simulated buying and selling of S&P 500 Index options.  According to FINRA, these transaction costs allegedly accrued on a daily basis and totaled 1.5 percent per quarter, but were not disclosed in the offering materials for the SRNs.  FINRA charges that in buying the notes, a reasonable retail customer would have considered it important that the execution factor imposed these costs.

Investors with questions about their rights may contact a securities arbitration attorney at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

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