Investment fraud lawyers recently began filing claims against Purshe Kaplan Sterling Investments, William Leitch and Corey Castilio on behalf of their clients. Claims have already been filed on behalf of more than 20 clients. According to the allegations, all of these clients are retirees whose retirement savings suffered significant losses because of actions and failures to act by Castilio, Leitch and Purshe Kaplan.

All of these clients previously used the services of the San Ramon Investment Advisory Company where Castilio and Leitch worked. Allegedly, Castilio and Leitch left that company in 2011 to work independently of that firm. Many of their former clients were mislead into leaving the firm; allegations state that the clients did not realize they were leaving the firm they had been with for years. According to stock fraud lawyers, when the clients were no longer benefitting from the original investment advisory company’s recommendations, they suffered disastrous losses.

According to the claim, Castilio and Leitch also made unsuitable recommendations on a variety of investments, including private placement REITs, to these clients. Allegedly, the REITs were misrepresented to the clients as bond or fixed income equivalents. According to investment fraud lawyers, prior to recommending an investment to a client, brokers and firms are required to perform the necessary due diligence to establish whether the investment is suitable for the client given their age, investment objectives and risk tolerance. While these investments were clearly unsuitable for the clients, Castilio and Leitch were probably motivated to recommend the investments because the commissions generated by these types of investments are generally larger than traditional securities, such as mutual funds, stocks and bonds.

If you were inappropriately invested in private placement REITs because of the recommendation of Corey Castilio, William Leitch and Purshe Kaplan or any other broker, adviser or firm, you may be able to recover your losses through Financial Industry Regulatory Authority arbitration. To find out more about your legal rights and options, contact a stock fraud lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

Recently, securities arbitration lawyers have begun filing claims against First Allied Securities Inc. and Sean Agahi on behalf of their clients. In one case, a 64-year-old retiree had entrusted his retirement savings to the firm and Agahi. According to the allegations, his savings was inappropriately invested and he suffered disastrous losses.

The claim states that Agahi invested the retiree’s savings in multiple non-traditional securities like private placement REITs and limited partnerships. According to securities fraud attorneys, prior to recommending an investment to a client, brokers and firms are required to perform the necessary due diligence to establish whether the investment is suitable for the client given their age, investment objectives and risk tolerance. While these investments were clearly unsuitable for the client, Agahi was probably motivated to recommend the investments because the commissions generated by these types of investments are generally larger than traditional securities, such as mutual funds, stocks and bonds.

Usually, retired individuals have a much lower risk tolerance than younger, still-working people and should be invested more conservatively, according to securities arbitration lawyers. Most retirees live off of the income they draw from their investments. As a result, a market downturn can be disastrous to retired individuals because it threatens the money they need to pay their bills. In addition, they are often unable to replace losses. To make matters worse, many corrupt brokers and advisers will target retired individuals for fraud, especially if they are unsophisticated investors.

If you were inappropriately invested in non-traditional securities because of the recommendation of Sean Agahi and First Allied Securities Inc., or any other broker, adviser or firm, you may be able to recover your losses through Financial Industry Regulatory Authority arbitration. To find out more about your legal rights and options, contact a securities fraud attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

ETFs (exchange traded funds) and ETNs (exchange traded notes) have recently gained a significant amount of attention in the securities industry. Securities fraud attorneys have been filing arbitration claims on behalf of investors who were unsuitably recommended ETFs or ETNs and suffered significant losses as a result. The Financial Industry Regulatory Authority (FINRA) has started to increase its efforts in regulating inverse ETFs and ETNs, hoping to ensure that unsophisticated investors are not being sold these complicated products.

In connection with FINRA’s efforts, UBS Financial Services, Morgan Stanley, Wells Fargo and Citigroup Global Markets Inc. have agreed to pay $7.3 million in fines and $1.8 million in restitution, totaling $9.1 million. This will settle allegations that they sold inverse and leveraged ETFs to clients for which the investment was unsuitable. According to FINRA, these four firms did not have a “reasonable basis” for the recommendation of the securities to certain clients and also failed to provide adequate supervision. For more than a year, from January 2008 through June 2009, $27 billion in inverse ETFs were bought and sold by the firms.

With ETFs and ETNs now being recognized as a significant problem, we are likely to see more sanctions leveled by FINRA. According to stock fraud lawyers, the SEC ceased approving applications for ETFs in March 2010, when those ETFs used derivatives. Furthermore, the SEC indicated that it wanted to determine if leveraged and inverse ETFs warranted additional investor protection. There is concern, from both FINRA and the SEC, that inverse and leveraged ETFs are being confused with traditional, less risky ETFs.

According to securities fraud attorneys, the higher risk of leveraged and inverse ETFs is a result of the fact that they use leverage and compounding and they reset daily. Because of this, these investments’ performance can be significantly different from the underlying index’s performance.

If you suffered significant losses as a result of your investment in an inverse ETN or ETF that was unsuitable for you, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a stock fraud lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

Lately, there has been a lot of buzz amongst securities arbitration lawyers about non-traded REITs. Investors who have suffered losses as a result of these investments have been encouraged to come forward to attempt to recover their losses through FINRA arbitration. But what exactly is the problem with these investments?

Generally, a problem with these investments arises when a financial advisor fails to adequately disclose to the customer the risks and illiquidity of the investment. Often, the motivation for the broker/adviser’s failure to disclose when recommending the product is the high commission he or she will earn on the investment.

Valuation problems of these investments are another major issue with non-traded REITs, according to investment fraud lawyers. Currently, FINRA rules only mandate that the sponsors of the investments establish an estimated per-share valuation no longer than 18 months after the investment stops raising investor funds. This is an issue because fund raising can, and often does, last for years. As a result, the per-share valuation can go for years without being updated. Furthermore, there is an obvious conflict of interest when it is the non-traded REIT’s sponsor that establishes the valuation.

According to Investment News, as regulators prepare to solidify rules on estimated share value creation for REITs, there is a deep divide within the non-traded REIT industry about valuations. Specifically, the issue revolves around whether an independent third party should be used to conduct appraisals. Many are arguing that complete transparency — regarding commissions generated, pricing and secondary market prices — is needed by the non-traded REIT industry.

Some of the non-traded REITs being investigated by the securities arbitration lawyers at CJ Gray are KBS REIT, Cornerstone Healthcare REIT, Inland Western and Behringer Harvard REIT. If you have suffered losses as a result of your investment a non-traded REIT, find out more about your legal rights and options by contacting an investment fraud lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

Recently, it has been reported that the SEC lawsuit against Morgan Keegan & Co. has been reinstated by the U.S. Court of Appeals in Atlanta. According to stock fraud lawyers, Morgan Keegan allegedly mislead investors regarding its auction-rate securities liquidity risk. According to the federal appeals court, a trial judge previously incorrectly sided with Morgan Keegan that the verbal comments made by brokers to four Morgan Keegan customers were not “material” omissions or misrepresentations that would, under U.S. Securities law, make the company liable.

Morgan Keegan’s office based in Memphis, Tennessee, was accused of securities fraud and sued by the SEC in 2009. According to securities fraud attorneys, the SEC alleged that from late 2007 through the ARS market collapse in February 2008, Morgan Keegan brokers told customers the auction-rate securities “were as good as cash” in an effort to increase sales.

Stock fraud lawyers know that auction-rate securities are tax-exempt, long-term and taxable bonds and their interest rates are connected to the short-term market. Through ARS, issuers can acquire lower short-term rates on long-term financing. Auction-rate securities were marketed as liquid cash alternatives and considered safe before the global credit crunch severely affected the market. As a result, many investors were left with securities that couldn’t be sold.

Typically consisting of preferred shares and municipal- and student loan-backed bonds, the market for these investments collapsed after dealers refrained from taking part in auctions at which interest rates were regularly reset at intervals of every 7, 28 or 35 days. This information is notwithstanding the alleged omissions and misrepresentations.

The acquisition of Morgan Keegan was recently completed by Raymond James Financial Inc. from Regions Financial Corp. This case can be referenced as SEC v. Morgan Keegan & Co. Inc, 11-13992, U.S. Court of Appeals for the Eleventh Circuit. Now that the case has been reinstated, securities fraud attorneys are watching for further developments.

If you believe you have been the victim of auction-rate securities fraud, find out more about your legal rights and options by contacting a securities fraud attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

Securities arbitration lawyers are currently investigating potential claims on behalf of investors who suffered losses as a result of their investments in Lehman Return Optimization Security Note and Maluhia Eight LLC.

Lehman Return Optimization Security Notes were allegedly marketed by brokers as investments designed to guarantee safety much like the safety associated with “capital preservation.” Furthermore, they were marketed as “low-risk investment,” according to investment fraud lawyers. However, the investment’s safety was actually dependent upon the solvency of Lehman Brothers, which acted as the issuer of the note. Following Lehman Brother’s September 2008 declaration of bankruptcy, investments such as this one that were backed by Lehman Brothers suffered disastrous losses. The potential liability of brokerage firms that sold the note to investors is now being investigated.

Brokerage firm liability for a Hawaii real estate deal, Maluhia Eight LLC, is also under investigation by securities arbitration lawyers. Chapter 11 bankruptcy was declared by Maluhia Eight in 2010 in the Northern District of Texas. Many investors have suffered losses as a result of the declaration of bankruptcy, but investors who purchased Maluhia Eight because of an unsuitable recommendation may be able to recover losses.

Prior to recommending an investment to a client, brokers and firms are required to perform the necessary due diligence to establish if the investment is suitable for the client given their age, investment objectives and risk tolerance. Brokerage firms which recommended Maluhia Eight will most likely be unable to demonstrate that the necessary due diligence was performed, based on what attorneys know about the investment.

If you suffered losses as a result of the unsuitable recommendation of either Lehman Return Optimization Security Note Losses or Maluhia Eight LLC, you may have a valid FINRA arbitration claim. To find out more about your legal rights and options, contact an investment fraud lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

Securities arbitration lawyers are currently investigating possible claims on behalf of investors who suffered losses as a result of their purchases of Inland Western Real Estate Investment Trust, which is now known as Retail Properties of America. Many of the investors who suffered losses as a result of Retail Properties of America were purportedly customers of Ameriprise Financial. Some Ameriprise customers have already come forward with potential claims.

In April 2012, Retail Properties of America was converted to a publicly-traded New York Stock Exchange company from a non-traded REIT. Last June, the value of the REIT was reported at $6.95 per share. Some brokers advised investors to remain invested in the REIT, given the decline, and asserted that it should rebound following the IPO. At the IPO, Retail Properties was expected to be offered at $10 to $12, but its actual offering of $8 was well below this expectation. Furthermore, the offering price of $8 resulted from a reverse stock split and the actual value of Retail Properties was around $3.20.

As a public non-traded REIT, the Inland Western REIT may have carried a high commission which motivates brokers to make the recommendation to investors despite the investment’s unsuitability. The commission on a non-traded REIT is often as high as 15 percent. Non-traded REITs, such as Inland Western REIT, carry a relatively high dividend or high interest, making them attractive to investors. However, non-traded REITs are inherently risky and illiquid, which limits access of funds to investors, according to stock fraud lawyers. If Ameriprise made unsuitable recommendations to clients to invest in Inland Western, this is a stark contrast to its claim that the company takes the “time to understand your dreams and goals, recommend strategies and product solutions to help you make progress toward those dreams and goals and help you implement these solutions and monitor progress.”

Allegedly, Ameriprise may have represented Retail Properties of America as a safe, low-risk investment. If they did, the product was misrepresented and clients may be able to recover losses through securities arbitration, according to securities arbitration lawyers. Furthermore, Ameriprise allegedly put a substantial amount of some clients’ assets in the REIT, which resulted in an over-concentration that was unsuitable for investors.

If you are an Ameriprise customer who suffered losses as a result of an unsuitable recommendation or over-concentration of stock in Inland Western or Retail Properties, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a stock fraud lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

Because of the recent decline in value of KBS Real Estate Investment Trust I, investment fraud lawyers are investigating claims on behalf of investors who suffered significant losses as a result of their investments. Full-service brokerage firms who sold this particular REIT could be held responsible for investor losses.

In April, investors of KBS REIT were informed that the value of KBS REIT had declined to $5.16 per share from $7.32 per share. While this represents a 29 percent decline since the last value cut of the REIT’s shares, it also represents a decline of nearly 50 percent since the original investment offering at $10 per share. The reduction in share price has resulted in significant losses for investors but, according to securities fraud attorneys, investors may be able to recover losses through securities arbitration.

KBS is a non-traded Real Estate Investment Trust (REIT). According to investment fraud lawyers, REITs typically carry a high commission which motivates brokers to make the recommendation to investors despite the investment’s unsuitability. The commission on a non-traded REIT is often as high as 15 percent. Non-traded REITs, such as the KBS REIT, carry a relatively high dividend or high interest, making them attractive to investors. However, non-traded REITs are inherently risky and illiquid, which limits access of funds to investors. For more information on REITs, see the previous blog post, “FINRA Investor Alert: Public Non-Traded REITs.”

Prior to recommending an investment to a client, brokers and firms are required to perform the necessary due diligence to establish whether the investment is suitable for the client given their age, investment objectives and risk tolerance. If you believe your broker or brokerage firm made an unsuitable recommendation of KBS REIT due to its inherently risky nature, and you suffered losses as a result of the recent decline in value of KBS, you may have a valid FINRA securities arbitration claim. To find out more about your legal rights and options, contact a securities fraud attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

Stock fraud lawyers are reviewing some ETFs, or exchange-traded funds, that employ misleading names that do not accurately reflect their true nature. This reflects a major problem in today’s securities industry, according to securities fraud attorneys. The packaging of these investments appears to the investor to avoid the volatile market; but, in actuality, they are only geared towards increasing revenue. The following is a list of ETFs that don’t actually invest in the way their name indicates, according to Casey Research:

· iShares MSCI Emerging Markets Eastern Europe Index Fund (ESR) — While the name implies that the fund invests throughout eastern Europe, the reality is that three-quarters of the funds assets are allocated to Russian companies, while few are in the rest of eastern Europe.
· ProShares Hedge Replication (HDG) Fund — While the name indicates hedge fund performance and strategies replication, 82 percent of the fund’s assets are actually held in three-month U.S. Treasury Bills.
· Vanguard MSCI Pacific ETF (VPL) — In this fund, 62 percent is allocated to Japan and 25 percent to Australia, even though the name implies the fund is invested throughout the Pacific.
· iShares MSCI Pacific Ex-Japan (EPP) Fund — Again, while implying the fund is invested widely in the Pacific, 65 percent is actually held in Australia, while only a small amount is held in Hong Kong and Singapore.
· Asia-Pacific Ex-Japan Portfolio (PAF) — While this name carries the same implications about the Pacific as EPP and VPL, 36 percent of the fund is allocated in South Korea.
· United States Oil Fund (USO) — This fund, originally meant to follow WTI crude oil prices, does not hold any oil but, rather, maintains futures market positions.
· United States Natural Gas Fund (UNG) — Like USO, UNG holds futures contracts, not natural gas, as the name implies.
· PIMCO Build America Bond Strategy ETF (BABZ) — While the name implies the fund invests throughout the entire United States, almost 7 percent is allocated in only four states: Illinois, New York, New Jersey and California. Furthermore, these four states issue more bonds and have more budget problems than most.

Prior to recommending an investment to a client, brokers and firms are required to perform the necessary due diligence to establish whether the investment is suitable for the client given their age, investment objectives and risk tolerance. According to stock fraud lawyers, even if your broker was unaware of the misleading nature of these titles, he or she may still be held liable for failure to perform the necessary due diligence.

If you have suffered losses as a result of your investments in any of the above ETFs, and feel your financial professional misrepresented the fund’s investment strategy or did not perform adequate due diligence on the fund’s underlying assets, you may have a valid FINRA securities arbitration claim. To find out more about your legal rights and options, contact a securities fraud attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

RMC Medstone Capital promissory note investors who suffered significant losses may have a valid securities arbitration claim, according to investment fraud lawyers. Investors of RMC Medstone Capital apparently received a Notice of Default in September 2011. The Notice of Default informed investors that their RMC Medstone Capital investment is now worthless.

According to securities arbitration lawyers, approximately $18 million in promissory notes were issued by RMC Medstone Capital and owners of these promissory notes should be seeking recovery of their losses. Prior to recommending an investment to a client, brokers and firms are required to perform the necessary due diligence to establish whether the investment is suitable for the client given their age, investment objectives and risk tolerance. Brokerage firms and broker-dealers offering the RMC Medstone Capital promissory notes will most likely be unable to demonstrate that the necessary due diligence was performed, based on what attorneys know about the investment.

Specifically, investment fraud lawyers are investigating recovery options for investors who suffered losses in RMC Medstone Capital V and VI promissory notes. Both of these notes were apparently sold under the Regulation D private offerings exemption. This exemption applies to certain private offerings and exempts the investment from normal SEC filing requirements.

According to securities arbitration lawyers, Regulation D can make the sale of unsuitable investments to the public easier. Investments sold under Reg D typically pay the selling broker a higher commission than mutual bonds that are not. Therefore, advisers who care more about maximizing commissions than serving their clients’ best interests are attracted to these types of investments.

If you suffered losses as a result of your investment in RMC Medstone Capital promissory notes, you may have a valid FINRA arbitration claim. To find out more about your legal rights and options, contact a securities arbitration lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.