securities arbitration lawyer

Published on: April 18, 2013

Ameriprise REIT Sales Under Investigation

Securities arbitration lawyers are currently investigating claims on behalf of investors who purchased risky non-traded REITs through Ameriprise Financial. Reportedly, Ameriprise Financial was one of the biggest non-traded real estate investment trust sellers and, in some cases, may not have properly advised customers as to the risks associated with non-traded REITs.

Ameriprise_REIT_Sales_Under_Investigation Many full-service brokerage firms recommended the purchase of REITs to investors, marketing them as safe, low-risk investments. Stock fraud lawyers say that some customers placed a substantial portion of their assets into a single non-traded REIT at the recommendation of a full-service brokerage firm representative, causing an over-concentration of their portfolio that was unsuitable. As a result, securities arbitration lawyers say many investors may have a valid securities arbitration claim that could lead to the recovery of some of their losses.

Some non-traded REITs may have carried a high commission which motivated brokers to recommend the product to investors despite the investment’s unsuitability. The commissions and fees associated with non-traded REITs are sometimes 15 percent or more. Non-traded REITs, like the ones sold by Ameriprise, carry a relatively high distributions of income, making them attractive to investors. However, non-traded REITs are inherently risky and illiquid, which limits access of funds to those investors. However, in many instances non-traded REITs have made distributions to investors that greatly exceeded the actual cash flows from their operations and actually represented returns of principal rather than income.

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.

Published on: March 28, 2013

Customers of Merrill Lynch, Phil Scott Group Could Recover Losses

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of customers of the Phil Scott Group and Merrill Lynch regarding the unsuitable recommendation of investments. Walter Schlaepfer, also known as Phil Scott, and the Phil Scott Group reportedly worked out of the Merrill Lynch branch office in Bellevue, Washington.

At least six customer complaints have been filed against Scott since 2008, according to the Phil Scott Group’s securities license. All of these complaints allege that Scott made misrepresentations and/or unsuitable recommendations of 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. In addition, securities arbitration lawyers say firms like Merrill Lynch have a duty to properly supervise their brokers and can be held liable for broker misconduct if they fail to do so.

Published on: March 21, 2013

Firm May Be Liable for Actions of Tracy Morgan Spaeth

by InvestorLawyers

Stock fraud lawyers are currently investigating claims on behalf of customers of Tracy Morgan Spaeth in relation to his sales of ProfitStars Int’l Corp. Spaeth, a former broker with BrokersXpress LLC, entered into a Letter of Acceptance, Wavier and Consent regarding his ProfitStars sales. According to the Financial Industry Regulatory Authority, Spaeth did not receive written approval, nor did he provide written notice to BrokersXpress, a FINRA member firm, prior to participating in private securities transactions. The alleged misconduct occurred from October 2010 through December 2010. During this time, Spaeth promoted ProfitStars Int’l Corp. limited partnership interests and assisted around 115 clients with the purchasing of the security. Investments in the security amounted to more than $8,000,000.

Firm May Be Liable for Actions of Tracy Morgan Spaeth

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.

Published on: March 14, 2013

Credit Suisse Yield Enhancement Strategy Recommendation Under Investigation

by InvestorLawyers

Stock fraud lawyers are currently investigating claims on behalf of Credit Suisse Securities (USA) LLC customers who received recommendations to invest a significant portion of their funds in the Yield Enhancement Strategy and suffered significant losses as a result. The Yield Enhancement Strategy, or YES, is a high-fee proprietary strategy and may not be suitable for many investors.

Credit Suisse Yield Enhancement Strategy Recommendation Under Investigation

Allegedly, Credit Suisse may have recommended the Yield Enhancement Strategy to some investors without properly explaining the risks to customers or considering their investment objectives and risk tolerances.

According to a recent statement of claim regarding this investment, advisors for Credit Suisse allegedly used literature that stated the goals would be achieved by the strategy by “selling short-term out-of-the-money puts and calls on the S&P 500 index.” Furthermore, the literature allegedly claimed that in order to “manage downside and upside market exposure, short term below-market put and above-market call options are purchased with the same duration as the puts and calls sold.” Securities arbitration lawyers say the allegations in the suit are that the strategy to “provide an additional source of income to portfolios when markets are flat, trending higher or trending lower” failed and, in a little over two years, more than $500,000 in losses and $200,000 in investor fees resulted.

Published on: March 5, 2013

CommonWealth REIT Announcement More Bad News for Investors

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses in CommonWealth REIT. CommonWealth REIT recently announced that it would commence a public offering intended to pay down as much as $450 million in senior notes. The public offering would be for 27 million shares of stock, which would dilute its outstanding share count by almost 30 percent.

CommonWealth REIT Announcement More Bad News for Investors

The CommonWealth real estate investment trust primarily owns and operates real estate, such as industrial buildings, office buildings and leased industrial land. Following the announcement for CommonWealth REIT’s fourth-quarter earnings results and the 27 million share offering, the REIT’s price dropped by as much as 11 percent. According to the fourth-quarter report, a loss of $1.96 million was reported by the company as a result of a $168.6 million asset impairment.

Furthermore, between January 10, 2012 and August 8, 2012, CommonWealth allegedly issued false and misleading statements regarding its financial standing and prospects which, if proved to be true, would be a violation of the Securities Exchange Act of 1934. Furthermore, in an announcement on August 8, 2012, CommonWealth stated that it would likely be reducing its dividend payment. Investment fraud lawyers also note that from 2008 to 2011, the company’s net income fell from $244.65 million to $109.98 million, a decline of $134.67 million. For more information on this issue, see the previous blog post, “CommonWealth REIT Investors Could Recover Losses.”

Published on: February 28, 2013

Recovery of Grubb & Ellis REIT Losses Possible

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of their investment in Grubb & Ellis REITs. For the period ending March 21, 2011, Grubb & Ellis Company reported an $18.3 million net loss. The company included charges of $2.3 million for bad debt, $3.5 million for depreciation and amortization, $1.7 million for amortization of signing bonuses, $1.7 million in share-based compensation and $0.5 million for intangible asset impairment.

Recovery of Grubb & Ellis REIT Losses

Grubb & Ellis is an investment and commercial real estate services firm. Grubb & Ellis Healthcare REIT acquired Oklahoma City Medical Portfolio in 2008, which consisted of two medical office buildings. Grubb & Ellis Healthcare REIT II acquired four properties comprising five medical office buildings in 2011. Grubb & Ellis Apartment REIT made arrangements to acquire Bella Ruscello Luxury Apartment Homes in 2010.

Securities arbitration lawyers say non-traded REIT investments like the Grubb and Ellis REITs 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: February 19, 2013

Clock Ticking on KBS REIT I Claims

by InvestorLawyers

Securities arbitration lawyers are encouraging investors who suffered significant losses in KBS REIT I to act quickly if they believe they have a securities arbitration claim. According to the Financial Industry Regulatory Authority, “If too much time has elapsed between a broker’s conduct and your complaint to FINRA, the investigation may be hindered.” The initial public offering for KBS REIT I closed on May 31, 2008, so this May will mark five years since many investors were unsuitably recommended the KBS REIT I.

Clock Ticking on KBS REIT I Claims

With a new estimated value of $5.16 per share, the per share price has dropped drastically since its original offering price of $10 per share. However, investment fraud lawyers say that if investors need to liquidate for cash, they may receive even less for their shares. Because investors must resort to selling on a private secondary market, some investors may receive only 80 percent or less of the investment’s already-reduced estimated value.

According to securities arbitration lawyers, in many cases investors received unsuitable recommendations of KBS REIT I. Many were led to believe that the investment was a safe investment that would produce regular, dependable distributions while the investment’s value remained constant or increased. In addition, many were not made aware of the illiquidity of the investment that resulted from the fact that it was a non-exchange-traded investment.

Published on: February 15, 2013

Investors in Equity Linked Structured Products Tied to Apple Could Recover Losses

by InvestorLawyers

Stock fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses in Equity Linked Structured Products which were tied to the Apple stock price. Apple stock has suffered a significant decline since last year, falling from more than $700 per share to less than $440 per share. While many Apple shareholders suffered losses as a result of this price decline, Equity Linked Structured Products, or ELSPs, that were tied to Apple’s stock price also suffered significant losses. Essentially, ELSPs are bonds that have a feature that allows them to be converted into other companies’ stocks.

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Features of ELSPs include high interest payments for a year or less. If the stock price of the company that the ELSPs are tied to remains close to the price of the stock at the time the bonds were issued, or increases, ELSP investors will get their money back when the investment comes due. However, if the stock price suffers a decline of more than 20 percent, the ELSPs can become shares of the stock — in this case, Apple — and the investor has no choice but to hold the investment until maturity.

Securities arbitration lawyers say that when Apple’s stock price increased substantially in 2012, full-service brokerage firms like Morgan Stanley, JPMorgan Chase and Barclays sold more than $722 million in ELSPs. In 2012, around 450 of the new structured products issued were tied to Apple, 75 percent of which suffered an estimated 15 percent decline in just one week. Most of these products are now underwater. In addition, many believe that investment banks were using ELSPs as an inexpensive hedging strategy against Apple’s stock price and benefited from these investments while investors were losing.