Syosset, NY-based stockbroker Matthew Eckstein was recently charged with three counts of second-degree grand larceny, third degree grand larceny, and two counts of first-degree scheme to defraud by the Nassau County District Attorney. These charges stem from Mr. Eckstein’s business as a financial advisor in Garden City, NY, and more specifically, allegations that he “betrayed his clients’ trust when he stole their money in a multi-million dollar Ponzi scheme and even pilfered hundred of thousands from the estates of deceased clients” according to Madeline Singas, the Nassau County District Attorney.

FINRA BrokerCheck indicates that Matthew Evan Eckstein’s (CRD# 2997245) career in the securities industry dates back to 1998, when he first began working as a registered representative for Gould, Ambroson & Associates Ltd. (“Gould”) (CRD# 17412) in Garden City, NY. Since September 16, 2015, Mr. Eckstein has been registered at his own broker-dealer, Sisk Investment Services, Inc. (“Sisk”) (CRD# 19406), where he is chief executive and chief compliance officer. On April 27, 2018, FINRA Enforcement filed a Complaint naming Mr. Eckstein as Respondent. As alleged by FINRA, from December 2014 until December 2015, Mr. Eckstein purportedly sold over $1.3 million in supposedly safe private investments akin to CDs to numerous clients.

Publicly available information suggests Mr. Eckstein’s alleged victims are from Massapequa, Seaford, Smithtown, Melville, Staten Island, Brooklyn, Manhattan, Norwalk, CT, Jupiter, FL, and Redlands, CA. In January 2015, Mr. Eckstein allegedly convinced one customer to invest approximately $385,000 into a company, Conmac Funding (“Conmac”), that was touted as a safe, no-risk investment. Further, Mr. Eckstein purportedly assured the client that the investment principal would be returned in two years, with an additional four-percent interest, much like a certificate of deposit. However, as recently reported, when the client requested his money back two years later, he only received $26,699.

According to FINRA Enforcement, Mr. Eckstein’s alleged misconduct involved an investment scheme run by “KB”, a close friend of Eckstein. FINRA’s Complaint alleges that Mr. Eckstein conducted no due diligence on the issuer of the supposedly safe investments, Conmac: “Eckstein never reviewed the Issuer’s books or financial statements and did not know the sources of the Issuer’s funds, the identity of its customers … the default rate on its loans, its overhead, or the number of its employees.” Further, FINRA Enforcement has alleged that Eckstein misrepresented the nature of these private investments in Conmac as “similar to a CD” and “fully guaranteed.”

Included among the claims brought by FINRA Enforcement are allegations that Mr. Eckstein engaged in “selling away” activity in violation of NASD Rule 3040 and FINRA Rule 2010. Specifically, FINRA has alleged that while registered with Gould, Mr. Eckstein “participated in five securities transactions wherein LM, JS, LS, and BV invested $1.28 million…” Brokerage firms like Gould have a duty to ensure that their registered representatives are adequately supervised, and moreover, must take reasonable steps to ensure that their brokers follow all applicable securities rules and regulations, as well as internal policies and procedures. In instances where a financial advisor engages in selling away activity, a member firm like Gould may be held liable for losses sustained by investors. Broker-dealers including Gould must ensure that their supervisory system is reasonable and that client accounts are adequately monitored, as brokerage firms may be found vicariously liable for the misconduct or negligence of a registered representative.

Attorneys at Law Office of Christopher J. Gray, P.C. have successfully resolved a number of disputes on behalf of investors, including cases involving high-risk, illiquid and opaque private placement investments and selling away cases. Investors may contact a securities arbitration attorney by telephone at (866) 966-9598, or by e-mail at newcases@investorlawyers.net for a no-cost, confidential consultation.

On March 27, 2018, the Securities and Exchange Commission (“SEC”) announced formal charges against Wedbush Securities Inc. (“Wedbush”, CRD# 877) with respect to allegations that the broker-dealer failed to supervise its employee, Ms. Timary Delorme (f/k/a Timary Koller) (“Delorme”). Based on its investigation, the SEC alleged Wedbush ignored numerous red flags indicating that Ms. Delorme — who has been affiliated with Wedbush as a registered representative since 1981 — was purportedly involved in a manipulative penny stock trading scheme with Izak Zirk Englebrecht, a/k/a Zirk De Maison “(“Englebrecht”).

As alleged by the SEC, Mr. Englebrecht engaged in manipulative trading, commonly referred to as “pump and dumps”, through the use of various thinly traded microcap penny stocks. According to the SEC’s allegations, Ms. Delorme purchased stocks at Englebrecht’s behest in certain customer accounts, and in turn received undisclosed material benefits. Moreover, the SEC’s findings suggest that Wedbush ignored numerous red flags associated with Ms. Delorme’s alleged involvement in the scheme, including a customer email outlining her involvement, as well as several FINRA arbitrations regarding her penny stock trading activity.

In response to the red flags, Wedbush purportedly conducted two investigations into Ms. Delorme’s conduct. The SEC has characterized Wedbush’s investigation as “flawed and insufficient”, and that ultimately the brokerage firm failed to take appropriate action to address the alleged misconduct. The SEC’s order instituting administrative proceedings against Wedbush charges that the broker-dealer failed to reasonably supervise its broker, Ms. Delorme. The matter will come before an administrative law judge, who will hear the case and prepare an initial decision — there have not yet been any findings of misconduct.

Founded in 1955, Los Angeles based Wedbush formed its brokerage unit in July 1966. As of June 2017, Wedbush’s Wealth Management Group provides various wealth management services through approximately 400 financial advisors located in roughly 100 offices nationwide. Brokerage firms like Wedbush have a duty to ensure that their registered representatives are adequately supervised. Brokerage firms must also take reasonable steps to ensure that their financial advisors follow all applicable securities rules and regulations, in addition to internal policies and procedures. In instances when brokerage firms fail to adequately supervise their registered representatives, they may be held liable for losses sustained by investors.

Both the SEC and FINRA have issued ample guidance concerning trading in penny stocks, which is generally regarded as a risky proposition due to a host of factors, including the lack of transparency as to information about the investment, including financials. In addition, penny stocks, due in part to their characteristic low-price and low-volume, are particularly susceptible to fraudulent activity such as pump and dump schemes by unscrupulous stock manipulators.

Attorneys at Law Office of Christopher J. Gray, P.C. have handled a number of disputes on behalf of investors, including losses sustained due to instances of alleged fraudulent conduct and market manipulation. Investors may contact a securities arbitration attorney by telephone at (866) 966-9598, or by e-mail at newcases@investorlawyers.net for a no-cost, confidential consultation.

Investors who suffered losses due to misconduct by financial advisor Ralph Savoie (CRD# 411660) may be able to recover their losses in arbitration before the Financial Industry Regulatory Authority (“FINRA”). On March 26, 2018, Mr. Savoie plead guilty in Louisiana federal court to stealing up to $1.5 million from clients, using their monies for personal expenses including jewelry, hotels, and credit card bills, as well as to pay off previous clients in Ponzi-fashion in connection with prior purported investment opportunities. Mr. Savoie allegedly guaranteed his clients high rates of returns on various investments in securities and insurance products, describing the investments as a “sure thing.” In actuality, however, Mr. Savoie allegedly engaged in misconduct by using these funds on personal expenses, to pay prior clients and to funnel money into a “risky real estate venture.”

According to public records, Mr. Savoie of Mandeville, LA, was formerly associated with Cambridge Investment Research Advisors, Inc. (CRD# 134139) (“Cambridge”) in their Metairie, LA, branch office, until on or about August 11, 2015, at which time Mr. Savoie was discharged from his employment with Cambridge as a registered representative. Mr. Savoie’s career in the securities industry is lengthy and dates back to the early 1970’s, including his most recent stint at Cambridge from 2013 until August 2015.

According to publicly available information through FINRA, Mr. Savoie was discharged from his employment with Cambridge due to his alleged failure to “[d]isclose and receive approval for an outside business activity.” Further, FINRA reports that Mr. Savoie has been subject to six customer disputes, including three that remain pending and three that have resulted in settlement. A number of these disputes center on allegations concerning Mr. Savoie’s purported sales of “unsuitable, illiquid, expensive, private placements.”

As our office has discussed in previous blog posts, private placements are, in general, a risky investment proposition. To begin, private placements carry considerable risk (investors should be prepared to lose their entire investment), often are complex in nature, and typically are opaque insofar as investors only have limited information off which to make an ultimate decision as to whether an investment is warranted (as unregistered securities, private placements do not provide the same scope and depth of information as with other investments, such as publicly traded, registered stocks or mutual funds). The majority of private placements are offered pursuant to Regulation D (“Reg D”), an SEC regulation that allows private companies to raise capital without conducting a public offering.

Brokerage firms like Cambridge have a duty to ensure that their registered representatives are adequately supervised, a duty which includes monitoring their brokers in connection with outside business activities and/or sales of private placements. Brokerage firms must also take reasonable steps to ensure that their financial advisors follow all applicable securities rules and regulations, in addition to internal policies and procedures. In instances when brokerage firms fail to adequately supervise their registered representatives, they may be held liable for losses sustained by investors.

The attorneys at Law Office of Christopher J. Gray, P.C. have successfully resolved a number of disputes on behalf of investors, including losses sustained due to instances of fraudulent conduct such as Ponzi schemes, and related broker misconduct. Investors may contact a securities arbitration attorney by telephone at (866) 966-9598, or by e-mail at newcases@investorlawyers.net for a no-cost, confidential consultation.

Financial advisor Melvin Elwood Case (CRD# 2393464) has been suspended from the securities industry. According to publicly available information through FINRA, on January 19, 2018, Mr. Case, without admitting or denying FINRA Enforcement’s findings, consented to being barred from the securities industry in all capacities for a period of six months (the suspension is set to terminate on August 4, 2018).

Specifically, FINRA enforcement entered into a settlement via Acceptance, Waiver and Consent (“AWC”) with the Respondent, pursuant to which Mr. Case consented to a finding that he “willfully omitted to state a material fact on a Form U4, and that under Section 3(a)(39)(F) of the Securities Exchange Act of 1934… this omission makes him subject to a statutory disqualification with respect to association with a [FINRA] member.” As disclosed by FINRA, Mr. Case pled guilty to a felony charge of exploitation of an aged adult on or about August 2016. It appears that final adjudication of guilt was withheld, and Mr. Case was placed on probation for a period of 24 months.

Based on his purported failure to report his criminal infraction to his employer, LPL Financial LLC (“LPL”) (CRD# 6413), Mr. Case was terminated by LPL on or about May 2, 2017. As disclosed through FINRA, Mr. Case’s termination by LPL concerned allegations of “criminal charges involving exploitation of an aged adult after converting the victim’s money for his own benefit.”

Mr. Case’s affiliation with the securities industry dates back to the early 1990’s, having worked as a registered representative for Pruco Securities, LLC (“Prudential”) (CRD# 5685) from September 1993 – August 2008. Thereafter, Mr. Case transitioned to a position with LPL in Jacksonville, FL, from July 2008 until his termination by LPL in May 2017. FINRA BrokerCheck indicates that Mr. Case has been named as a Respondent or otherwise involved in a total of four customer disputes, two of which resulted in settlement. Most recently, in August 2017, a customer dispute concerning allegations of misrepresentations, poor recommendations and fees resulted in a settlement in an amount exceeding the damages requested. Previous to that, in 2016, a customer case resulted in a settlement of $100,000.

FINRA has recognized that given the aging of the U.S. population, financial exploitation of seniors is a serious and growing problem. In fact, FINRA has recently adopted amendments to Rule 4512 and implemented new Rule 2165 in order to provide members with ways to better respond to situations in which seniors are falling victim to financial exploitation. FINRA firms like Prudential and LPL have an affirmative duty to ensure that their registered representatives are adequately supervised. As part of this mandate, brokerage firms must take reasonable steps to ensure that their financial advisors follow all applicable securities rules and regulations, including Rule 2165’s broad definition of ‘financial exploitation’ to include “the wrongful or unauthorized taking, withholding, appropriation, or use of a specified adult’s funds or securities.” In instances when brokerage firms fail to adequately supervise their registered representatives, they may be liable for losses sustained by investors.

The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience in representing investors who have sustained losses due to the negligence or misconduct of stockbrokers or investment advisors. Investors may contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

On February 9, 2017, FINRA Enforcement signed off on a Letter of Acceptance, Waiver and Consent (“AWC”) between FINRA and former financial advisor Matthew C. Maczko (“Maczko” or “Respondent”) (CRD# 1888519). Without admitting or denying FINRA’s findings, Mr. Maczko voluntarily consented to an industry bar from associating with any FINRA member firm in any capacity.

Mr. Maczko first became associated with a FINRA member firm in 1988 as a general securities representative under the employ of UBS Financial Services Inc. (“UBS”) (CRD# 8174). During the course of his career, he worked at UBS for nearly twenty years, and thereafter, from 2008-2016, worked as a registered representative for Wells Fargo Advisors, LLC (“Wells Fargo”) (CRD# 19616).

According to the AWC, “[M]aczko had been terminated on September 2, 2016” by Wells Fargo in connection with the brokerage firm’s “[i]nternal review for adherence to industry standards of conduct based on concerns about the level of trading in a customer account.” Furthermore, the AWC specifically referenced the following instance of alleged excessive trading, or churning, purportedly conducted by Maczko while affiliated with Wells Fargo:

“Between January 2009 and April 2016, Maczko effected excessive transactions in four brokerage accounts of Customer JZ, who is now 93 years old. Maczko effectively controlled these accounts, which had an average aggregate value of $3 million. During this period, Maczko effected over 2800 transactions in these accounts that generated approximately $581,650 in commissions, $84,270 in other fees, and approximately $397,000 in trading losses. This level of trading was unsuitable for Customer JZ given her investment profile; including her age, risk tolerance, and income needs. Accordingly, Maczko violated NASD Rule 2310 and FINRA Rules 2111 and 2010.”

Excessive trading, or churning, occurs where: (i) a registered representative exercises control over a customer’s account; and (ii) the level of activity in that account is inconsistent with the customer’s investment objectives, financial situation, and needs. Excessive trading constitutes a violation of FINRA’s suitability standards set forth under FINRA Rule 2111.

Brokerage firms like UBS and Wells Fargo have a duty to ensure that their registered representatives are adequately supervised. Brokerage firms must also take reasonable steps to ensure that their financial advisors follow all applicable securities rules and regulations, in addition to internal policies and procedures. In instances when brokerage firms fail to adequately supervise their registered representatives, they may be held liable for losses sustained by investors.

At Law Office of Christopher J. Gray, P.C., our securities attorneys have successfully resolved a number of disputes on behalf of aggrieved investors, including losses sustained due to instances of fraudulent conduct, excessive trading or churning, and related broker misconduct. Investors may be able to recover their losses in FINRA arbitration. Investors may contact a securities arbitration attorney via the contact form on this website, by telephone at (866) 966-9598, or by e-mail at newcases@investorlawyers.net for a no-cost, confidential consultation.

As we recently discussed in detail in a previous blog post, on December 21, 2017, the Securities and Exchange Commission (“SEC”) formally announced charges, as well as an asset freeze, against the Woodbridge Group of Companies (“Woodbridge”) of Sherman Oaks, CA, as well as Woodbridge’s related unregistered investment funds, and the firm’s owner and former CEO, Robert Shapiro. Among other things, the SEC has alleged in its Complaint – filed in Florida federal court – that “[D]efendant Robert H. Shapiro used his web of more than 275 Limited Liability Companies to conduct a massive Ponzi scheme raising more than $1.22 billion from over 8,400 unsuspecting investors nationwide through fraudulent unregistered securities offerings.”

According to the SEC’s Complaint, Woodbridge utilized a large and coordinated sales force to sell its Woodbridge Notes, sometimes referred to as First Position Commercial Mortgages (“FPCMs”). As further alleged by the SEC, “Woodbridge employed a sales team of approximately 30 in-house employees that operated within Woodbridge’s offices.” Moreover, the SEC’s Complaint alleges that “Woodbridge also utilized a network of hundreds of external sales agents to solicit investments from the general public by way of television, radio, and newspaper advertisements, cold calling campaigns, social media, websites, seminars and in-person presentations.”

As detailed in the SEC’s Complaint, the Woodbridge business model relied upon borrowing money from investors in exchange for promissory notes, typically maturing in 12 – 18 months. These notes carried an annual interest rate of 5 – 8%, payable monthly. The investors’ money was supposed to be issued to lenders in the form of securitized mortgages. However, according to the SEC, this rarely occurred.

As recently reported and covered in several of our prior blog posts, Woodbridge declared Chapter 11 bankruptcy in Delaware in early December. The timing of the filing came on the heels of Woodbridge discontinuing its interest payments to investors. In its bankruptcy filings, Woodbridge cited “increased operating and development costs” that “were exacerbated by the unforeseen costs associated with ongoing litigation and regulatory compliance.”

At this stage, it appears that while Woodbridge was marketed nationwide to a number of investors, South Florida was a particular hotbed of activity. This makes sense, given the large number of retirees and pensioners residing in Florida who seek stable fixed income investments. In fact, as recently reported, one insurance salesman and former broker supposedly sent invitations to potential Woodbridge investors, encouraging potential attendees to “learn how to earn 6% fixed interest” a year, while also highlighting “monthly income checks” and “no market risk.”

It appears that many investors in Woodbridge succumbed to the promise of earning above-market yields on safe, conservative, “risk-free” or “secured” investments in mortgages. Of course, such representations often prove to be a red flag, or indicator of some wrongdoing. When an advisor or promoter makes the claim that an investment product has no risk or is somehow crash proof, it should serve as an immediate warning or red flag to an investor of potential fraud.

Investors who purchased Woodbridge First Position Commercial Mortgages (“FPCMs”) through a stockbroker or financial advisor may have viable FINRA arbitration claims if the brokerage firm or Registered Investment Advisor (“RIA”) did not perform adequate due diligence before recommending the Woodbridge investment.

Some of the issuers of Woodbridge securities include the following entities:

• WMF Management, LLC (“WMF”);
• Woodbridge Group of Companies, LLC (d/b/a Woodbridge Wealth);
• Woodbridge Mortgage Investment Fund 1, LLC;
• Woodbridge Mortgage Investment Fund 2, LLC;
• Woodbridge Mortgage Investment Fund 3, LLC;
• Woodbridge Mortgage Investment Fund 3A, LLC;
• Woodbridge Mortgage Investment Fund 4, LLC;
• Woodbridge Commercial Bridge Loan Fund 1, LLC;
• Woodbridge Commercial Bridge Loan Fund 2, LLC.

As members and associated persons of FINRA, brokerage firms and their financial advisors must ensure that adequate due diligence is performed on any investment that is recommended to investors – including private placements under Regulation D. Further, firms and their brokers must ensure that investors are informed of the risks associated with an investment, and must conduct a suitability analysis to determine if an investment meets an investor’s stated investment objectives and risk profile. Either an unsuitable recommendation to purchase an investment or a misrepresentation concerning the nature and characteristics of the investment may give rise to a claim against a stockbroker or financial advisor.

If you have invested in any of the Woodbridge Funds, or otherwise purchased a First Position Commercial Mortgage through investing in a Woodbridge promissory note, from a registered representative of a broker-dealer, you may be able to recover investment losses in FINRA arbitration. Investors may contact a securities arbitration attorney at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

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.

Investigators have identified more than $1 million in investor losses caused by Scott to date, FBI officials note. However, there may be more investor losses not yet uncovered by authorities, and customers of Scott are advised to contact an investment fraud lawyer immediately. Scott has pleaded guilty to the charge of stealing over $1 million from investors through a wire fraud scheme, making false statements to examiners for the SEC and other securities fraud allegations.

If your broker or investment advisor promised you returns that you never received, you may have been the victim of securities fraud. 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 or by e-mail at newcases@investorlawyers.net for a no-cost, confidential consultation.

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.

FINRA further alleges that VSR reduced the risk ratings on many investments when determining concentration at specific risk levels. According to securities arbitration lawyers, this means the ratings were inconsistent with the risks stated in the investments’ offering documents. Furthermore, the discount program resulted in an “artificially” reduced amount invested in certain investments used to determine concentration for individual customers.

According to investment lawyers, firms and their registered representatives 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. A high concentration of alternative investments is unsuitable for many investors and can result in significant losses.

If your portfolio with VSR, or another firm, contained an unsuitable concentration of alternative investments, 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 or by e-mail at newcases@investorlawyers.net for a no-cost, confidential consultation.

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.”

“UBS kept $23.6 million that under the terms of the deal should have gone to the CDO for the benefit of its investors,” says George S. Canellos, co-director of the SEC’s Division of Enforcement. “In doing so, UBS misrepresented the nature of the CDO’s collateral and rendered false the disclosures about how the collateral was acquired.”

The $50 million settlement includes disgorgement of the upfront payments amounting to $23.6 million and the $10.8 million disclosed fee, $9.7 million in interest and a $5.7 million penalty. If you invested in the CDO ACA ABS 2007-2, find out more about your legal rights and options by contacting a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 for a no-cost, confidential consultation.

“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.

An announcement from Behringer Harvard Holdings LLC stated that affiliates of Behringer Harvard and a board of directors special committee of Behringer Harvard Multifamily REIT I had entered into contractual arrangements, initiating the process of making the REIT self-managed. However, the management team for the REIT will remain basically unchanged. Five of the executives will become employees of the REIT instead of employees of Behringer Harvard. Furthermore, Mark T. Alfieri will replace Robert S. Aisner, who will remain an employee of Behringer Harvard, as the REIT’s CEO.

Typically, non-traded REITs carry a high commission, sometimes as high as 15 percent, which motivates brokers to make unsuitable recommendations to their clients. Non-traded REITs such as the Behringer Harvard Multifamily REIT I are attractive to investors because they carry a relatively high dividend or interest. However, in some instances brokers have sold the REITs without disclosing the risks of principal loss and/or the fact that the investor’s funds may be tied up for several years due to the limited market for resale of non-traded REIT shares.

If you suffered significant losses because of an unsuitable recommendation of Behringer Harvard Multifamily REIT I, or another non-traded REIT, you may be able to recover your losses through FINRA arbitration. To find out more about your legal rights and options, contact an investment fraud lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 for a no-cost, confidential consultation.

Reportedly, a claim has already been filed on behalf of one investor against Kathleen Tarr, a former representative of Royal Alliance Securities. Allegedly, Tarr recommended taking an early retirement option and then sold the investor unsuitable variable annuities and non-traded REITs. Prior to taking the early retirement option, the investor’s portfolio consisted of diversified retirement investments.

In addition, securities arbitration lawyers are investigating recommendations made by Brian Brunhaver, a former registered representative for LPL Financial. Allegedly, Brunhaver unsuitably recommended the purchase of the non-traded REITs, specifically Inland American and Inland Western, to a client. This client was seeking to make investments that would fund future college expenses. Because of the illiquidity of non-traded REITs, the investments could not be sold in time to meet the client’s needs.

Typically, non-traded REITs carry a high commission, often as high as 15 percent, which sometimes motivates brokers to make unsuitable recommendations to their clients. Non-traded REITs may appear attractive to investors because they carry a relatively high dividend or interest. However, these investments are inherently risky and illiquid, which limits access of funds to investors and makes them unsuitable for many individuals with conservative risk tolerances and those who need easy access to funds.

According to investment fraud 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.

If you received a recommendation to purchase non-traded REITs or variable annuities that were unsuitable given your investment objectives and risk tolerance, and suffered significant losses as a result, you may have a valid securities arbitration claim. 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.

The following firms have reportedly been subpoenaed: Merrill Lynch, Morgan Stanley, UBS Securities LLC, Charles Schwab & Co. Inc., Fidelity Brokerage Services LLC, Wells Fargo Advisors, ING Financial Partners Inc., TD Ameritrade Inc., LPL Financial LLC, MML Investor Services LLC, Commonwealth Financial Network, Investors Capital Corp., WFG Investments Inc. and Signator Investors Inc.

According to securities arbitration lawyers, the state sent subpoenas to the firms on July 10, 2013, requesting information regarding the sale of certain products to Massachusetts residents 65 or older over the last year. Nontraditional investments include private placements, hedge funds, oil and gas partnerships, tenant-in-common offerings, and structured products.

The subpoenas reportedly requested the following information related to these investments: The method of review of the sale, commissions generated, training materials, marketing materials and any relevant compliance. The firms have been instructed to respond no later than July 24.

In some cases, the recommendation of alternative investments to seniors with low risk tolerances may be unsuitable. According to investment fraud 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.

This investigation follows the recent Massachusetts crackdown on improper sales of non-traded REITs, which resulted in over $8 million in restitution to Massachusetts investors paid by six different brokerage firms. According to William F. Galvin, the Massachusetts Secretary of the Commonwealth, the recent investigations into non-traded REIT sales “heightened my concern that the senior marketplace is being targeted for the sales of these high-risk esoteric products.” The fifteen firms that were recently subpoenaed were not parties to the previous restitution payments, and the firms have not been found guilty of any wrongdoing.

About the alternative investments, Galvin stated, “While these products are not unsuitable in and of themselves, they are accidents waiting to happen when they are sold to inexperienced investors by untrained agents who push the products to score… large commissions.”

If you received an unsuitable recommendation to invest in alternative investments, 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.

Recently, a Financial Industry Regulatory Authority arbitration claim was filed on behalf of a Texas investor against UBS Financial Services. According to the Statement of Claim, UBS Financial Services allegedly sold the investor, who was a brokerage customer of the firm at the time, $300,000 of the 100 Percent Principal Protected Notes.

According to the claim’s allegations, UBS was aware of the deteriorating financial condition of Lehman Brothers, but concealed its views from brokerage customers who owned the notes. Furthermore, UBS customers were allegedly kept unaware that the Lehman Brothers notes could quite possibly default and become worthless. In addition, the claim alleges that the sales of Lehman notes were halted twice by UBS Financial Services because of concerns regarding credit risk, but UBS did not disclose these halts to thousands of its customers who were already invested in Lehman notes.

In addition to the alleged failure to disclose relevant information to its customers, securities arbitration lawyers say that many investors may have received unsuitable recommendations of the Lehman Brothers 100 Percent Principal Protected Notes and other Lehman Brothers structured products. 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 brokerage firms must, before approving an investment’s sale to a customer, conduct a reasonable investigation of the securities and issuer.

Investors should be aware that the Financial Industry Regulatory Authority imposes a six-year time limitation for filing arbitration claims. Therefore, investors who purchased Lehman Brothers structured products in late 2007 or early 2008 should consider consulting an attorney as soon as possible if they wish to explore filing a claim.

If you are a UBS Financial Services customer who suffered significant losses in Lehman Brothers products, you may have a valid securities arbitration claim. 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.

Reportedly, Margulies was allowed to improperly sell unregistered stock to investors between February 2005 and October 2007. Securities arbitration lawyers say he reportedly sold $8.4 million worth of unregistered stock. According to FINRA, “Scottrade failed to conduct an independent inquiry to determine whether the shares deposited were freely tradable.”

According to investment fraud lawyers, Margulies was convicted in 2011 of stealing more than $20 million from investors and looting over $90 million in illegally-issued securities by the Manhattan district attorney. He reportedly used more than $7 million of that money for luxury items such as jewelry for his wife, a vacation club membership, expensive homes and travel on a private jet.

Margulies was sentenced to 7 to 21 years in prison. However, firms have a responsibility to properly supervise and monitor customer accounts for fraud and theft. If they fail to do so, they may be held liable for customer losses. Investors should carefully review their account statements for unauthorized transactions and other signs of fraud and theft.

WFG Investments Inc. reportedly settled a similar case in which Margulies was allowed to sell almost $18 million in restricted stock. In that case, WFG was ordered to pay a fine of $200,000 to the Financial Industry Regulatory Authority.

Investors who suffered significant losses because of a firm’s failure to monitor accounts for fraud and/or sale of unregistered securities may have a valid securities arbitration claim. 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.

According to the Statement of Claim, the couple was nearing retirement and, therefore, wanted to preserve and protect their savings. Allegedly, they were presented with a written financial plan by UBS Financial Services that recommended an allocation of 52 percent equities and 46 percent fixed income for their “moderate” objectives and risk tolerance.

However, securities arbitration lawyers say the claim alleges that UBS disregarded the recommended allocation and concentrated the couple’s accounts in structured products and notes and equities for the “fixed income” portion. These investments allegedly included Lehman structured products, which UBS was aware carried significant default risk.

The claim also alleges that, unlike traditional fixed income investments, the structured products failed to provide principal protection or diversification, making their sale to these investors unsuitable. Allegedly, UBS sold these structured notes in order to generate fees.

According to investment fraud lawyers, 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.

If you are a UBS Financial Services customer who suffered significant losses because of an unsuitable recommendation of an investment product that was too risky for your investment objectives and risk tolerances, you may have a valid securities arbitration claim. Under FINRA rules investors must make claims within six years of the event or occurrence underlying the claim. Therefore, investors who purchased Lehman structured products in late 2007 and 2008 should consider consulting an attorney as soon as possible if they wish to possibly pursue a claim. To find out more about your legal rights and options, contact a securities arbitration lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

According to the order, “Steadfast’s decision to publicly announce an offering price increase 59 days prior to implementation of the price increase created a sale period that may have artificially increased investor demand for its securities.” The cease-and-desist order only orders a halt in the valuation price and does not stop sales of the Steadfast Income REIT.

On July 12, 2012, an estimated per share value of $10.24 was disclosed for the Steadfast Income REIT. However, securities arbitration lawyers say that the REIT continued to sell at the lower, $10 per share value until September 10, 2012. Reportedly, the announcement of a future valuation change harms shareholders by undercutting the investment’s current value.

The Ohio Division of Securities registration chief counsel, Mark Heuerman stated, “It’s in the best interest of prior shareholders that the REIT sells shares for what it’s worth.” The order does not include any fines restitution for investors and, as a result, many investors are seeking the help of an investment fraud lawyer in order to regain their losses.

The Steadfast Income REIT primarily invests in multifamily real estate or apartment houses. It was launched in 2009 and has assets totaling $691.4 million.

This issue resembles a similar problem that occurred with Tony Thompson’s TNP Strategic Retail Trust, which reportedly continued to sell at $10 per share, despite an estimated NAV increase on November 9, 2012, to $10.60 per share. Furthermore, the REIT stopped paying investor dividends in March, and Thompson is under Financial Industry Regulatory Authority investigation.

If you suffered significant losses as a result of the premature announcement of the Steadfast Income REIT’s value, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a securities arbitration lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

The claim alleges that the claimant, a 40-year employee of UPS, acquired more than 234,000 shares of UPS stock through the company’s Employee Stock Purchase Plan and Manager’s Incentive Program. A Hypothecation Loan was allegedly opened to facilitate the purchase of the stock, which was used as collateral for the loan. Reportedly, the investor reached a Note and Security Agreement with Wells Fargo when he moved his hypo loan to the firm.

Allegedly, Wells Fargo did not recommend a risk management strategy, such as a protective put and/or collar in order to protect the investor’s leveraged, concentrated position. Meanwhile, Wells Fargo used the UPS stock as collateral for loans to the investor. When UPS’ stock suffered a significant decline that dropped its value well below the loan-to-value ratio, the collateral call on the loan could have been prevented by a protective put option or collar. However, Wells Fargo allegedly facilitated borrowing against the investor’s concentrated stock position, while it was unprotected by a risk management strategy, in an effort to make money.

The investor’s UPS stock was, at one point, valued at more than $16,000,000. According to investment fraud lawyers, if Wells Fargo had recommended an appropriate risk management strategy, the sale of the investor’s UPS stock may not have been triggered by a collateral call and losses may have been avoided.

If you are a UPS employee who suffered significant losses because a stockbroker or financial advisor failed to recommend a risk management strategy to protect your concentrated, leveraged position in company stock, 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 The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

The letter was sent by Corvex Management LP and Related Fund Management LLC. Corvex and Related are separately managed investment funds. Together, they own around 9.6 percent of all outstanding CommonWealth REIT common shares.

The letter from Corvex and Related states: “An outdated management structure, abysmal corporate governance, and mismanagement of operations have in our view been a significant driver in the 45 percent decline in CommonWealth REIT’s stock price over the last five years. We believe this continued value destruction is by design — the direct result of self-interested actions taken by CommonWealth’s current Board of Trustees and its external manager, REIT Management and Research LLC (RMR) which is owned by Barry Portnoy and his son, Adam.”

According to the letter, in the last six months, the Portnoys and RMR have attempted to change bylaws and Maryland law in an effort to prevent the removal of trustees and “further entrench management.” Corvex and Related assert that these actions “make it clear that RMR is not operating CommonWealth for the benefit of shareholders, but, rather, for the benefit of the Portnoys. Not only has the Company repeatedly taken action to eliminate shareholder rights, in March they enacted a highly dilutive equity offering in a purported attempt to maintain ‘investment grade ratings’ — only to be downgraded to junk status by Standard & Poor’s as a result of ‘weak’ management and corporate governance.”

In addition to the issues outlined in the letter to shareholders, securities arbitration lawyers are investigating potential investor loss recovery on the basis of allegations that CommonWealth did not disclose certain facts, including the fact that leased office spaces had fallen below expectations, existing tenants were receiving concessions which were eroding CommonWealth’s income and, as a result, CommonWealth’s positive statements about its occupancy rate, dividend payout and leverage ratio were not reasonably founded. For more information about these allegations, please see the previous blog post, “CommonWealth REIT Investors Could Recover Losses.”

If you have suffered significant losses as a result of your investment in the CommonWealth REIT, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a securities arbitration lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

According to a securities arbitration claim filed by a former JP Morgan broker, the firm allegedly “had a policy to only recommend in-house product to customers, irrespective of whether that product was the best choice for customers to meet their investment objectives.” Furthermore, the firm continued to discourage the selling of outside products by allegedly making it difficult for brokers to collect commissions and fees for those products. In addition, the claim alleges that the firm’s continuing insistence on the sales of proprietary mutual funds created a perpetual conflict between the firm’s policies and a broker’s responsibility to his or her clients.

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. The alleged practices of JP Morgan would have discouraged and/or made it difficult for brokers to act in the best interest of their clients.

If you are a JP Morgan customer and you received an unsuitable recommendation of a proprietary mutual fund, you may have a valid securities arbitration claim. 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.