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Articles Posted in New York

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Securities arbitration attorneys are currently investigating claims on behalf of investors who suffered significant losses in AXA Equitable Life Insurance Company Equi-Vest or Accumulator variable annuity contracts — specifically those invested in the managed funds, AXA Tactical Manager Strategy or ATM-managed funds.

Equi-Vest, Accumulator Variable Annuity Investors Could Recover Losses

Reportedly, the New York State Department of Financial Services (“DFS”) launched an investigation in 2011 concerning alleged omissions on the part of AXA Equitable regarding its applications for approval to alter the Equi-Vest and Accumulator variable annuities.  The change would substitute ATM-managed funds for previous managers.  According to DFS’ allegations, AXA Equitable misled DFS regarding the change’s impact and failed to disclose the underperformance of the ATM funds under the previous managers.  Allegedly, these actions resulted in a reduced return for investors, especially for those who paid fees to receive guaranteed minimum benefits and those who wanted to be more aggressive in their investment strategy. In order to settle the investigation, AXA Equitable agreed to pay $20 million on March 17, 2014. 

Some AXA Equitable investors may have been misled about the variable annuity contract changes. In addition, certain characteristics of variable annuities, including high penalties for early withdrawal, long surrender periods and low rate of return, make these products unsuitable for many investors. Many brokers are motivated to make unsuitable recommendations because of the large commissions associated with variable annuities.

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Securities attorneys are currently investigating claims on behalf of the customers of Christopher B. Birli and Patrick W. Chapin, who suffered significant losses as a result of misrepresentations and unsuitable recommendations of variable annuities. Reportedly, Birli and Chapin received significant sales commissions for allegedly unsuitable recommendations to their customers.

Customers Could Recover Losses for Unsuitable MetLife Variable Annuity Recommendations

On March 27, a complaint was filed with the Financial Industry Regulatory Authority Office of Hearing Officers against Birli and Chapin regarding the State University of New York retirement program. According to the complaint, Birli and Chapin recommended their customers switch MetLife variable Annuities with new ones held outside the retirement plan in MetLife IRA accounts.

Allegedly, Birli and Chapin circumvented their firm’s general prohibition of direct annuities exchange by recommending to their customers that they surrender their annuities to purchase another product available within the retirement program, wait 90 days, and then sell the second product in order to purchase the MetLife IRA annuity.

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Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses in variable annuities. Variable annuities are insurance products tied to an investment portfolio, which typically consist of mutual funds that hold bonds and stocks. In many cases, brokers receive commissions as high as 8 percent when selling variable annuities, which may motivate them to make recommendations that are unsuitable for investors.

Two MetLife Brokers Accused of Unsuitable Variable Annuity Sales

The Financial Industry Regulatory Authority (FINRA) recently filed a complaint against two MetLife Securities Inc. brokers, Patrick Chapin and Christopher Birli. According to the complaint, Chapin and Birli focused on advising State University of New York employees on their retirement plan. Both were terminated in 2012 and do not work in the securities industry at this time.

According to the complaint, Chapin and Birli allegedly made recommendations to 45 of their customers to unload their plan’s MetLife variable annuities by cashing in their annuities, purchasing another security within the plan to be held for 90 days, and then selling that security to switch to new variable annuities outside the university plan, held in IRAs. The alleged misconduct took place between 2004 and 2007. According to FINRA, this scheme generated commissions for the brokers amounting to hundreds of thousands of dollars.

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Investment fraud lawyers continue to investigate claims on behalf of individuals who suffered significant losses in Puerto Rican bonds after the value of these investments plummeted in 2013, causing many investors to suffer significant losses. In addition, securities arbitration lawyers are keeping an eye on recent news that indicates investors may be able to pursue their claims in continental Unites States venues, rather than in Puerto Rico, due to the shortage of FINRA arbitrators on the island.

Recent News Regarding Puerto Rican Bonds

A claim was recently filed on behalf of a former client of Luis Fernandez and Angel Canabal against UBS Financial Services Incorporated of Puerto Rico and UBS Financial Services Inc. According to the claim, the retired client invested the majority of his life savings based on the recommendation of Fernandez in UBS proprietary bond funds, which were primarily invested in Puerto Rican debt.  Allegedly, these investments were risky, illiquid and unsuitable for the investor.

The claim also alleges that the risks of the investments were not explained to the client, and that UBS made a recommendation that he borrow more money to be invested in the proprietary funds from a UBS-related company.  The account was later taken over by Canabal, who allegedly told the investor that the recommendations were sound, the account wasn’t invested aggressively, and no changes were required.

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Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of doing business with Surevest Capital Management and employees of the firm.

Alleged Unsuitable Recommendations of Non-Traded REITs by Surevest Others

Allegedly, Surevest invested some of its clients in high-risk portfolios, allocating very little of these accounts into traditionally low-risk investments. These high-risk investments allegedly included equities, non-traded REITs and other private placement securities. Some Surevest clients have raised allegations asserting that the high-risk investment recommendations were unsuitable and implemented regardless of the age, risk tolerance and other considerations of the investors. 

According to securities arbitration 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 as well as those who need easy access to funds. Other private placements and equities also carry significant risks.

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Investment fraud lawyers are currently investigating claims on behalf of the victims of securities fraud perpetuated through schemes such as advanced fee scams. Reportedly, the Securities and Exchange Commission (SEC) has filed charges against Frederick D. Scott, a New York money manager. Scott owns ACI Capital Group, an investment advisory firm. According to the SEC, Scott made false claims regarding the company’s assets under management. He allegedly claimed the assets to be $3.7 million so that he would appear more credible when promoting “too good to be true” investment opportunities.

Allegedly, Scott targeted individual investors and small businesses with multiple financial scams. The SEC claims that he promised high rates of return in order to get money from investors and then stole their money. Reportedly, Scott used investor funds to pay his personal expenses, such as private school tuition for his children, department store purchases, air travel, dental bills and hotels, and his clients never received the promised returns.

According to securities arbitration lawyers, one of Scott’s alleged scams was an advanced fee scheme in which investors were told that the firm would give multi-million-dollar loans after a percentage of the loan amount was advanced to the firm. Reportedly, investors were told they would receive the remaining balance after the loan was made but they never received this sum.

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Investors are disappointed, to say the least, that a federal judge recently dismissed an investor class action lawsuit related to the sale of Apple REITs by David Lerner Associates Inc. However, stock fraud lawyers say that this decision will have absolutely no impact on arbitration cases filed against Lerner with the Financial Industry Regulatory Authority (FINRA).

Title of the Post Goes Here

In May 2011, a complaint was filed against Lerner by FINRA, regarding the firm’s Apple REIT marketing practices. In October 2012, FINRA ordered Lerner to pay $2.3 million for allegedly overcharging clients who had purchased other securities. Lerner was also ordered to pay $12 million to the trust investors. Founder and chief executive, David Lerner, was barred for one year from the securities industry and fined $250,000.

The class action raised allegations that Lerner breached fiduciary duty, was unjustly enriched and negligent in the sale of over $6.8 billion in Apple REITs. Though the class action has been dismissed by a federal judge, Lerner still faces many arbitration claims alleging the unsuitable recommendation of Apple REITs. According to securities arbitration lawyers, the question of misrepresentation is completely different than the question of suitability. Even if an investment firm adequately discloses all the risks of the investment, the investment must still be suitable for each investor receiving the recommendation given their age, investment objectives and risk tolerance. Furthermore, in some cases oral misrepresentations at the time of sale- which were not at issue in the class action- can be a basis for liability in a FINRA arbitration if a stockbroker misrepresented the nature of an investment to a customer.

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An investor recently commenced legal action attempting to recover $400 million lost in Citigroup Alternative Investments LLC’s Corporate Special Opportunities Fund. The investor, David Beach, is suing Citigroup, accusing the bank of misleading investors about debt trading in ProSiebenSat. 1 Media AG, (PSM). ProSiebenSat. 1 is a German firm and one of Europe’s biggest broadcasters.

Investor Sues Citigroup for $400 million Lost in CSO Fund

According to the complaint, which was filed in Manhattan federal court, John Picket, the CSO’s founder, leveraged the assets of the fund in order to purchase debt in the German firm’s offering worth around 558 million Euros, or $730 million. Allegedly, following Pickett’s actions, the CSO fund suffered significant losses. Reportedly, in December 2007, Pickett resigned.

Beach’s investment fraud lawyers stated in the complaint that, “investors were not informed that his departure was the result of his breaches of the fund’s investment restrictions.” Citigroup spokeswoman Danielle Romero-Apsilos declined to comment in relation to the suit.

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Securities arbitration lawyers continue to investigate claims on behalf of investors who suffered significant losses during the 2008 market crash. In many cases, large investment banks allegedly deceived investors as to the risks of complex investments, including mortgage-backed securities, causing devastating losses.

Have Credit Suisse and Wells Fargo Paid their Dues? Many Don’t Think So

Currently, Credit Suisse Securities and affiliates are being sued by the state of New York based on claims that the firm misled investors about the evaluation of residential mortgage-backed securities.

“We need real accountability for the illegal and deceptive conduct in the creation of the housing bubble in order to bring justice for New York’s homeowners and investors,” says Eric Schneiderman, the state’s attorney general.

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Investment fraud lawyers are currently investing claims on behalf of the clients of Mark Hotton. A recent complaint filed by the Financial Industry Regulatory Authority alleges that Hotton stole or rerouted money from his clients — funds that amounted to at least $8.5 million. Hotton, a stockbroker and businessman, was earlier accused of having allegedly defrauded the production team of “Rebecca: The Musical” by fabricating investors. Hotton was later sued by the producers of the musical. In an earlier statement, Preet Bharara, Manhattan U.S. Attorney, alleged that Hotton had “faked lives, faked companies and even staged a fake death, pretending that one imaginary investor had suddenly died of malaria.”

Mark Hotton Allegedly Defrauded Clients; Investors Could Recover Losses

FINRA’s latest charges against Hotton are separate from the charges that he defrauded the producers of the musical. These charges state that since 2006, Hotton allegedly stole at least $5.9 million from clients and caused funds amounting to at least $2.6 million to be rerouted from the Oppenheimer Inc. brokerage accounts of his clients. These rerouted funds were wired to Hotton’s outside business activities, other entities and individuals affiliated with Hotton. Furthermore, securities arbitration lawyers say Hotton reportedly lied when filling out third-party wire request forms, forged letters of authorization signatures and created investments that were completely fictitious.

In 2009, Hotton left Oppenheimer and he was last registered, until May 2012, with Obsidian Financial Group. Hotton faces serious charges in both cases, including 20 years in prison for each count of wire fraud related to the musical and monetary sanctions and/or a bar from the securities industry related to the most recent charges. Clients of Hotton are encouraged to contact an investment fraud lawyer as soon as possible to explore their options for recovering their losses through all possible avenues, including securities arbitration.

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