Retirement

Published on: August 3, 2012

FINRA Alert: Exchange-traded Notes

Stock fraud lawyers encourage investors to read the Financial Industry Regulatory Authority (FINRA)’s new Investor Alert, which was announced on July 10. This alert, titled “Exchange-traded Notes — Avoid Unpleasant Surprises,” is meant to help investors become more informed of the risks and features of exchange-traded notes, or ETNs. This investor alert can help investors make smart decisions about investing in ETNs. And if you’ve already invested in an ETN, it can also help you determine if you were unsuitably recommended exchange-traded notes by your broker or adviser.

FINRA Alert: Exchange-traded Notes

ETNs are, according to the FINRA alert, a type of debt security that trades on exchanges and promises a return that is linked to a market index or some other benchmark. Unlike exchange-traded funds (ETFs), however, exchange-traded notes don’t replicate or approximate the performance of that index through the purchase or holding of assets. According to stock fraud lawyers, brokers have been known to sell ETFs and ETNs as conservative ways to track a sector of the market or the market as a whole. However, complicated trading strategies are necessary to accomplish this, and using these investments to track a sector of the market, even if valid, may or may not be a conservative trading strategy. FINRA wants investors to be aware of the fact that an ETN’s market price can deviate from its indicative value, and in some cases this deviation is significant.

FINRA’s Vice President for Investor Education, Gerri Wals, stated that “ETNs are complex products and can carry a raft of risks. Investors considering ETNs should only invest if they are confident the ETN can help them meet their investment objectives and they full understand and are comfortable with the risks.”

Published on: August 2, 2012

Investors Beware: Structured Products Not Suitable for All Investors

by InvestorLawyers

Securities fraud attorneys are currently investigating potential claims on behalf of investors who suffered losses in a variety of structured product investments. Wall Street has marketed structured notes and other products as safe and secure, but what does that really mean? One thing is certain, safe and secure does not mean risk-free. According to a study recently conducted by the nonpartisan policy center Demos and The Nation Institute, $113 billion has been lost by investors as a result of purchasing these “safe” instruments.

Investors Beware: Structured Products Not Suitable for All Investors

Furthermore, the study concluded that over $52 billion in structured notes were sold in 2010 alone. Investment fraud lawyers are concerned about what this increase in structured product sales means. Structured products have previously been sold only to sophisticated institutional investors. However, recent years have seen a repackaging of these products as a principal protection tool that is then sold to retail investors, who are often senior citizens. The study also stated that these products are among the most popular for pitching to income-oriented investors.

Structured products combine a zero-coupon bond and an option with a payoff that is linked to an index, benchmark, basket of benchmarks or an underlying asset. The notes can provide upside potential and reasonable returns when they pay off based on the linked index’s performance. Securities fraud attorneys say that this method of payoff can be very attractive given today’s market, but structured products can be extremely complex. A Financial Industry Regulatory Authority (FINRA) and Securities and Exchange Commission alert warned investors that these products often come with low guarantees, confusing terms and, in some cases, can keep money tied up in the investment for up to a decade.

Published on: July 26, 2012

Dividend Capital Total Realty Trust Non-traded REIT Investors Could Recover Losses

by InvestorLawyers

Stock fraud lawyers are currently investigating claims on behalf of investors who suffered losses as a result of their investment in Dividend Capital Total Realty Trust Inc. Dividend Capital Total Realty Trust was formed on April 11, 2005 and is a Maryland corporation, according to its filing with the Securities and Exchange Commission. Dividend Capital is located in Denver, Colorado and was designed to invest in a diverse portfolio of real estate-related and real property investments. The targeted investments of the company include direct investments that consist of high-quality retail, industrial, multi-family and other properties. The properties are primarily located in North America. The company also targets securities investments that include mortgage loans which are secured by income-producing real estate, and those issued by other real estate companies.

Dividend Capital Total Realty Trust Non-traded REIT Investors Could Recover Losses

Securities arbitration lawyers believe that secondary market offers indicate that Dividend Capital Total Realty Trust’s value has appeared to have substantially declined.

Non-traded REIT investments like the Dividend Capital Total Realty Trust typically offer commissions between 7-10 percent, which is significantly higher than traditional investments like mutual funds and stocks. In some cases, the commission generated by these investments can be as high as 15 percent. This higher commission can explain why brokerage firms are motivated to recommend these investments despite their possible unsuitability.

Published on: July 23, 2012

News: David Lerner Associates to Face FINRA Panel in September

by InvestorLawyers

David Lerner Associates is in the spotlight once again as it is threatened by charges alleging that the company and its principle, David Lerner, deceived customers — many of whom were elderly, unsophisticated investors. David Lerner, 75, is surrounded by controversy regarding 20 years of real estate investment sales. As a result of his alleged misdeeds, an abundance of complaints, regulatory sanctions and litigation have been left in his wake. Lerner has used seminars and radio to sell shares of a Virginia-based Real Estate Investment Trust (REIT) that, in turn, invests in extended-stay hotels. Stock fraud lawyers and industry regulators say that David Lerner Associates has sold shares of Apple REIT amounting to almost $7 billion, in 120,000 customer accounts, since 1992. Those sales have generated a staggering $600 million in fees.

News: David Lerner Associates to Face FINRA Panel in September

Furthermore, according to FINRA’s complaint, David Lerner Associates allegedly earns 10 percent from the Apple REIT offerings, and that these fees account for 60-70 percent of the firm’s business since 1996. The complaint also alleges that the firm is “targeting unsophisticated and elderly customers” while making false claims and omissions about market values, investment returns, prospects and performance of the REIT.

Investment fraud lawyers say that sales strategies employed by the 350 or more brokers employed by Lerner include mailings, cold calls and seminars at hotels, restaurants, country clubs and senior centers. Lerner is also known in New York and Florida for his spots on an AM radio station.

Published on: July 13, 2012

Elder Financial Abuse Targeted by CFPB

by InvestorLawyers

On June 15, coinciding with World Elder Abuse Awareness Day, the Consumer Financial Protection Bureau (CFPB) announced that it would be launching a public inquiry regarding the financial exploitation of elder Americans. The CFPB is a new agency that will be policing consumer financial products, and investment fraud lawyers applaud its choice to focus its attention on elder financial abuse.

Elder Financial Abuse Targeted by CFPB

It is clear to securities fraud attorneys, who regularly file claims on behalf of elderly individuals, that financial abuse against the elderly is a common problem. This sentiment was reflected in the June 15 announcement by the CFPB.

“Older Americans have lost billions of dollars to the silent crime of financial exploitation,” says Richard Cordray, CFPB director. “Our older adult population is growing every year, which makes it even more critical that we study this issue. Today, the Bureau will launch a public inquiry to learn more about financial fraud of older Americans and the credentials of financial advisors who counsel them.”

Published on: July 11, 2012

Victims of Bruce Harada Fraud Could Recover Losses

by InvestorLawyers

Stock fraud lawyers are currently investigating claims on behalf of investors who suffered losses as a result of their investment with Bruce Harada, a former financial advisor for ING Financial Partners/ING Financial Advisors LLC. Reportedly, Harada has been charged with one count of money laundering and two counts of securities fraud. According to the accusations, Harada allegedly stole over $2 million from a minimum of 21 victims in Hawaii. At the time of the theft, Harada reportedly managed compensation plans for retired and active employees of ING, and was acting as an independent financial adviser for the firm.

Victims of Bruce Harada Fraud Could Recover Losses

According to securities arbitration lawyers, brokerage firms have an obligation to adequately supervise financial advisors in their employ. They must ensure that agents comply with any applicable securities laws. ING may be liable for losses suffered by investors as a result of Harada’s actions if it can be proven that the firm failed to execute adequate supervision of Harada.

The FINRA Broker Report (CRD) for Bruce Harada states that he was working for ING Financial Partners/ING Financial Advisors LLC from January 2007 until the end of May 2012. Harada worked out of ING’s Honolulu, Hawaii office. Furthermore, the CRD indicates that before working for ING, Harada worked, from March 1999 through December 2006, for Financial Network Investment Corporation. In addition, stock fraud lawyers say Harada is the subject of 9 ongoing customer complaints. ING has terminated his employment for “violation of firm’s policies and procedures regarding the handling of customer funds.”

Published on: July 9, 2012

Desert Capital REIT Investors Could Recover Losses

by InvestorLawyers

Investment fraud lawyers are currently filing claims on behalf of investors who suffered significant losses as a result of their investment in Desert Capital REIT. Recently, a claim was filed on behalf of two individuals. Both of these investors were retirees, ages 81 and 88. The claim, which is seeking $130,000 in damages, was filed with the Financial Industry Regulatory Authority (FINRA).

Desert Capital REIT Investors Could Recover Losses

The claim alleges that the Calton representative who solicited the Desert Capital REIT investment to the claimants was aware that the investors were retired and represented the investment as an income-producing, low-risk investment. Allegedly, the representative stated the REIT had a good reputation of paying dividends and would, therefore, be a good addition to the income-producing portfolio of the claimants. The claimants could not afford an illiquid, high-risk, speculative investment because their only source of income came from their investments and social security.

Securities fraud attorneys have stated that since REITs are, in fact, illiquid, non-traded investments, many REITs are not a suitable investment for all investors. FINRA 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. Furthermore, brokerage firms must, before approving an investment’s sale to a customer, conduct a reasonable investigation of the securities and issuer. The claim states that the Calton representative and the firm itself did not perform the necessary due diligence and misrepresented the risks of Desert Capital REIT.

Published on: July 6, 2012

Investors of Deutsche Bank Structured Products Could Recover Losses

by InvestorLawyers

Stock fraud lawyers are currently investigating potential claims on behalf of customers who suffered losses as a result in their investment in a Deutsche Bank-created structured product or products. In some cases, Financial Industry Regulatory Authority-registered brokerage firms may be held liable for having improperly sold structured products to their clients, such as those created by Deutsche Bank.

Investors of Deutsche Bank Structured Products Could Recover Losses

Typically, structured products are notes or debt instruments created by investment sponsors. These products are linked to assets such as stock, which are linked to another asset or assets. These investments are extremely complex and, as a result, are not appropriate for unsophisticated investors who are not capable of understanding the risks and complexity of the investment.

Because an income component is typically offered with structured products, they are appealing to fixed income individuals, such as retirees. Despite the fact the investment is not suitable for many individuals, they continue to be pushed by brokerage firms because of the high commissions offered in association with their creation and sale. 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. Furthermore, investment fraud lawyers say that brokerage firms must, before approving an investment’s sale to a customer, conduct a reasonable investigation of the securities and issuer.

Published on: July 2, 2012

Investors of Bank of America Structured Products Could Recover Losses

by InvestorLawyers

Securities fraud attorneys are currently investigating potential claims on behalf of customers who suffered losses as a result in their investment in a Bank of America-created structured product or products. In some cases, Financial Industry Regulatory Authority-registered brokerage firms may be held liable for having improperly sold structured products to their clients, such as those created by Bank of America.

Investors of Bank of America Structured Products Could Recover Losses

Typically, structured products are notes or debt instruments created by investment sponsors. These products are linked to assets such as stock, which are linked to another asset or assets. These investments are extremely complex and, as a result, are not appropriate for unsophisticated investors who are not capable of understanding the risks and complexity of the investment.

Because an income component is typically offered with structured products, they are appealing to fixed income individuals, such as retirees. Despite the fact the investment is not suitable for many individuals, they continue to be pushed by brokerage firms because of the high commissions offered in association with their creation and sale. 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. Furthermore, securities arbitration lawyers say that brokerage firms must, before approving an investment’s sale to a customer, conduct a reasonable investigation of the securities and issuer.

Published on: June 28, 2012

Investors Beware Retirement Account Fraud

by InvestorLawyers

Investment fraud lawyers are currently investigating potential claims on behalf of investors who suffered losses as a result of a breach of fiduciary duty related to their retirement accounts.

Investors Beware Retirement Account Fraud

Cofounder and director of Results One Financial LLC, Steven Salutric, was recently ordered to restore $1,211,902.25 to clients who held pension plans with him. The money was allegedly withdrawn from four pension plans between 2005 and 2009. This action violated the Employee Retirement Income Security Act. Allegations against Salutric stated that he misdirected client assets to entities such as a restaurant, a film distribution company, a real estate partnership and the church at which he served as treasurer. Salutric had a personal interest in all these entities, according to stock fraud lawyers.

“It is particularly egregious when those entrusted with protecting workers’ retirement assets jeopardize them by committing illegal acts for personal gain,” Hilda L.Solis, secretary of the U.S. Department of Labor, said.