SEC Category Archives — Page 3 of 13 — Investor Lawyers Blog Published by New York, New York Investor Attorneys

Published on: October 24, 2013

SEC Charges ACI Capital Group Owner with Defrauding Investors

152993229SEC_Charges_ACI_Capital_Group_Owner_with_Defrauding_Investors

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.

Published on: October 22, 2013

Investors Could Recover Losses for Unsuitable Recommendation of Private Placements

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses because of their broker or advisor’s unsuitable recommendation of private placements. In September, a new investor alert was issued by the Financial Industry Regulatory Authority (FINRA) titled “Private Placements — Evaluate the Risks Before Placing Them in Your Portfolio.” Unfortunately, many individuals have already suffered significant losses because they trusted the unsuitable recommendation of their investment adviser.

147292100Investors_Could_Recover_Losses_for_Unsuitable_Recommendation_of_Private_Placements

A private placement, as defined by FINRA, is “an offering of a company’s securities that is not registered with the Securities and Exchange Commission (SEC) and is not offered to the public at large.” According to stock fraud lawyers, private placements are generally only suitable for accredited investors. Accredited investors have a net worth exceeding $1,000,000 and an income of at least $200,000 (individually) or $300,000 (jointly with spouse).

“Investors should understand that many private placement securities are issued by companies that are not required to file financial reports, and investors may have problems finding out how the company is doing,” FINRA officials note. “Given the risks and liquidity issues, investors should carefully assess how private placements fit in with other investments they hold before investing.”

Published on: October 10, 2013

Firm Fined for Allegations of Inadequate Supervision of Concentrated Client Positions in Alternative Investments

by InvestorLawyers

Securities lawyers are currently investigating claims on behalf of investors whose portfolios held by VSR Financial Services or other brokerage firms contained an unsuitable concentration of alternative investments. Reportedly, VSR Financial Services Inc. is being fined $550,000 by the Financial Industry Regulatory Authority (FINRA) over claims that a reasonable supervisory system was not set up, maintained or enforced regarding non-conventional investment sales.

Firm Fined for Allegations of Inadequate Supervision of Concentrated Client Positions in Alternative Investments

Reportedly, stipulations in VSR’s written supervisory procedures allowed only up to 50 percent of the exclusive net worth of their clients could be invested in alternative investments, unless there was a justifiable reason for exceeding these guidelines. In addition, VSR’s owner allegedly set up procedures that provided a discount through certain non-conventional instruments that artificially lowered the amount of the customer’s liquid net worth that was invested in non-conventional instruments.

However, the Securities and Exchange Commission stated in a letter to VSR that it had found that adequate written procedures had not been established for the program and this deficiency had not been corrected two years after VSR was notified by the regulator of the problem. The SEC also stated that reasonable actions were not taken to ensure the written supervisory procedures were implemented or, if they were not implemented, to eliminate the discount program.

Published on: October 3, 2013

UBS Allegedly Mislead CDO Investors, Ordered to Pay $50 Million by SEC

by InvestorLawyers

Investment fraud lawyers are currently investigating claims regarding UBS Securities. UBS Securities has agreed to pay almost $50 million to settle charges that it violated securities laws regarding certain collateralized debt obligation, or “CDO”, investments. The charges apply to the firm’s structuring and marketing of ACA ABS 2007-2 — a CDO, or collateralized debt obligation. Allegedly, UBS failed to disclose the fact that it retained millions in upfront cash while acquiring collateral. The SEC officially charged UBS on August 6, 2013.

dv563009UBS_Allegedly_Mislead_CDO_Investors_Ordered_to_Pay_50_Million_by_SEC

The collateral for the CDO was managed by ACA Management and reportedly was primarily consisted of CDS on subprime RMBS, or residential mortgage-backed securities. According to securities arbitration lawyers, the CDO — as the “insurer” — received premiums from the CDS collateral on a monthly basis. Then the premiums were used for CDO bondholder payments. According to the SEC, ACA and UBS agreed that the collateral manager would seek bids for yield that contained both a fixed running spread and upfront cash in the form of “points.”

According to the SEC’s findings, UBS collected upfront payments totaling $23.6 million while acquiring collateral and, instead of transferring the upfront fees at the same time as the collateral, UBS kept the upfront payments and chose not to disclose this information. In addition to retaining the undisclosed $23.6 million, it also retained a disclosed fee of $10.8 million. Investment fraud lawyers say the decision not to disclose the retention of the upfront points was inconsistent with prior UBS deals and the industry standard. Allegedly, UBS’ head of the U.S. CDO group stated, “Let’s see how much money we can draw out of the deal.”

Published on: September 24, 2013

SEC Suspends 61 Companies as Possible Tools for Fraud

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of investors who mya have been defrauded through microcap shell company pump-and-dump schemes in light of one of the largest trading suspensions in Securities and Exchange Commission history. In June, the SEC announced that it would suspend trading in 61 companies in the over-the-counter market on the basis that they are ripe for fraud . 135963527SEC_Suspends_61_Companies_as_Possible_Too_ls_for_Fraud “The SEC suspended trading in the securities of 61 empty shell companies that are delinquent in their public filings and seemingly no longer in business based on an analysis by the SEC’s Microcap Fraud Working Group,” SEC officials stated in a statement. “Since microcap companies are thinly traded, once they become dormant they have a great potential to be hijacked by fraudsters who falsely hype the stock to portray it as a thriving company and coerce investors into ‘pump-and-dump’ schemes.” Reportedly, these companies were identified in 17 states and one foreign country. Following this suspension, these companies are required to prove they are still operational with updated financial information. However, securities arbitration lawyers say that while these companies became useless to fraudsters once they were suspended, it is difficult for them to identify every shell company that is a possible tool for fraud in time to prevent fraud from occurring. According to investment fraud lawyers, in a pump-and-dump scheme, fraudsters will use false and misleading statements to sell investments in the company, purchasing the stock at a low price, “pumping” the price of the stock higher and then selling the stock at a profit. Previously, the SEC suspended 379 such companies in one day, making this the second-largest suspension in history. A complete list of the 61 companies can be found on the SEC’s website. If you were persuaded to invest in any of these companies by your broker or financial adviser, 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.

Published on: August 20, 2013

SEC to Discuss Uniform Fiduciary Standard Rule for Brokers

by InvestorLawyers

According to a recent article in Investment News, Chairman of the Securities and Exchange Commission, Mary Jo White, wants the SEC to decide as soon as possible whether to propose a rule that would raise the standards for investment advice given by brokers. Securities fraud attorneys say a rule of this kind would play a significant part in protecting investors and could make it easier to determine misconduct in securities arbitration.

SEC to Discuss Uniform Fiduciary Standard Rule for Brokers

Stock fraud lawyers expect the commission, which consists of five members, will be split on this controversial issue. A cost-benefit analysis is being conducted by the SEC regarding a potential rule. In an interview, SEC Commissioner Daniel Gallagher said the potential rule hasn’t been a “front burner issue,” but it soon will be.

“We really need to decide, based on what we’ve seen, whether it makes sense to move forward,” Gallagher stated.

Published on: June 13, 2013

Customers of Blake B. Richards, Ameriprise, LPL Could Recover Losses

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of Ameriprise Financial and LPL Financial customers. Recently, the U.S. Securities Exchange Commission charged Blake B. Richards, a former LPL and Ameriprise Advisor Services advisor, with fraud. Allegedly, Richards misappropriated funds from a minimum of six individuals, amounting to around $2 million.

According to the SEC, at least two of Richards’ victims are elderly and most of the allegedly misappropriated funds were life insurance proceeds and/or retirement savings.

“Since at least 2008, on occasions when investors informed Richards that they had funds available to invest (such as from an IRA rollover or proceeds from a life insurance policy), Richards instructed the investors to write out checks to an entity called ‘Blake Richards Investments,’ a d/b/a entity, or another d/b/a used by Richards, ‘BMO Investments,'” the SEC’s complaint states. “Richards represented to the investors that he would invest their funds through his investment vehicle in life insurance, fixed income assets, variable annuities, or household-name stocks. Richards misappropriated much of the funds.”

Published on: May 16, 2013

InnerWorkings Investigated for Breach of Fiduciary Duty, Federal Securities Laws Violations Following Per-share Price Plunge

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses in InnerWorkings Inc. securities. According to recent reports, an investigation is underway to determine whether InnerWorkings and its executives committed federal securities violations and/or breached its fiduciary duty to shareholders.

InnerWorkings Investigated for Breach of Fiduciary Duty, Federal Securities Laws Violations Following Per-share Price Plunge

On April 16, 2013, the Wall Street Journal reported that InnerWorkings projected its first-quarter 2013 results would fall below the expectations of analysts. It claimed a “significant reduction in scope of work at a large retail client” was the reason for cutting the expectations for 2013. Following the news, shares of InnerWorkings fell more than 20 percent in one day, from $14.03 per share to $10.50 per share on April 17, 2013. Furthermore, InnerWorkings now estimates per-share earnings to be 45-50 cents per share, as opposed to the previous forecast of 57-61 cents per share. Revenue projections have also decreased, from $930-$960 million to $900-$930 million.

According to investment fraud lawyers, investors became even more concerned on April 30, 2013, when a report was published by Prescience Point Research Group. The report alleges that InnerWorking shares are grossly overvalued as a result of revenue inflation committed by the company, and in violation of GAAP principles. Allegedly, InnerWorkings misapplied gross revenue accounting which, if true, would violate its credit agreement. The Securities and Exchange Commission had previously filed a letter on November 13, 2012 requesting that InnerWorkings’ service revenue recognition treatment and multiple element arrangement accounting treatment be clarified, according to securities fraud attorneys.

Published on: May 14, 2013

Broker-dealers’ Info Regarding Non-traded REITs is Inadequate, FINRA Says

by InvestorLawyers

Earlier this month, the Financial Industry Regulatory Authority (FINRA) issued a notice to broker-dealers stating that in some cases, they have not provided adequate service to investors in several areas, including the distribution of materials containing inaccurate and misleading statements related to non-traded real estate investment trusts, or REITs. Many securities arbitration claims have been filed by stock fraud lawyers on behalf of investors that cite similar claims.

The way in which investors receive dividends, or distributions, is one matter that is of concern to securities arbitration lawyers. One of the most attractive reasons for many investors to purchase non-traded REITs is the fact that they begin paying distributions immediately after sale. According to the FINRA notice, however, communications from broker-dealers to investors “have emphasized the distributions paid by a real estate program and failed to adequately explain that some of the distribution constitutes return of principal.”

FINRA also stated that “some communications have not provided sufficient discussions of the risks associated with investing in the products in order to balance the presentation of benefits.” Numerous claims have, in fact, been made alleging independent broker-dealers such as Ameriprise Financial Services Inc. and LPL Financial LLC did not adequately disclose the risks of non-traded REITs to investors prior to purchase. According to stock fraud lawyers, some investors are also not made aware that distribution payments can stop at any time.

Published on: May 9, 2013

Securities Fraud: John Thomas Financial Investors Could Recover Losses

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of conducting business with Anastasios “Tommy” Belesis and other representatives of John Thomas Financial Inc. Specifically, investors in Liberty Silver Corp. and America West Resources Inc. may be eligible to recover their losses. In January of 2013, the Financial Industry Regulatory Authority issued a Wells Notice to Belesis, the CEO of John Thomas Financial. Allegedly, Belesis was part of a pump-and-dump scheme involving Liberty Silver Corp.

Title of the Post Goes Here

A FINRA statement alleged that Mr. Belesis “(1) willfully or recklessly sold a substantial portion of a firm proprietary position while failing to execute customer orders to sell shares of the same stock, at prices that would have satisfied the unexecuted customer orders; (2) failed to follow instructions by the customers to sell the shares; (3) used manipulative, deceptive and/or fraudulent means to artificially inflate the price of the stock; (4) made material misrepresentations, to customers, registered representatives and FINRA, about the reasons why the customer orders had not been executed; (5) falsified or failed to preserve the orders in question and other pertinent records; and (6) failed to reasonably supervise the receipt, documentation and execution of the customer orders.” Securities arbitration lawyers are conducting their own investigation into the sales practices of John Thomas Financial, based on FINRA’s claims.

Bloomberg reported that Belesis has also been accused of fraud related to America West Resources Inc. According to FINRA, John Thomas Financial raised $20 million for America West from 2008 to 2011. Investment fraud lawyers say that when America West stock rose significantly in February 2012, Belesis allegedly prevented customers from selling their shares while he instructed an employee to sell the firm’s stock, gaining the firm over $1 million in proceeds. John Thomas Financial allegedly attempted to disguise the alleged fraud by “losing” the customer order tickets. Currently, no decision has been made in this case.