Galvin charges that SII failed to adequately supervise the sale of nontraded REITs to customers. As a result of the settlement, any Massachusetts investor who was identified by Mr. Galvin’s office as having been improperly sold the REITs by SII will be offered their money back. While this conduct may have occurred in other states, only Massachusetts investors are affected by the action by Galvin’s office (and other investors will not receive a refund as a result of this action).

Of note, the Massachusetts action focused on SII treating clients’ annuities as liquid assets rather than nonliquid assets for purposes of calculating the amount of the client’s assets that could be invested in non-traded REITs: “SII’s suitability and disclosure form for nontraded REITs stated that no more than 10% of an investor’s liquid net worth may be invested in any particular nontraded REIT… While SII’s own internal policies made clear that annuities are illiquid products, SII nevertheless included annuities with substantial pending surrender fees as liquid for nontraded REIT liquid net-worth calculations.”

Mr. Galvin reportedly stated as follows in announcing his office’s action: “SII allowed its agents to miscalculate the customer’s liquid net worth in order to sell them high-commission nontraded REITs in violation of Massachusetts guidelines and its own policies.” As part of the settlement, SII also agreed to pay a $50,000 fine. Last year, Massachusetts charged SII Investments with “dishonest or unethical conduct and failure to supervise” sales of nontraded real estate investment trusts (REITs) to investors by inflating clients’ liquid net worth. LPL Financial bought SII in 2017 from an insurance company as part of its acquisition of the assets of National Planning Holdings, a network of four broker-dealers.

Non-traded REITs are investments that are frequently not adequately explained by the financial advisors recommending them. To begin, non-traded REITs are typically characterized by very high fees and up-front commissions (as high as 15% in some instances). Aside from their high fee structure, non-traded REITs are illiquid in nature, and usually cannot readily be sold for a number of years after purchase. Unlike traditional stocks and mutual funds, non-traded REITs do not trade on a deep and liquid national securities exchange. Therefore, many investors in non-traded REITs come to learn too late that their ability to exit their investment position is limited. For instance, non-traded REIT investors typically can only redeem shares directly with the sponsor on a limited basis, and even then, often at a disadvantageous price. Economic research shows that non-traded REITs have consistently underperformed publicly-traded REITs, which feature much lower fees and commission and can be freely sold by investors on the open market.

The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience in representing investors who have incurred losses in connection with non-traded REITs and other investments. Investors may contact a securities arbitration attorney at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation.

Infinex Investments (“Infinex”, CRD No. 35371) of Meriden, Connecticut has entered into a Consent Order with Massachusetts securities regulators, agreeing to pay a fine of $125,000 and make restition to investors to resolve allegations that it failed to adequately supervise agents who were selling high-commission securities products. Infinex registered representatives allegedly targeted customers at bank branches, primarily senior citizens, for unsuitable investment recommendations, including real estate investment trusts REITs and variable annuities, primarily to senior customers at local banks who didn’t understand the products.

Infinex is majority-owned by a group of nearly 40 banks that offer securities on bank premises and has selling agreements with approximately 30 banks in Massachusetts. Infinex also operates in other states and, according to the Financial Industry Regulatory Authority (“FINRA”), is licensed to operate in 53 U.S. states and territories. Therefore, it is possible that sales of investments such as those that allegedly occurred in Massachusetts may have occurred in bank branches in other states.

The Massachusetts Securities Division reportedly began investigating sales practices by Infinex after senior citizens complained that they had been sold investments they did not ask for or did not understand. The Consent Order is accessible below.

Executed-Infinex-Consent-Order-E-2017-0092

Brokerage firms like Infinex and their representatives must have a reasonable basis for any investment recommendations that they make to customers- a requirement known as “suitability”. FINRA’s suitability rule, Rule 2111, requires that before making a recommendation, broker-dealers must take into account a customer’s age, risk tolerance, time horizon, liquidity needs, other investments and experience, as well as any applicable tax considerations.

FINRA has provided the following guidance with respect to the terms “risk tolerance,” “time horizon” and “liquidity needs”:

• Risk Tolerance: “A customer’s ability and willingness to lose some or all of [the] original investment in exchange for greater potential returns.”
• Time Horizon: “The expected number of months, years, or decades [a customer plans to invest] to achieve a particular financial goal.”
• Liquidity Needs: “The extent to which a customer desires the ability or has financial obligations that dictate the need to quickly and easily convert to cash all or a portion of an investment or investments without experiencing significant loss in value from, for example, the lack of a ready market, or incurring significant cost or penalties.”

Attorneys at Law Office of Christopher J. Gray, P.C. have significant experience representing investors in disputes concerning unsuitable investment recommendations by stockbrokers or investment advisors. Investors may contact a securities arbitration attorney via the contact form on this website, by telephone at (866) 966-9598, or by e-mail at newcases@investorlawyers.net for a no-cost, confidential consultation.

As recently reported by the Wall Street Journal (WSJ), investments in so-called private placements have experienced a substantial upswing in the wake of the 2008 financial crisis. In fact, according to a May 7, 2018 WSJ article entitled, A Private-Market Deal Gone Bad: Sketchy Brokers, Bilked Seniors and a Cosmetologist, “In 2017 alone, private placements using brokers totaled at least $710 billion … a nearly threefold increase rise from 2009.” Of considerable concern, the article indicates that that financial advisors recommending private placements are “six times as likely as the average broker to report at least one regulatory action against them…” and, moreover, that 1 in 8 brokers recommending private placement investments have “three or more red flags on their records, such as investor complaint, regulatory action, criminal charge or firing… .”

In response to growing concerns about the many risks and pitfalls associated with private placements, some securities regulators have stepped up their efforts to combat the problem. For example, on July 2, 2018, the Massachusetts Securities Division (the “Division”) announced its investigation into sales practices linked to private placement investments. Pursuant to the Division’s investigation – which will be spearheaded by Mr. William Galvin, the Secretary of the Commonwealth of Massachusetts – a total of 10 broker-dealers will be subjected to regulatory inquiry. These brokerage firms, which have a demonstrated history of sales practice abuse surrounding private placement investments, include: LPL Financial, Arthur W. Wood Company, Santander Securities, U.S. Boston Capital, Bolton Global Capital, Advisory Group Equity Services, Moors & Cabot, Inc., Detwiler Fenton & Co., BTS Securities, and Winslow, Evans & Crocker.

In connection with its investigation, the Division is seeking to examine firms and advisors with disciplinary reports on file from 2 years ago, when the Division surveyed over 200 brokerage firms regarding their hiring and disciplinary practices. According to Mr. Galvin: “Private placements are risky investments that reward the salesperson handsomely with high commissions. Firms offering these to the public, especially seniors, have an obligation to see that they are sold to benefit the investor, not the broker. Individuals with a history of disciplinary actions magnify the risk of unsuitable sales in connection with private placements.”

As a general rule, investing in a private placement carries with it complexity and considerable risk — including high commissions, lack of transparency, and the illiquid nature of the unregistered offering — and, therefore, is most typically only available to accredited and/or sophisticated investors. An investor is considered “accredited” if he or she has an annual income of over $200,000 or has a net worth of more than $1 million of assets (excluding one’s primary residence). It is a financial advisor’s responsibility to ensure that an investor meets this test.

Financial advisors, and by extension their brokerage firm, have a duty to perform adequate due diligence on any investment recommended to customers, including private placement offerings pursuant to Regulation D, as promulgated by the SEC. Furthermore, financial advisors have a duty to disclose the risks associated with such an investment, as well as conduct a suitability analysis to determine if an investment meets an investor’s stated investment objectives and associated risk profile.

The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience in representing investors who have incurred losses in connection with private placement offerings, including investments in oil and gas drilling funds, hedge funds, and other exempt offerings. Investors may contact a securities arbitration attorney at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation.

On June 25, 2018, the Enforcement Section of the Commonwealth of Massachusetts Securities Division (“Division”) filed an Administrative Complaint (“Complaint”) against Respondent MetLife, Inc. (“MetLife”) in connection with alleged violations of the Massachusetts Uniform Securities Act (the “Act”). Specifically, the Division has alleged that MetLife, through a line of business known as pension risk transfer, “negligently relied on inadequate procedures to contact certain retirees, many of whom may be completely unaware that their former employer has offloaded its pension responsibilities to MetLife.” MetLife purportedly failed to make a good faith attempt to contact certain Massachusetts retirees due group annuity benefits, and as alleged in the Complaint, the insurance company did not take reasonable steps, such as through certified mail, e-mail, or telephone calls, to contact numerous pensioners, including over 400 Massachusetts retirees.

As alleged in the Complaint, MetLife categorized numerous living retirees as “Presumed Dead.” Consequently, the Division has alleged that MetLife stopped making pension payments to certain Massachusetts annuitants (in some cases, dating back 10 years), and further, caused negligent material misstatements to be made in certain MetLife public disclosures as filed with the SEC. According to the Complaint: “MetLife’s negligent administration of its pension risk transfer business caused MetLife to make materially misleading misstatements in its public filings. The Division brings this action pursuant to the antifraud provisions of the Act, to ensure that MetLife identifies and locates those retirees to whom it owes benefits, and immediately effects all retroactive and continuing payments, plus interest, to Massachusetts retirees.”

According to the Division, MetLife only sent “two bureaucratic, perfunctory letters” to Massachusetts retirees, one at age 65 and one at age 70 ½. When retirees failed to respond to these letters, MetLife allegedly released the retiree’s benefit amount from its reserves (thus effectively transferring a liability to an asset on the company’s balance sheet), without confirming that the retiree was actually deceased. As alleged in the Complaint: “After two unsuccessful attempts to contact its annuitants, MetLife released the full liability based on the unreasonable presumption that these annuitants would never respond and had not become entitled to benefits based on certain contractual provisions.”

In connection with its investigation into the matter, the Division has determined that MetLife’s purported misconduct has directly impacted numerous Massachusetts retirees, including former nurses, salesmen, shipbuilders and grocery store clerks. Further, the Division has indicated that it has heard from numerous individuals who have supposedly gone years without receiving benefits due under their pension. For example, in one instance according to the Division, a 72 year-old Vietnam veteran who was an employee of a Quincy, MA shipyard from 1972-1986, only began receiving benefits in 2018.

Retirees who believe that they may be owed money through an annuity contract or similar retirement product may contact an attorney at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

As recently reported, on September 20, 2017, the Enforcement Section of the Massachusetts Securities Division (the “Division”) filed an Administrative Complaint (“Complaint”) against SII Investments, Inc. (“SII”) (CRD# 2225) in connection with the brokerage firm’s marketing and sales of non-traded REITs to certain Massachusetts investors. SII is an independent broker-dealer within National Planning Holdings, which was recently acquired by Boston-based LPL Financial.

The Complaint essentially alleges that for the past several years, SII has engaged in “[d]ishonest and unethical conduct and failed to supervise its agents by allowing systemic inflation of its clients’ liquid net worth while maintaining contradictory and unclear rules related to the purchase of non-traded real estate investment trusts… .” Of significance, Massachusetts securities regulations mandate that “[n]o more than 10% of a client’s liquid net worth can be concentrated in one specific non-traded REIT and no more than 20% of a client’s liquid net worth can be concentrated in non-traded REITs in general.”

According to the Complaint, SII’s own internal policies and procedures also would also appear to have been violated by some of SII’s alleged conduct. For example, on SII’s own suitability and disclosure forms used for the sales of non-traded REITs, the full value of variable annuity products was listed as part of a client’s liquid net worth. However, as referenced in the Complaint, SII’s own “[C]ompliance Guide states ‘There must not be any representation or implication that variable annuities are short-term, liquid investments. Presentations regarding liquidity or ease of access to investment values must be balanced by clear language describing the negative impact of early redemptions.’”

In aggregate, the Division has alleged that from 2011-2016, SII sold 93 non-traded REITs to Massachusetts investors with a value of approximately $4.7 million. In bringing the Complaint, the Division is seeking, among other relief, to permanently enjoin SII from any further alleged conduct in violation of the Massachusetts Uniform Securities Act (the “Act”), requiring SII to provide an accounting of investor losses attributable to the alleged wrongdoing, and requiring SII to make written offers of rescission to all Massachusetts residents who purchased securities that were sold in violation of the Act.

Aside from liquidity concerns, there are numerous additional risks associated with non-traded financial products, including but not limited to characteristically high up-front fees charged investors (commissions to brokers and their firm run as high as 10%, as well as certain due diligence and administrative fees that can range up to 3%), as well as the fact that many non-traded REITs are complex investment products that often pay distributions from investor capital (return of capital). This return of capital may confuse some investors who believe that the investment’s yield is based on positive earnings and cash flows.

If you have invested in a non-traded REIT, or similar illiquid non-traded financial product, and you have suffered losses as a result (or are currently unable to exit your illiquid investment position), you may be able to recover your losses in FINRA arbitration if the investment recommendation by a stockbroker or financial advisor lacked a reasonable basis. Investors may 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.

In one case, registered representative Jane E. O’Brien reportedly borrowed client funds amounting to more than $2 million. O’Brien allegedly used client funds that should have been invested in a software company for personal expenses. According to Massachusetts prosecutors and regulators, O’Brien has pleaded guilty to charges of fraud. She was sentenced to 33 months in prison and was barred from the securities industry.

In addition, regulators say that Merrill Lynch should have suspected that O’Brien was in financial trouble when she removed $380,750 from her retirement account prematurely, incurring tax penalties, but they didn’t inform regulators about a conduct review until almost a week after the Justice Department indicted her. Merrill was ordered to pay a fine of $500,000 for allegedly failing to adequately supervise O’Brien.

The firm agreed to pay the fine but did not admit to violating the law. Reportedly, O’Brien earned $903,734 in revenue in her first year and brought in client assets amounting to almost $154 million. According to William F. Galvin, the secretary of the commonwealth for the state of Massachusetts, “This is in my estimation yet another example of top producers often being held to a different standard because of the revenue they bring to the firm.”

Massachusetts has also fined Sentinel Securities Inc. for failure to supervise. This case regarded the actions of an operations manager who allegedly moved funds to his own account from the firm’s accounts. Sentinel Securities has been ordered to pay a fine of $50,000.

Financial Industry Regulatory Authority rules have established that firms must properly supervise brokers’ activities while they are registered with the firm. If they fail to do so, the firms can be held responsible for the activities of their representatives and, thus, could be ordered to compensate their clients for losses sustained for the period they were registered with the firm.

If you have suffered significant losses as a result of misappropriation by a stockbroker or financial advisor, you may be able to recover your losses through securities 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 for a no-cost, confidential consultation.

According to securities arbitration lawyers, many state-specific municipal bond funds contained Puerto Rico debt and, as a result, other investigations may ensue. According to Massachusetts Secretary of the Commonwealth, William Galvin, the investigation includes three large fund managers: OppenheimerFunds (a unit of MassMutual Life Insurance Co.), UBS Financial Services and Fidelity Investments. The investigation is regarding how these managers sold and disclosed the risk of mutual funds containing heavy concentrations of the Puerto Rico bonds.

“Puerto Rico is currently on the verge of insolvency and many of its obligations are at or near junk rating, thus the risks associated with its municipal debt obligation are disproportionately high,” Galvin notes.

Investment fraud lawyers say the bonds are attractive to managers of mutual funds because they are state-, federal- and local income tax-exempt in all U.S. states. Some of the funds currently being investigated by securities fraud attorneys are:

• Puerto Rico Mortgage Backed & US Govt. Fund
• Puerto Rico Fixed Income Funds I-VI
• Puerto Rico AAA Portfolio Bond Funds I and II
• Puerto Rico AAA Portfolio Target Maturity Fund
• Puerto Rico Investors Bond Fund II
• Puerto Rico Investor’s Tax-Free Funds I-VI
• Puerto Rico GNMA &US Gov. Target Maturity Fund
• Puerto Rico Tax-Free Target Maturity Fund I and II
• Tax-Free Puerto Rico Target Maturity Fund
• Tax-Free Puerto Rico Funds I and II

If you suffered significant losses in UBS Puerto Rico closed-end bond funds through OppenheimerFunds, UBS Financial Services, Fidelity Investments or another fund manager, you may be able to recover your losses through FINRA securities arbitration. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray at (866) 966-9598, or by e-mail at newcases@investorlawyers.net for a no-cost, confidential consultation.

Investment fraud lawyers continue to investigate claims on behalf of investors who suffered significant losses as a result of an unsuitable recommendation of non-traded REITs, or real estate investment trusts. Last month, securities regulators of Massachusetts ordered five independent broker-dealers (IBDs) to pay an additional $10.75 million in restitution over sales of non-traded REITs. The relevant sales occurred beginning in 2005.

The five firms involved in this order are Ameriprise Financial Services Inc., Commonwealth Financial Network, Securities America Inc., Royal Alliance Associates Inc. and Lincoln Financial Advisors Corp. This order follows one made in May, in which the five IBDs agreed to pay $975,000 in fines and restitution of $6.1 million. Prior to that decision, LPL Financial agreed to pay restitution of $4.8 million to Massachusetts clients.

Of the $10.75 million, Securities America must pay $7.5 million, Ameriprise Financial must pay $1.6 million, Lincoln Financial must pay $841,000, Commonwealth must pay $534,000 and Royal Alliance must pay $125,000. This order, combined with the previous orders, requires restitution of $21.6 million to Massachusetts clients over improper sales of non-traded REITs. Non-Massachusetts investors will not benefit from this restitution. However, securities arbitration lawyers say that investors in other states can still recover losses sustained in risky non-traded REITs sold by these firms in securities arbitration.

According to investment fraud lawyers, firms have an obligation to fully disclose all the risks of a given investment when making recommendations, and those recommendations must be suitable for the individual investor receiving the recommendation given their age, investment objectives and risk tolerance. Non-traded REITs are inherently risky and illiquid, which limits access of funds to investors and makes them unsuitable for many individuals with conservative risk tolerances and those who need easy access to funds.

If you suffered significant losses because of the unsuitable recommendation of non-traded REITs, you may have a valid securities arbitration claim. 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 for a no-cost, confidential consultation.

The following firms have reportedly been subpoenaed: Merrill Lynch, Morgan Stanley, UBS Securities LLC, Charles Schwab & Co. Inc., Fidelity Brokerage Services LLC, Wells Fargo Advisors, ING Financial Partners Inc., TD Ameritrade Inc., LPL Financial LLC, MML Investor Services LLC, Commonwealth Financial Network, Investors Capital Corp., WFG Investments Inc. and Signator Investors Inc.

According to securities arbitration lawyers, the state sent subpoenas to the firms on July 10, 2013, requesting information regarding the sale of certain products to Massachusetts residents 65 or older over the last year. Nontraditional investments include private placements, hedge funds, oil and gas partnerships, tenant-in-common offerings, and structured products.

The subpoenas reportedly requested the following information related to these investments: The method of review of the sale, commissions generated, training materials, marketing materials and any relevant compliance. The firms have been instructed to respond no later than July 24.

In some cases, the recommendation of alternative investments to seniors with low risk tolerances may be unsuitable. According to investment fraud lawyers, firms have an obligation to fully disclose all the risks of a given investment when making recommendations, and those recommendations must be suitable for the individual investor receiving the recommendation given their age, investment objectives and risk tolerance.

This investigation follows the recent Massachusetts crackdown on improper sales of non-traded REITs, which resulted in over $8 million in restitution to Massachusetts investors paid by six different brokerage firms. According to William F. Galvin, the Massachusetts Secretary of the Commonwealth, the recent investigations into non-traded REIT sales “heightened my concern that the senior marketplace is being targeted for the sales of these high-risk esoteric products.” The fifteen firms that were recently subpoenaed were not parties to the previous restitution payments, and the firms have not been found guilty of any wrongdoing.

About the alternative investments, Galvin stated, “While these products are not unsuitable in and of themselves, they are accidents waiting to happen when they are sold to inexperienced investors by untrained agents who push the products to score… large commissions.”

If you received an unsuitable recommendation to invest in alternative investments, you may be able to recover your losses through securities 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 for a no-cost, confidential consultation.

According to a statement made by Mr. Galvin, “Our investigation into the sales of REITs, triggered by investor complaints, showed a pattern of impropriety on the sales of these popular but risky investments on the part of independent brokerage firms where supervision has historically been difficult to monitor.”

According to stock fraud lawyers, this settlement follows the February decision in which LPL Financial LLC was required to pay restitution to investors of $2 million and fines totaling $500,000 regarding non-traded REIT sales.

Some non-traded REITs may have carried a high commission which motivated brokers to recommend the product to investors, despite the investment’s unsuitability. The commission on a non-traded REIT is sometimes as high as 15 percent. Many non-traded REITs carry a relatively high distributions, making them attractive to investors. However, non-traded REITs are not traded on any national securities exchange, which limits access of funds to investors. Financial Industry Regulatory Authority rules have established that firms have an obligation to fully disclose all the risks of a given investment when making recommendations, and those recommendations must be suitable for the individual investor receiving the recommendation given their age, investment objectives and risk tolerance.

If you received an unsuitable recommendation of a non-traded REIT and/or were not made aware of the risks associated with these investments, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a stock fraud lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 for a no-cost, confidential consultation.

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.

Securities fraud attorneys are also investigating the suitability of these investments for individuals who received recommendations from their broker or advisor. For more information, see the previous blog post, “The Fight Against LPL Financial Nontraded REIT Fraud Continues.”

If you purchased shares of Cole Credit Property Trust II, Dividend Capital Total Realty or another risky nontraded REIT, you may be able to recover your losses through securities 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.

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.

According to the complaint, the investigation has “revealed significant and widespread problems with LPL’s adherence with the product prospectus and (state) requirements.” However, securities fraud attorneys say that Massachusetts may not be the only state that had its regulatory requirements violated by LPL, though it is the only state listed in this particular complaint. The complaint went on to state that “on paper, LPL set forth stringent requirements for the sale of non-traded REITs. In practice, LPL failed to review properly sales of non-traded REITs. While purporting to conduct a thorough review of offering documents, LPL allegedly overlooked prospectus delivery requirements in numerous sales of non-traded REITs.”

Investors who believe that a financial advisor or stockbroker may have violated their rights in connection with sales of non-traded REITs or other securities may contact Law Office of Christopher J. Gray, P.C. at (866) 966-9598 for a confidential, no-obligation consultation.

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.”

According to investment fraud lawyers, it is not uncommon for investors to feel safe when they have an established relationship with a broker or adviser, but many fraudsters will deliberately use this trust in order to commit fraud. The SEC’s complaint states that some of the defrauded customers had been loyal customers of Blankenship for two decades. Nevertheless, he began defrauding these customers since at least 2002. The SEC stated that, “most of the investors lied to by Blankenship were brokerage customers of his, first at Syndicated Capital Inc., a registered broker-dealer based in Santa Monica, California and then at Vanderbilt Securities LLC, a registered broker-dealer based in Melville, New York.”

Blankenship was registered with Syndicated Capital from March 2002 until May 2006. Following that period he was registered with Vanderbilt Securities from May 2006 until November 2011. Securities fraud attorneys say that at the time Blankenship was registered with these firms, the firms were responsible for properly supervising Blankenship’s activities and, as a result, these firms could be held liable for investor losses.

If you suffered significant losses as a result of your investments with Stephen B. Blankenship, you may be able to recover your losses through securities 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.

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.

“Selling away” occurs when a broker who is affiliated with FINRA conducts business outside his registered firm, according to securities fraud attorneys. If the firm does not have adequate supervisory procedures in place, the firm may be held liable for the broker’s actions when “selling away.”

If you suffered significant losses as a result of your Inofin investment, through the recommendation of Keough or another FINRA registered broker-dealer, 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.

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.”

Bennett opted not to name the firms involved in the upcoming enforcement cases. While leveraged and inverse ETFs have been investigated for years by FINRA and the SEC, there has been little enforcement action in the past. A Massachusetts securities regulator sued RBC Capital Markets LLC for selling leveraged ETFs to investors who did not properly understand them in July 2011. In addition, FINRA barred a former Morgan Keegan & Co. broker in March for making inappropriate and excessive trades in leveraged and inverse ETFs on behalf of clients.

Securities fraud attorneys say FINRA is also looking into the marketing and selling practices of firms who sell exchange-traded notes as a result of the significant loss of value of the VelocityShares Daily 2x Short-Term ETN, which was managed by Credit Suisse.

If you have suffered losses as a result of your investments in ETFs, you may have a valid securities 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.

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.

While Goldman did not admit or deny the charges, it consented to the findings of FINRA and the SEC. Furthermore, the firm admitted to certain facts related to a previous settlement with the State of Massachusetts.

If you believe you have been the victim of fraud and would like to discuss your options, contact a securities fraud attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

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.

Needless to say, between the recent settlement, the subpoena regarding two of its CLOs, and numerous potential securities arbitration claims related to its CDOs, Bank of America is not off to a good start in 2012. If suspicions about the Bank of America CLOs turn out to be correct, investors who suffered losses as a result may have a valid securities arbitration claim. Investors are advised to stay informed on this issue as it holds potential for loss recovery.