Leveraged ETFs

In addition to the inherent risks of such investments, some investors’ portfolios may be over-concentrated in oil and gas stocks or ETFs. Some of these ETFs may be leveraged or non-traditional ETFs. These types of funds will tend to rise or fall in value even more rapidly than the price of oil and gas, due to internal leverage, or the borrowing of money by the funds to increase their exposure energy prices.

Some “leveraged ETF” funds of this nature are listed below:

AXEN – iShares MSCI ACWI ex US Energy Sector Index ETF

CHIE – Global X China Energy ETF

DBE – PowerShares DB Energy ETF

EMLP – First Trust North American Energy Infrastructure ETF

ENFR – Alerian Energy Infrastructure ETF

ENY – Claymore/SWM Canadian Energy Income ETF

ERX – Direxion Daily Energy Bull 3X Shares ETF

ERY – Direxion Daily Energy Bear 3X Shares ETF

FILL – iShares MSCI Global Energy Producers Fund

FXN – First Trust Energy AlphaDEX ETF

ICLN – iShares S&P Global Clean Energy Index ETF

IPW – SPDR S&P International Energy Sector ETF

IXC – iShares S&P Global Energy Sector ETF

IYE – iShares Dow Jones US Energy Sector ETF

JJE – iPath DJ-UBS Energy Total Return Sub-Index ETN

OGEM – EGShares Energy GEMS ETF

ONG – iPath Pure Beta Energy ETN

PSCE – PowerShares S&P SmallCap Energy Portfolio

PUW – PowerShares WilderHill Progressive Energy ETF

PXE – PowerShares Dynamic Energy Exploration & Prod ETF

PXI – PowerShares Dynamic Energy ETF

RGRE – RBS Rogers Enhanced Energy ETN

RJN – ELEMENTS Rogers International Commodity Energy ETN

RYE – Rydex S&P Equal Weight Energy ETF

UBN – UBS E-TRACS CMCI Energy Total Return ETN

VDE – Vanguard Energy ETF

XLE – Energy Select Sector SPDR

Natural Gas ETFs

Even funds that are not internally leveraged may have suffered significant losses due to their concentrated exposure to the price of natural gas. Some funds concentrated in investments linked to the value of natural gas are listed below:

DCNG – iPath Seasonal Natural Gas ETN

DDG – The Short Oil and Gas ProShares ETF

FCG – First Trust ISE-Revere Natural Gas ETF

BOIL – ProShares Ultra DJ-UBS Natural Gas ETF

KOLD – UltraShort DJ-UBS Natural Gas ETF

FRAK – Market Vectors Unconventional Oil & Gas ETF

GASL – Direxion Daily Natural Gas Related Bull 3X Shares ETF

GASX – Direxion Daily Natural Gas Related Bear 3X Shares ETF

GASZ – ETRACS Natural Gas Futures Contango ETN

GAZ – iPath DJ AIG Natural Gas TR Sub-Index ETN

IGAS – Global Natural Gas Small Cap Equity ETF

MLPG – UBS E-TRACS Alerian Natural Gas MLP Index ETN

NAGS – Teucrium Natural Gas Fund

UNG – United States Natural Gas ETF

Crude Oil ETF’s

Funds that are not internally leveraged may also have suffered significant losses due to their concentrated exposure to the price of crude oil. Some funds concentrated in investments linked to the value of crude oil are listed below:

BARL – Morgan Stanley S&P 500 Crude Oil Linked ETN

BNO – United States Brent Oil Fund

DBO – PowerShares DB Oil ETF

DNO – United States Short Oil Fund ETF

DTO – PowerShares DB Crude Oil Double Short ETN

DUG – UltraShort Oil & Gas ProShares ETF

IOIL – Global Crude Oil Small Cap Equity ETF

FRAK – Market Vectors Unconventional Oil & Gas ETF

OIH – Market Vectors Oil Services ETF

OIL – Goldman Sachs Crude Oil Total Return ETN

OILZ – ETRACS Oil Futures Contango ETN

OLEM – iPath Pure Beta Crude Oil ETN

OLO – PowerShares DB Crude Oil Long ETN

SCO – ProShares UltraShort DJ-AIG Crude Oil ETF

SZO – PowerShares DB Crude Oil Short ETN

USO – United States Oil Fund ETF

USL – United States 12 Month Oil Fund ETF

UHN – United States Heating Oil Fund ETF

UCO – ProShares Ultra DJ-AIG Crude Oil ETF

DDG – The Short Oil and Gas ProShares ETF

CRUD – Teucrium WTI Crude Oil Fund

WCAT – Jefferies TR/J CRB Wildcatters Expl& Prod Equity ETF

FOL – FactorShares 2X Oil Bull/S&P500 Bear ETF

SNDS – Sustainable North American Oil Sands ETF

Brokers who sell oil and gas investments have an obligation to make sure that the investment is suitable for the investor and to disclose all the risks associated with the product. If you suffered significant losses are a result of possible unsuitable recommendations, 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.

Prior to starting with Merrill Lynch in 2009, Zeng worked for UBS Financial Services and before that for Morgan Stanley.

If you suffered significant losses as a result of doing business with David Zeng or received an unsuitable recommendation in any of the mentioned investment categories from another 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 stock fraud lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

According to stock 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. Churning, on the other hand, is a form of broker misconduct in which the broker performs excessive trading to generate personal profit.

In addition, a firm has an obligation to properly supervise brokers and financial advisors while they are registered with the firm. If it fails in this duty, securities fraud attorneys say it may be held liable for customer losses. One Statement of Claim has already been filed with the Financial Industry Regulatory Authority against the firm, alleging that Douglas Guarino, Lawrence Lee and Robert E. Lee had churned a client’s account. The claim is seeking damages for excessive trading, churning, fraud and unsuitable recommendations.

Reportedly, FINRA recently barred Robert E. Lee from the securities industry for “providing inaccurate written information to a customer regarding the customer’s account and investments” and was discharged from a different employer after allegations regarding customer account handling. He has at least five judgments or liens, two internal reviews and seven customer complaints. Douglas Guarino has had ten disclosed complaints from customers.

If you have done business with Douglas Guarino, Lawrence Lee or Robert E. Lee and you believe you received unsuitable recommendations or that your account was churned, 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 Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

Reportedly, in early 2012, one of LaRue’s clients made a complaint that LaRue had executed a series of unauthorized trades on her account prior to his departure. As a result of the complaint, the Arkansas Securities Department reportedly discovered similar problems in other customer accounts, as well as other violations.

“The unauthorized trading was occurring in margin accounts,” says Scott Freydl of the ASD. “In looking at this, we saw there were leveraged and inverse exchange traded funds. That’s when the issue of suitability came up.”

According to the allegations against him, LaRue made unauthorized trades in investments meant to be held for just one day; instead, he held them for days, weeks or months in client accounts. According to the findings, he bought and sold ETFs — short-term, speculative investment s— for one client account that stated “long-term growth with greater risk” as the listed investment objective.

According to securities arbitration lawyers, FINRA and the ASD sanctioned LaRue in October. He was fined $10,000 by each and his securities trading privileges were suspended. The ASD suspension ended on February 21, 2014 and the FINRA suspension ends on March 3. According to ASD findings, Stephens did not have a written compliance policy addressing inverse or leveraged ETF transactions until August 2009. Months later, the firm’s internal computer system could not track the sale of these products to enforce the new written policy. Stephens was fined $25,000 and paid $475,000 to settle a $1.9 million claim by one of LaRue’s clients.

Reportedly, unauthorized trading and the unsuitable sale of inverse and leveraged ETFs increased following the 2008 economic downturn. As a result, investment fraud lawyers have filed numerous arbitration claims on behalf of investors who suffered significant losses in inverse and leveraged ETFs. “We saw an explosion of non-traditional investments,” notes Heath Abshure, ASD Commissioner and last year’s president of the North American Securities Administrator Association. “Instead of sophisticated investors, we started seeing Ma and Pa buy. It’s common to push non-traditional investments during times of market fears.”

LaRue worked for Stephens from October 1998 until August 2011. From September 2011 until his regulatory suspension, LaRue worked for Morgan Keegan & Co. in the Conway offices, and Raymond James & Associates following its acquisition.

If you suffered significant losses as a result of unauthorized and/or unsuitable trades in exchange-traded funds, you may be able to recover your losses through securities arbitration. To find out more about their legal rights and options, contact a stock fraud lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyes.net for a no-cost, confidential consultation.

Lawrence is also the defendant in two lawsuits filed in November. According to the allegations in these lawsuits, Lawrence failed to repay $1 million in loans made by private individuals. Reportedly, Lawrence stated in November 2013 that he would turn himself over to regulators “regarding allegations of illegal securities trading practices.”

According to FINRA reports, Lawrence has been accused of causing $140,000 in customer losses because of inappropriate trades during the time he worked with Southwest Securities and $71,000 in customer losses because of unauthorized trading when he was with Oppenheimer.

Under FINRA rules, 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. Furthermore, firms have an obligation to properly supervise brokers’ activities while they are registered with the firm. According to securities fraud attorneys, Lawrence reportedly worked for Southwest Securities since August 2011. Prior to that he reportedly worked for Oppenheimer until he resigned, following these allegations, in July 2011.

If you suffered significant losses because of unsuitable or unauthorized trades executed by Wade James Lawrence, you may be able to recover your losses through securities arbitration. To find out more about their legal rights and options, contact a stock fraud lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

According to stock fraud lawyers, principal transactions usually involve an investment adviser who uses affiliate brokerage firms to act on behalf of its account. However, conflicts of interest frequently arise between adviser and client. Therefore, securities fraud attorneys say that advisers must disclose any monetary interest or conflicted role in written form when advising the client and obtaining permission.

Parallax Investments LLC, Tri-Star Advisors and three executives — John P. Bott II, Jon C. Vaughan and William T. Payne — all based in Houston, Texas, face securities charges regarding the unauthorized transactions. According to the SEC’s orders of administrative proceedings, Bott made at least 2,000 principal transactions without disclosing or receiving permission from clients from 2009 to 2011. Furthermore, for each transaction, the broker-dealer affiliate bought mortgage-backed bonds with its inventory account and placed them in the client accounts. Bott gained almost half the $1.9 million in sales credits the firm received on the transactions. Vaughan and Payne executed similar trades and received similar benefits.

According to Marshall S. Sprung, the SEC Enforcement Division’s Asset Management Unit co-chief, clients were prevented by the firms from knowing that “running the trades through an affiliated account” could benefit their advisers.

If your broker or adviser executed principal transactions without disclosing their actions or obtaining your permission, you may be able to recover your losses through Financial Industry Regulatory Authority securities arbitration. 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 or newcases@investorlawyers.net for a no-cost, confidential consultation.

Reportedly, Margulies was allowed to improperly sell unregistered stock to investors between February 2005 and October 2007. Securities arbitration lawyers say he reportedly sold $8.4 million worth of unregistered stock. According to FINRA, “Scottrade failed to conduct an independent inquiry to determine whether the shares deposited were freely tradable.”

According to investment fraud lawyers, Margulies was convicted in 2011 of stealing more than $20 million from investors and looting over $90 million in illegally-issued securities by the Manhattan district attorney. He reportedly used more than $7 million of that money for luxury items such as jewelry for his wife, a vacation club membership, expensive homes and travel on a private jet.

Margulies was sentenced to 7 to 21 years in prison. However, firms have a responsibility to properly supervise and monitor customer accounts for fraud and theft. If they fail to do so, they may be held liable for customer losses. Investors should carefully review their account statements for unauthorized transactions and other signs of fraud and theft.

WFG Investments Inc. reportedly settled a similar case in which Margulies was allowed to sell almost $18 million in restricted stock. In that case, WFG was ordered to pay a fine of $200,000 to the Financial Industry Regulatory Authority.

Investors who suffered significant losses because of a firm’s failure to monitor accounts for fraud and/or sale of unregistered securities 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.

According to FINRA’s discretionary rule, “No member or registered representative shall exercise any discretionary power in a customer’s account unless such customer has given prior written authorization to a stated individual or individuals and the account has been accepted by the member, as evidenced in writing by the member or the partner, officer or manager, duly designated by the member, in accordance with Rule 3010.” However, according to securities arbitration lawyers, this rule doesn’t stop all brokers.

As an example, James Harman McNeill, a Morgan Stanley broker, recently was cited for unsolicited trades and discretion. Allegedly, McNeill violated FINRA Rule 2010 in November 2011 when he exercised discretionary power in Morgan Stanley customer accounts without receiving written authorization prior to doing so. Furthermore, later that month McNeill allegedly marked non-traditional Exchange Traded Fund purchase orders as “unsolicited” even though they were solicited, according to the allegations listed in the Letter of Acceptance, Wavier and Consent that was submitted in March of this year. The Financial Industry Regulatory Authority imposed a 9-month suspension and a $15,000 fine upon McNeill. According to investment fraud lawyers, mis-marked tickets can raise issues regarding inaccurate books and determining if a broker made an unsuitable recommendation.

According to a recent article in Forbes, “not every example of unauthorized trading or mis-marked tickets can be ascribed to time pressure and fatigue. Frequently, bad folks are simply up to no good. Similarly, some folks just won’t listen to reason and no matter how often you warn certain registered persons to avoid shortcuts and go by the book, they figure it’s their lucky day and who’s gonna know and who’s gonna find out — and that’s exactly when bad goes to worse.”

If you believe your stockbroker or investment advisor executed trades on your non-discretionary account without your permission, 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.

FINRA also alleged that “in connection with the private securities transaction described above, Spaeth provided a webinar to his clients regarding foreign exchange currency trading software. The webinar failed to provide a sound basis for evaluating the products and services being offered, failed to disclose the risks of the software and strategy being promoted, was exaggerated and misleading, and contained performance forecasts, all in violation of NASD Rule 2210 and FINRA Rule 2010.”

Securities arbitration lawyers say that according to FINRA rules, BrokersXpress LLC was obligated to adequately supervise Spaeth from July 2009 through December 2010, the entire time he was registered with the FINRA-registered firm. Spaeth’s alleged misconduct occurred during the time he was registered with the firm and, as a result, stock fraud lawyers say that BrokersXpress may be held liable for customer losses resulting from Spaeth’s alleged misconduct.

If you suffered significant losses as a result of your investment with Tracy Morgan Spaeth and his recommendation of ProfitStars Int’l Corp. limited partnership interests, 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.

According to FINRA’s findings, in 2012, Hudson Valley, through Gillis, improperly day traded stock worth millions using the firm’s Average Price Account. Following the improper trades, Gillis manipulated the stocks’ share prices and withdrew his day trading proceeds using accounts under his control. Following significant losses caused by this fraudulent trading, Gillis made unauthorized trades in customer accounts in order to cover the losses. Thousands of shares in securities were purchased by Gillis and then allocated to customers at excessive markups from 177 percent to 280 percent. In addition, he paid for an unauthorized purchase of stock by converting customer funds. One customer suffered losses of around $400,000 because of Gillis’ fraudulent activity.

When two customers became aware of unauthorized trading in their accounts, they confronted Gillis, who attempted to hide his misconduct by lying to them. He later lied during sworn testimony to FINRA staff. Investment fraud lawyers stress to investors the importance of diligently monitoring their accounts and statements for fraudulent activity. If investors suspect unauthorized trading or any other type of securities fraud has occurred in their accounts, they should contact a securities fraud attorney immediately.

If, after reviewing your account statements, you believe your representative broker or firm has committed fraud through unauthorized trading, you may be able to recover your losses through securities arbitration. 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.

TNP 12 Percent Notes were designed to raise capital for the tenant-in-common, or TIC, real estate operations of Thompson National Properties. A Securities and Exchange Commission filing states that the program, in 2008 and 2009, raised $21.5 million from 418 investors. The filing also states that the investment required a $50,000 minimum investment, and agreements to sell the notes were held by 22 independent broker-dealers. Reportedly, a recent announcement informed investors that the TNP 12 Percent Notes Program LLC would cease interest payments, but that it intends to restart payments in 2013.

Since its 2008 launch, TNP has launched 16 investment programs in addition to the TNP 12 Percent Notes. The largest of these investments was TNP Strategic Retail Trust, a non-traded real estate investment trust (REIT). Reportedly, this REIT has acquired necessity-anchored and grocery retail shopping centers. Its investments are valued at $200 million and the REIT raised nearly $91 million from investors. For more on this REIT, see the blog post “TNP Strategic Retail Trust Investors Could Recover Losses.”

Securities arbitration lawyers are investigating the possibility that brokerage firms may be held liable for the recommendation of this and other TNP investments. Financial Industry Regulatory Authority rules have established that brokers and 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. Furthermore, brokerage firms must, before approving an investment’s sale to a customer, conduct a reasonable investigation of the securities and issuer.

According to the SEC filing, brokers earned a 7 percent commission on the sale of the TNP 12 Percent Notes. This commission is much higher than on traditional investments like mutual funds and stocks.

If you invested in Thompson National Properties 12 Percent Notes and suffered significant losses as a result, you may have a 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.

According to investment fraud lawyers, many Fidelity investors have learned that their Facebook stock orders were not executed at previously expected prices. In addition, some Fidelity investors decided to cancel their Facebook stock orders prior to the time it began trading, on May 18 at 11:30 am, but the stock was allegedly assigned to their accounts anyway. Many investors were confronted with margin calls that were unexpected because of Fidelity’s failure to honor the canceled orders. Securities fraud attorneys say this exacerbated the situation.

In a related case, Facebook Inc., Morgan Stanley and other banks are being sued by Facebook’s shareholders. The shareholders claimed Facebook’s weakened growth forecasts were hidden by the defendants prior to its $16 billion IPO. According to the complaint filed in the U.S. District Court in Manhattan, changes in the business forecast during the IPO process were only “selectively disclosed by defendants to certain preferred investors.” The complaint alleges that “the value of Facebook common stock has declined substantially and plaintiffs and the class have sustained damages as a result.” A similar lawsuit was filed by another investor in a California state court. In the first three days of trading, Facebook shares declined 18.4 percent, reducing the stock’s value by more than $2.9 billion.

If you sustained losses as a result of Fidelity’s alleged execution errors of Facebook stock, 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.

It comes as no surprise that some psychopathic traits are magnets for stock broker fraud. And the relatively high number of psychopaths on Wall Street may explain why securities fraud runs rampant.

DeCovny’s story points to the research of several psychologists. It’s important to note that the term “psychopath” is not synonymous with rampaging murderers and should not instantly conjure up images of Norman Bates, she says. Rather, according to DeConvy, clinical psychopaths are charming, gregarious and bright. But they have no trouble lying and do so often. Furthermore, they may not feel empathy for others. She states that psychopaths are also more likely to take risks because they either don’t understand or don’t care about the consequences.

Sound familiar?

The number of psychopaths in the general population is estimated to be around 1 percent, so why are there so many on Wall Street? One reason is that some psychopathic traits are also the qualities that amount to success in careers such as politician and stockbroker. In addition, the high-pressure, fast-paced Wall Street environment puts tremendous strain on the mental health of some employees. Research has shown that stockbrokers suffer from clinical depression three times more often than the general population and that trading stocks can, in stockbrokers with a compulsive gambling problem, trigger pathological responses.

So what does this mean for investors? Don’t be fooled into believing your investments are safe with smart, charismatic, successful stockbrokers. Despite previous success, the characteristics of a clinical psychopath can result in excessive risks that can result in unsuitable recommendations and losses, the temptation of “easy money” that can be gained through stock broker fraud and a lack of guilt that would prevent fraud in psychologically healthy brokers. Most investors will not be able to detect if their broker has committed fraud based on the broker’s actions so it is important to monitor investments and account statements to ensure that fraud hasn’t occurred.

If you believe you have been a victim of stock broker fraud, contact an investment attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

1. Unauthorized Trading: Unauthorized trading occurs when a broker makes trades without permission. This is surprisingly common and brokers will often defend their actions by saying that the investor either agreed to the trade or ratified it by raising no objection when they received a confirmation.
2. Unsuitable Investments: Surprisingly, it is common for brokers to be unable to accurately measure risk. As a result, investors may have a portfolio that is far more risky than is appropriate. Brokers must, by law, take into account the risk tolerance and investment objectives of each client and make suitable recommendations based on those criteria. Unsuitable investments include investments that carry a risk that is not in keeping with the investor’s risk tolerance, as well as inadequate diversification and improper asset allocation. Churning, which generates excessive commissions through excessive trading, is also a form of unsuitable investments. Investors who suspect the trading on their account is excessive will most likely have to consult an investment attorney for an analysis of their portfolio.
3. Misrepresentations and Omissions: If a broker fails to disclose the inherent risk of an investment or trading strategy, he or she has made misrepresentations and/or omissions. If it can be proven that the investors would have made different investment choices if the misrepresentations and/or omissions hadn’t occurred, they become material and the investor may have a valid securities arbitration claim.
4. Other Claims: Other forms of broker misconduct that could mean a valid claim for investors include front running, forgery, selling away, order failure and failure to supervise.

If you believe you have been a victim of any of these types of stock broker fraud, contact an investment attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

McKee convinced an LPL client to invest $400,000. This investment took place in April 2007 and was put into a real estate venture. However, according to the FINRA complaint, McKee failed to notify or receive approval from LPL for the venture. Following a heart attack, which subjected the investor to significant medical expenses, she contacted McKee to have her money returned. McKee received two checks for $200,000 in February 2008 but failed to return the money to the investor. Instead, he told the client the funds remained invested and then used them for his own use. The money has not yet been returned to the client.

According to the police statement on the matter, McKee “committed aggravated theft by deception and fraud with respect to securities or securities business” from February 2008 to the present. According to Oregon officials, McKee sold unregistered securities, conducted unauthorized liquidation of investment account monies, concealed the liquidation and made an unauthorized deposit of said funds into his personal bank account.

According to the FINRA complaint, McKee used material misrepresentations and omissions to persuade investors to make investments in multiple undisclosed real estate ventures in which he had a direct or indirect financial interest. He is also accused of lying about how the invested funds would be used, improperly using customer funds for personal benefit and making unsuitable recommendations.

From November 2002 until September 2008, McKee was affiliated with LPL. Immediately following and until November 2010, he was associated with Berthel Fisher. At that point he joined Morgan Stanley until he was discharged in October.

If you believe you have been the victim of broker misconduct similar to McKee’s, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact an investment attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

FINRA’s Vice President for Investor Education, Gerri Walsh, in a FINRA press release about the Investor Alert stated, “Investors whose portfolios have taken a hit might not be keen to open their account statements, but investors should review their statements carefully. Investors should also review trade confirmations as soon as they receive them because a single keystroke can make the difference between 100 and 1,000 shares.”

The Investor Alert uses plain language to detail to investors their account statements’ key elements and “red flags” that could indicate to investors that misconduct or mistakes may have occurred. Investors should also look for their investment objective, which is listed on many account statements. This investment objective will indicate the investor’s strategy and will contain words such as “conservative” or “growth.” This description – and the account activity – should accurately reflect the goals of the investor.

Furthermore, FINRA’s Investor Alert explains the difference between quarterly account statements and consolidated account statements, as well as the importance of reviewing quarterly account statements, even if consolidated account statements are provided. The Alert also discusses trade confirmations and how they disclose whether the firm acted as a principal or the broker acted as the investor’s agent, and what this means to the investor.

If, while inspecting statements, investors find abnormalities that indicate securities fraud may have occurred, they should contact an investment attorney immediately to find out more about their legal rights and options. If you believe you have suffered losses as a result of securities fraud, contact an investment attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

In some cases, firms failed to verify the instructions via telephone but released the funds anyway. This violation in procedure may entitle defrauded investors to a recovery of losses through securities arbitration. According to the SEC, four brokerage firms have been charged for allowing traders to trade in the U.S. securities market, despite the fact that they were unregistered. In the same case, Igors Nagaicevs, a trader, was charged with making $874,896 through unauthorized purchases and sales. He also broke into accounts 159 times from 2009 to August 2010. According to the SEC, he cost investors possibly over $2 million.

“Nagaicevs engaged in a brazen and systematic securities fraud, repeatedly raiding brokerage accounts and causing massive damages to innocent investors,” says the director of the SEC’s San Francisco regional office, Marc J. Fagel.

According to the FBI’s figures, this type of financial fraud totals around $23 million, with actual victim losses amounting to about $6 million.

If investors notice any signs that their account has been compromised, such as bounced email messages, unexplained password changes, reports of spam, or unauthorized transactions on their investment accounts, they should contact an investment attorney immediately. If you believe you have been the victim of fraud, find out more about your legal rights and options by contacting an investment attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

UITs offer sales charge discounts on purchases that exceed certain thresholds, often called “breakpoints,” or involve redemption or termination proceeds from another UIT during the initial offering period. Wells Fargo’s insufficient monitoring of the reverse convertible sales caused them to fail to provide breakpoint and rollover and exchange discounts in the sales of UITs to eligible customers from January 2006 to July 2008.

The registered representative, who is no longer with Wells Fargo, Alfred Chi Chen, made unauthorized trades in multiple customer accounts. In some cases, the customer accounts belonged to deceased individuals. FINRA filed a complaint against Chen, in addition to its decision to fine Wells Fargo. According to FINRA’s investigation, Chen’s broker misconduct extended to 21 clients, most of which had limited experience in investments, low risk tolerances and/or were elderly. To these 21 clients, Chen made hundreds of unsuitable recommendations for reverse convertible investments. Repayment of reverse convertibles, which are interest-bearing notes, is tied to the performance of a stock, basket of stocks, or another underlying asset. These investments were unsuitable for many of Chen’s low-risk profile clients because they risk sustaining a loss if the value of the underlying asset falls below a certain level at maturity or during the term of the reverse convertible, according to FINRA.

Possible remedies include Chen’s suspension or bar from the securities industry, censure, disgorgement, fine and restitution.

If your broker has made unsuitable recommendations or unauthorized trades and you have suffered losses as a result, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact an investment attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

The following suggestions will help you prevent unauthorized trading and determine if you have been a victim of unauthorized trading:

1. Take notes! This can be especially helpful in determining if you have been a victim of the second method of unauthorized trading described above. It is important to keep careful notes of all conversations between you and your broker. Notes should include dates, times, what was discussed and what your instructions were to your broker. These notes can be compared with monthly statements to determine if your broker conducted trades that were either unapproved or conducted before your approval was given. Remember, unauthorized trading is still fraud, even if you later consented to the trade, and should not go unchecked.

2. Check statements! You should always read your account statements, confirmations and anything else related to your investments in a timely fashion. Do not put off reviewing your statements and be sure to keep them for future reference. In the event that you need to file a securities arbitration claim, it is important that you have both your statements and your notes for your stock broker fraud lawyer to review.

3. Be clear! Always be abundantly clear of your wishes in communications to your stock broker. Repeat your instructions and be firm about your decisions. If you do not want your broker to execute a trade, say so clearly, distinctly and at least twice. Then record your decision in your notes as well as the number of times you expressed your instructions to your broker. Doing so will ensure that there is a clear understanding between you and your broker about the transaction being discussed, as well as help to prevent confusion in the event that you file a securities arbitration claim.

If you believe you have been the victim of unauthorized trading, contact an investment attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.