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Investors in Lordstown Motors Corp. (NASDAQ: RIDE, “Lordstown” or the “Company”) may have legal claims arising from conduct by the Company that has given rise to a class action lawsuit (discussed below).

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The electric vehicle startup recently said in a regulatory filing with the Securities and Exchange Commission (“SEC”) that orders for its Endurance pickup are non-binding, sending its share price tumbling.  Lordstown’s stock dropped as much as 7% after the Company clarified statements by company President Rich Schmidt on June 15, 2021 to the effect that the Company had a large book of binding orders.  The Company stated: “Although these vehicle purchase agreements provide us with a significant indicator of demand for the Endurance, these agreements do not represent binding purchase orders or other firm purchase commitments.”

Previously, Company founder and former CEO Steve Burns left Lordstown after the board reportedly determined that he had overstated orders for the Endurance truck with claims of 100,000 pre-orders.  This controversy is the subject of a class action lawsuit that has been filed in the United States District Court for the Northern District of Ohio on behalf of investors who purchased or otherwise acquired securities between August 3, 2020 and March 24, 2021, inclusive.

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Investors in Sila Realty Trust Inc. (“Sila”), a publicly registered, non-traded real estate investment trust (formerly known as Carter Validus Mission Critical REIT II) may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

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Sila recently sent a letter to shareholders recommending they reject an unsolicited tender offer by CMG Partners and its affiliates, CMG Income Fund II LLC, CMG Liquidity Fund LLC and Blue River Capital LLC.  Under the tender offer, CMG is offering to buy up to300,000 shares of Sila stock for $3.57 each.  This price is approximately 59 percent less than the REIT’s most recent net asset value per share of $8.69, announced in December 2020. CMG’s offer expires on July 15, 2021, unless extended.  As well as being much lower than Sila’s estimated NAV per share, CMG’s offer price is also lower than certain reported secondary market transactions, which have reportedly taken place at prices over $6.00 a share during 2021.

Sila  merged with another REIT known as with Carter Validus Mission Critical REIT Inc. in late 2019.  Sila recently announced plans to sell its 29-property data center portfolio to subsidiaries of Mapletree Industrial Trust, a REIT listed on the Singapore Exchange, for more than $1.3 billion. The transaction is expected to be completed in one or more closings during the third quarter of 2021.  As of March 31, 2021, Sila reportedly owned 153 real estate properties, consisting of 29 data centers and 124 healthcare properties located in 70 markets across the United States with a total purchase price of approximately $3.2 billion, including capital expenditures on development properties placed into service.

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FINRA suspended financial advisor Christian Frank Lucchetto (CRD No. 4648994, hereinafter “Lucchetto”) from the securities industry for three months and fined him $5,000 based on allegations of excessive trading in customer accounts.  According to FINRA, during January 2018 through May 2019,  Lucchetto excessively and unsuitably traded a customer’s account, in violation of FINRA Rules 2111 and 2010.  The conduct allegedly occurred while Lucchetto was employed at First Standard Financial Co. (“First Standard”) in Red Bank, New Jersey.

Money Maze
In 2019, New Jersey securities regulators revoked the broker-dealer registration of First Standard and froze its assets over findings that the firm received revenues of approximately $28.7 million due to unauthorized, unsuitable and excessive trading.  According to New Jersey, the firm, headquartered in Red Bank, N.J., routinely hired agents with a history of customer complaints and regulatory problems.  According to New Jersey, First Standard engaged in unsuitable and frequently unauthorized in-and-out trading in bonds and other securities for which active trading is unsuitable in customer accounts.  New Jersey also found that the firm’s sales commissions were so high that accounts would have had to generate extraordinary returns simply to break even.

According to FINRA Letter of Acceptance, Waiver, and Consent No. 2020065035201l, accessible here lucchetto awc, between January 2018 and May 2019, Mr. Lucchetto, while employed by First Standard, Lucchetto excessively and unsuitably traded a customer’s account.

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Customers of barred former stockbroker Jeffrey A. Broten (“Broten”), formerly associated with defunct brokerage firm First Standard Financial Co., LLC (“First Standard”) and several other brokerage firms, may have arbitration or other legal claims, notwithstanding First Standard being out of business since 2019 and having declared bankruptcy in 2021.

Piggy Bank in a Cage
In 2019, New Jersey securities regulators revoked the broker-dealer registration of First Standard and froze its assets over findings that the firm received revenues of approximately $28.7 million due to unauthorized, unsuitable and excessive trading.  According to New Jersey, the firm, headquartered in Red Bank, N.J., routinely hired agents with a history of customer complaints and regulatory problems.  According to New Jersey, certain First Standard agents engaged in unsuitable and frequently unauthorized in-and-out trading in bonds and other securities for which active trading is unsuitable in customer accounts.  New Jersey also found that, in some circumstances, the firm’s sales commissions were so high that accounts would have had to generate extraordinary returns simply to break even.

Broten was barred from associating with any Financial Industry Regulatory Authority (FINRA) member firm in any capacity under the terms of a Letter of Acceptance, Waiver and Consent dated October 1, 2020, accessible here. BrotenAWC  The FINRA AWC letter also recites that Broten’s agent registration in the State of New Jersey was revoked under a Summary Denial, Revocation and Penalty Order dated February 6, 2020.  According to Broten’s FINRA BrokerCheck record, the New Jersey authorities alleged that Broten made untrue statements and omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.  New Jersey also charged that Broten engaged in an act, practice or course of business that operated as a fraud, due to engaging in a pattern of excessive, unsuitable and unauthorized trading activity in customer accounts while employed by First Standard.  Broten’s FINRA BrokerCheck report is accessible here. BrotenBrokerCheck

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Investors may have litigation or arbitration claims against stockbrokers or investment advisers who sold them or placed their funds in Northstar Financial Services (Bermuda)’s Investment products, if the sale was the result of a misleading sales presentation or if the financial advisor’s recommendation to purchase the investment lacked a reasonable basis.

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Investment products sponsored by Northstar Financial Services (Bermuda) include the following:

* Global VIP Elite

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Investors in private funds formerly managed by defunct Chicago options trading firm LJM Partners, including funds known as LJM Investment Fund LP, LJM Preservation & Growth Fund, LP, LJM Aggressive Fund LP, LJM Fund LP, LJM Master Trading Fund, LP, PEC-LJM Fund LP, and PCF-LJM Preservation & Growth Fund, LP (“LJM Private Funds”) may have litigation or arbitration claims against stockbrokers or investment advisers who sold them or placed their funds in the LJM Private Funds.

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The Commodity Futures Trading Commission and the Securities and Exchange Commission (“SEC”) recently filed litigation against LJM Partners Ltd. alleging the enterprise mismanaged $1 billion in assets by misleading investors about its short options trading strategy and risk management practices.  According to the government lawsuit, LJM Partners unlawfully misled investors for two years about the risk management protocols and “worst case” losses investors could expect from the options trading strategy they employed in  certain commodity pools and private investment funds (as well as in an open-end  mutual fund also managed by LJM Partners, the LJM Preservation and Growth Fund (“LJM Fund”)).

In early February 2018, the LJM Fund dropped more than 80% over the course of just two days during a spike in the volatility index (VIX), losing more than $600 million for investors.  While the losses in the LJM Private Funds varied, the LJM Private Funds also experienced substantial losses during this time frame as a result of utilizing the same general trading strategy.

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Customers of defunct brokerage firm First Standard Financial Co., LLC (“First Standard”) may have arbitration claims against its former stockbrokers/registered representatives, their former employers, or other persons, notwithstanding First Standard being out of business since 2019 and having declared bankruptcy in 2021.

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In 2019, New Jersey securities regulators revoked the broker-dealer registration of First Standard and froze its assets over findings that the firm received revenues of approximately $28.7 million due to unauthorized, unsuitable and excessive trading.  According to New Jersey, the firm, headquartered in Red Bank, N.J., routinely hired agents with a history of customer complaints and regulatory problems.  According to New Jersey, First Standard engaged in unsuitable and frequently unauthorized in-and-out trading in bonds and other securities for which active trading is unsuitable in customer accounts.  New Jersey also found that the firm’s sales commissions were so high that accounts would have had to generate extraordinary returns simply to break even.  New Jersey’s Summary Revocation Order against First Standard is accessible here. NJ SUMMARY REVOCATION ORDER

In a subsequent lawsuit, New Jersey alleged that First Standard had engaged in a “fraudulent course of business that consisted of excessive, unsuitable, and frequently unauthorized short-term trading in customer accounts that generated commissions for First Standard and its agents at its customers’ expense.”  See Grewal, et ano. v. First Standard Financial Company, LLC, Superior Court of the State of New Jersey, Chancery Division, Essex County Dkt. No. ESX-C-204-4 (accessible here NJ LAWSUIT COMPLAINT).

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Investors in certain syndicated conservation easement private placements may have legal claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

Money Flies
The federal government is suing EcoVest Capital (“EcoVest”), a real estate investment company, for allegedly creating sham tax shelters by exploiting so-called conservation easements, which are intended to preserve natural land.  EcoVest’s scheme hinged on grossly overvalued appraisals, the lawsuit alleges.  EcoVest, based in Atlanta, is reportedly one of the biggest promotors of syndicated conservation easements investment programs.  The Justice Department suit states that EcoVest has been involved in 51 syndication easement deals since 2009, generating $1.7 billion in federal tax deductions.

Investors who bought investments in private placements known as syndicated conservation easements could be facing serious consequences: their investments could be worthless and they may be facing back taxes, interest, tax penalties, and audits.

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Investors who were sold private placements investments offering high tax deductions arising from conservation easements may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

Money Bags
The Internal Revenue Service (“IRS”) began a crackdown on these types of investments in 2017 after it concluded that many so-called syndicated conservation easements were nothing more than sham transactions designed to create tax deductions.  Syndicated conservation easements are private placements that promise tax deductions worth four to four-and-a-half times a person’s investment.  That means an investor could hypothetically turn a $100,000 investment into $400,000 or more in tax deductions.

However, new IRS guidance (IRS Notice 2017-10, accessible here notice 2017-10) designated certain conservation easement transactions as “listed transactions”, meaning their participants must disclose to the IRS on their tax returns their participation in the transaction. IRS Notice 2017-10 applies to certain syndicated conservation easement transactions are listed transactions if entered into on or after January 1, 2010, and is targeted at those prospective investors who receive oral or written promotional materials offering the possibility of a charitable donation deduction of at least 2.5 times their investment.

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The Financial Industry Regulatory Authority (FINRA), a securities regulator, announced that it has censured and fined Cambridge Investment Research (“Cambridge”) $400,000 and Securities America $100,000 for failing to supervise their representatives’ recommendations of an alternative mutual fund that resulted in hundreds of thousands in losses for customers.  The FINRA Letters of Acceptance, Waiver & Consent (AWCs) announcing the sanctions are accessible here.  Cambridge AWC SAI AWC.  Cambridge also was ordered to pay a restitution of $3.13 million plus interest; and Securities America was ordered to pay a restitution of $235,979 plus interest.

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According to the AWCs, Cambridge and Securities America permitted the sale of the LJM Preservation & Growth Fund (LJM) without conducting reasonable due diligence and without a sufficient understanding of LJM’s risks and features, including the fact that the fund pursued a risky strategy that relied, in part, on purchasing uncovered options.

In early February 2018, the value of LJM’s shares dropped more than 80% over the course of just two days during a spike in the volatility index (VIX), losing more than $600 million for investors.  The LJM Fund was launched in January 2013 and sold in three different share classes (ticker symbols LJMAX, LJMCX, LJMIX).  According to its last annual report, LJM had net assets of $768 million as of October 31, 2017.

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