investment fraud lawyers

Published on: June 13, 2013

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

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 28, 2013

American Capital Agency, American Capital Mortgage REIT Investors Could Recover Losses

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses in two mortgage REITs, American Capital Agency and American Capital Mortgage, following the announcement of 2013 first-quarter results. For the first quarter of 2013, American Capital Mortgage suffered losses of $0.56 per share and American Capital Agency suffered losses of $1.57 per share.

American Capital Agency, American Capital Mortgage REIT Investors Could Recover Losses

Reportedly, these losses are a result of increasing interest rates combined with a drop in mortgage-backed securities values and the secondary offering’s failure to foresee these changes. However, mortgage REITs, or real estate investment trusts, are not suitable for all investors. Prior to recommending an investment to a client, brokers and firms are required to perform the necessary due diligence to establish whether the investment is suitable for the client, given their age, investment objectives and risk tolerance.

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. Furthermore, securities arbitration lawyers say brokerage firms must, before approving an investment’s sale to a customer, conduct a reasonable investigation of the securities and issuer.

Published on: May 23, 2013

VSR Financial Services Customers Could Recover Losses

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of doing business with VSR Financial Services and/or Michael David Shaw, a financial advisor. Allegedly, Shaw and VSR Financial Services may have engaged in misconduct in connection with the sales of REITs, alternative investments, hedge funds and private placements.

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Reportedly, the Financial Industry Regulatory Authority accepted a Letter of Acceptance, Waiver and Consent on May 15, 2013 from VSR Financial Services. In the letter, the firm agreed to pay a fine of $550,000 which will settle allegations that the firm failed to adequately supervise the sales of alternative investments to customers. In particular, the firm allegedly failed to supervise the concentration of these investments in customer portfolios.

In addition, securities arbitration lawyers say that in October 2011, a trader calling himself Michael Daniel Shaw submitted a Letter of Acceptance, Waiver and Consent. In this letter he consented to the findings that he had recommended the sale of private placements, which were high-risk, to customers for whom he did not have a reasonable basis to believe they were suitable transactions. Furthermore, Shaw allegedly made material omissions or misrepresentations regarding the purchase or sales of the private placements.

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 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.

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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.

Published on: May 2, 2013

Recovery of Success Trade Promissory Note Losses

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of the customers of Success Trade Securities who purchased Success Trade promissory notes. In April 2013, the Financial Industry Regulatory Authority (FINRA) announced that it had filed a Temporary Cease-and-Desist Order in relation to these notes. The order is intended to halt fraudulent activity and misuse of investors’ assets and funds allegedly being conducted by Success Trade Securities and Fuad Ahmed, the firm’s president and CEO.

FINRA has issued a complaint against Ahmed and Success Trade Securities that charges promissory note sales fraud. These promissory notes were issued by Success Trade Inc., Success Trade Securities’ parent company. According to the complaint’s allegations, “Success Trade Securities, Ahmed and other registered representatives at the firm sold more than $18 million in Success Trade promissory notes to 58 investors, many of whom are current or former NFL and NBA players, while misrepresenting or omitting material facts. [They] misrepresented that they were raising $5 million through the sale of promissory notes and continued to make this representation, even as the sales exceeded the original offering by more than 300 percent.” According to investment fraud lawyers, FINRA also claimed that Success Trade Securities and Ahmed misrepresented the way in which they would use the proceeds and used the funds improperly, using them to pay existing noteholders’ interest payments and making unsecured loans to the president and CEO.

According to the allegations, Success Trade Securities and Ahmed also failed to disclose to investors the actual amount of the existing debt the company owed investors and the fact that it required raising money from additional investors to make future interest payments. Some of the promissory notes allegedly promised to pay as much as 26 percent interest, while most promised a 12.5 percent annual interest rate payment, due monthly, over the course of three years. Another FINRA allegation was that the exempt status and rate of return of the private placement offering used to sell the notes was misrepresented. Misrepresentations become material and therefore grounds for securities arbitration when it can be proven by a securities fraud attorney that the investor would have made a different investment choice if the misrepresentation or omission had not occurred. This, combined with the sales fraud allegations, suggests that Success Trade promissory note investors may have strong arbitration claims.

Published on: April 25, 2013

Morgan Stanley Broker Allegedly Traded on Customer Accounts without Permission

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of customers of Morgan Stanley and other full-service brokerage firms who were the victim of unauthorized trading or discretionary trading on a non-discretionary account without receiving prior written authorization.

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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.

Published on: April 16, 2013

Investigations on Behalf of Cole Credit Property Trust III Shareholders

by InvestorLawyers

Securities attorneys are currently investigating claims on behalf of Cole Credit Property Trust III investors. Cole Credit III is a non-traded real estate investment trust, or REIT. A press release issued on March 21, 2013 announced that Cole Credit III’s Board of Directors Special Committee affirmed that it was committed to pursuing a New York Stock Exchange listing and the acquisition of Cole Holdings Corp.

Investigations_on_Behalf_of_Cole_Credit_Property_Trust_III_Shareholders Lawyers are reviewing whether shareholders are paying fair or excessive value in the Cole Holdings Corp. acquisition, in addition to whether or not the transaction itself may c0nstitute a breach of fiduciary duty. Reportedly, the transaction indicated that Chris Cole and Cole Holdings management would receive cash and stock amounting to $127 million in the transaction. Since the announcement of the acquisition, shareholders have filed at least three lawsuits.

Meanwhile, InvestmentNews reported on April 11, 2013 that almost one week after the acquisition of Cole Holdings closed for 10.7 million shares and $20 million in cash, Chief Executive Nicholas Schorsch and American Realty Capital Properties Inc. had withdrawn their bid to acquire Cole Credit III. Schorsch stated in an interview, “We made a good faith offer, $9.7 billion.” After the $12 per share offering was rejected by Cole management, ARCP increased the bid to $12.50 per share but, according to Schorsch, Cole Credit III never negotiated seriously.

Published on: April 11, 2013

Full-service Brokerage Firms Held Liable for Spousal Theft

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of investors who have been the victim of spousal theft from their full-service brokerage accounts. A recent Financial Industry Regulatory Authority panel decision in Indianapolis ruled in favor of an investor in her case against E*Trade Securities LLC and Wells Fargo Advisors LLC.

Wells Fargo was found liable for $50,253 in compensatory damages to the investor, while E*Trade Securities was found liable for $33,502. Furthermore, E*Trade Securities and Wells Fargo Advisors were ordered to pay attorney fees of $22,500, interest of $11,960, and arbitration hearing session and fees of $4,500.

According to the investor’s securities arbitration lawyer, the investor’s ex-husband exhibited classic signs of identity theft and falsified documents in order to transfer funds from the investor’s Wells Fargo accounts into multiple E*Trade accounts. Reportedly, the investor was unaware of and did not consent to the transfers. The investor’s attorney also stated that the client “was the victim of a very focused and intentional scheme that was permitted to occur – if not facilitated – by both Wells Fargo and E*Trade.” Furthermore, the investor alleged that Wells Fargo Advisors and E*Trade Securities failed to take responsibility for misconduct despite having previous opportunity to do so.

Published on: April 3, 2013

UPS Employees Could Recover Investment Losses

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of employees of the United Parcel Service, better known as UPS, some of whom allegedly suffered significant losses as a result of the recommendation of financial advisers to maintain a leveraged, concentrated position in UPS stock. Through UPS’s Managers Incentive Program, many UPS employees received company stock. Some employees then transferred the stock to full-service brokerage firms.

UPS Employees Could Recover Merrill Lynch Investment Losses

In many cases, the company stock was used as collateral for a “hypo loan,” which is obtained through the pledging of the securities to secure a loan. However, full-service brokerage firms may not have informed UPS employees of the risks associated with this type of loan. Those employees suffered significant losses from October 2008 through April 2009 when the value of UPS stock declined and they liquidated their investment.

One of the risks of maintaining a hypo loan is that of a margin call, which can result in a forced liquidation. As a result, the investor is not able to recover losses when or if the price of the stock rebounds. In the case of many UPS employees, securities arbitration lawyers say some of their losses could have been recovered as the company’s stock value rose since 2009. However, due to the hypo loans some employees were forced to liquidate their UPS stock and therefore did not benefit from the subsequent recovery in UPS’s share price.