If your financial advisor recommended an investment in All American Oil & Gas (“AAOG”) stock, limited partnership units, or high yield (“junk”) bonds, you may be able to recover losses sustained through FINRA arbitration, in the event your broker lacked a reasonable basis for the recommendation, or if your financial advisor failed to disclose the many risks associated with an investment in AAOG. Headquartered in San Antonio, TX, AAOG is a privately held oil and gas producer that is the parent company of subsidiaries Western Power & Steam, Inc. (“WPS”) and Kern River Holding Inc. (“KRH”), an upstream exploration and production outfit with approximately 124 producing wells in the Kern River Oil Field. Together, AAOG, WPS and KRH are referred to as the Company.

On November 12, 2018, the Company filed for Chapter 11 bankruptcy in U.S. District Court in the Western District of Texas, citing “an ongoing dispute with its lenders.” As of the date of filing its petition, the Company has a total of $141,942,197 in debt obligations. According to the bankruptcy petition, in a number of instances KRH is the borrower on the Company’s loan facilities, as it requires regular ongoing cash flows to maintain its exploration and production activities.

With U.S. crude oil now trading below $50 per barrel (in 2014 oil was trading around $100, and as recently as September 2018 was hovering around $80 per barrel), many oil and gas companies may now be encountering financial distress after leveraging their balance sheets in order to fund costly exploration, drilling and related operations. Predictably, this overleveraging has placed some oil and gas companies in a precarious financial position, particularly those operating in the capital-intensive and risky upstream sector of the oil and gas market.

When a broker and/or brokerage firm recommends an oil and gas investment to a client, the financial advisor should first ensure that the investor is aware from the outset of the volatile nature of an oil and gas investment; essentially, such an investment amounts to a commodity play attached to the price movement of oil. Further, the financial advisor has a duty to determine if the investment is suitable in light of the investor’s profile and stated investment objectives. In addition, in instances where an investor’s account becomes over-concentrated in oil and gas investments, or if a broker fails to disclose the risks associated with such an investment or investment strategy, the broker and his or her firm may well be held liable for losses on the investment.

The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience representing investors in disputes concerning oil and gas investments, including MLPs, drilling programs, and private placements. Investors may contact us 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. Attorneys at the firm are admitted in New York and Wisconsin and various federal courts around the country, and handle cases nationwide (in cooperation with attorneys located in those states if required by applicable rules).

Third-party real estate investment firm Everest REIT Investors I, LLC (“Everest”) recently launched an unsolicited tender offer to purchase up to 780,000 shares of common stock in Cole Credit Property Trust IV, Inc. (“Cole Credit IV”), at $6.60 per share.

Cole Credit IV was formed in July 2010 and is structured as a publicly registered, non-traded REIT. Shares issued through its offering were priced at $10 per share. As of December 31, 2017, Cole Credit IV had raised approximately $3.4 billion in investor equity. While the non-traded REIT has most recently estimated its share value at $9.37 per share, Cole Credit IV further “states that such figure is based on numerous assumptions and judgments and there can be no assurances that such amount would be realized upon a liquidation of assets or other liquidity event.”

Non-traded REITs pose a great deal of risks that are often not readily apparent to retail investors, and may not be adequately explained by the financial advisors and stockbrokers who recommend these complex investments. One significant risk associated with non-traded REITs concerns their high up-front commissions, typically between 7-10%. In addition to high commissions, non-traded REITs like Cole Credit IV generally charge investors for certain due diligence and administrative fees, ranging anywhere from 1-3%.

Likely the greatest risk associated with non-traded REITs involves their illiquid nature. Unlike traditional stocks and mutual funds, non-traded REITs do not trade on a national securities exchange. Unfortunately, many uninitiated investors in non-traded REITs have come to learn too late that their ability to exit their investment position is limited. Investors in non-traded REITs can sometimes exit their investment through redemption directly with the sponsor, but such redemptions are limited, both as to timing (often redemptions are only done on a quarterly basis), as well as amount (any redemption will be subject to certain terms, including an overall limit on the aggregate number of shares that the REIT will permit to be redeemed at a given time). Investors may also be able to sell shares through tender offers from time to time, or via a limited secondary market.

The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience representing investors in connection with complex non-conventional investments, including non-traded REITs and business development companies (BDCs). Investors may contact us 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. Attorneys at the firm are admitted in New York and Wisconsin and various federal courts around the country, and handle cases nationwide (in cooperation with attorneys located in those states if required by applicable rules).

Investors in FS Energy and Power Fund (“FSEP” or the “Company”) will likely encounter difficulty in selling out of all or a substantial portion of their FSEP position, in the event they seek to redeem their shares directly with FSEP’s sponsor, Franklin Square. Headquartered in Philadelphia, PA, FSEP was formed as a Delaware Statutory Trust in September 2010, and subsequently commenced its investment operations on July 18, 2011. Structured as a regulated investment company, or RIC, for federal tax purposes, FSEP qualifies as a business development company (“BDC”) under the Investment Company Act of 1940.

Upon information and belief, as a publicly registered, non-traded BDC, FSEP was marketed and recommended to numerous retail investors nationwide. As set forth in its most recent quarterly 10-Q as filed with the SEC, “The Company’s investment objective is to generate current income and long-term capital appreciation by investing primarily in privately-held U.S. companies in the energy and power industry.”

As we have highlighted in recent blog posts, BDCs have been around since the early 1980’s, when Congress first enacted legislation amending federal securities laws allowing for BDCs — which are simply types of closed-end funds — to make investments in developing companies and firms that would otherwise have difficulty accessing financing. Because they provide financing solutions for smaller, private companies, BDCs have been likened to private equity investment vehicles for retail investors in various marketing pitches by BDC sponsors and the financial advisors who recommend these financial products.

BDCs characteristically offer high yields to investors, both as a function of their collecting much higher than average interest income on loans to more thinly capitalized businesses, as well as their use of internal leverage. In light of a BDC’s leveraged structure and its typical investment portfolio, however, uninformed investors may come to learn too late that their investment carries considerable risk. Moreover, non-traded BDCs such as FSEP carry additional risks, including their lack of liquidity and high upfront fees and commissions.

Investors who wish to sell their FSEP shares through the Company’s Share Repurchase Program are limited as to timing, and may only do so quarterly pursuant to FSEP’s redemption program. Further, the Company limits the amount of shares which it allows for repurchase each quarter. For example, on July 2, 2018, FSEP “repurchased 4,554,498 common shares (representing 20% of common shares tendered for repurchase…) at $6.60 per share….” Thus, a FSEP investor seeking to sell out of their entire for the quarter ending July 2, 2018, would have been limited to only selling 20% of their FSEP investment.

For investors seeking immediate liquidity on their non-traded FSEP shares, there does exist a limited and fragmented secondary market. Unfortunately, however, recent pricing suggests that FSEP investors wishing to sell on a thinly traded secondary market may only do so at disadvantageous pricing of approximately $5.25 – $5.61 per share. This recent secondary market pricing suggests that FSEP investors who recently sold their shares on the secondary market likely incurred substantial losses of approximately 45% on their initial investment, excluding distributions paid to date.

The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience representing investors in connection with complex non-conventional investments, including non-traded BDCs and REITs. Investors may contact us 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. Attorneys at the firm are admitted in New York and Wisconsin and various federal courts around the country, and handle cases nationwide (in cooperation with attorneys located in those states if required by applicable rules).

Investors in Strategic Storage Growth Trust, Inc. (“Strategic Storage” or the “Company”) may have arbitration claims to be pursued before FINRA, in the event that their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the broker. As recently reported, Strategic Storage’s board of directors has elected to suspend its distribution reinvestment plan, as well as its share redemption program, as it seeks to shore up its finances and explore potential liquidity options. Given the fact that one of the Company’s stated primary investment objectives is to “grow net cash flow from operations in order to provide sustainable cash distributions… over the long-term” many retail investors who invested because of the Company’s income component are now faced with the prospect of holding an illiquid, non-traded investment that no longer provides valuable monthly income.

According to publicly available documents filed with the SEC, Strategic Storage was formed on March 12, 2013 as a Maryland corporation for the “[p]urpose of engaging in the business of investing in self storage facilities and related self storage real estate investments.” The Company’s portfolio currently consists of 26 operating self storage facilities, in addition to two properties in development. Strategic Storage launched its offering in January 2015, in the process raising approximately $193 million through issuance of Class A shares and approximately $79 million through issuance of Class T shares.

Strategic Storage is structured as an operating business, but qualifies as a REIT for federal income tax purposes. For many investors, their primary motivation to invest in a REIT is to capture an enhanced income stream from the tax-advantaged REIT structure. Importantly, however, Strategic Storage is a non-traded REIT, meaning that the investment is illiquid in nature and not easily sold (typically, many non-traded REIT’s offer a share redemption program, but these programs are often limited both as to when an investor may redeem and the amount of shares available for actual redemption).

With regard to income or distributions, many non-traded REITs pose significant risks, including their initial structure as a blind pool, as well as the nature of the income paid to investors. Many non-traded REITs are blind pools, meaning that an investor considering a capital commitment will have either no information (or very limited information) as to the nature and quality of the assets to be purchased by the REIT. Further, with respect to the nature of income paid by non-traded REITs, quite often distributions are paid to investors via “return of capital,” meaning that investors are essentially being paid back with their own initial contribution. This is extremely problematic, and unsurprisingly, many non-traded REITs — including Strategic Storage — have elected to suspend their distributions, and in certain instances their share redemption programs, leaving retail investors mired in an illiquid investment that no longer pays valuable income.

Strategic Storage 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.

If you invested in a Woodbridge promissory note(s) upon the recommendation of broker Peter David Holler (CRD# 838897), you may be able to recover your losses through securities arbitration before FINRA. As disclosed by FINRA on May 21, 2018, registered representative Peter Holler has been suspended from the securities industry for a period of two years. From 2001 through August 2017, Mr. Holler was affiliated with Securities Service Network, LLC (BD No. 13318) (“SSN”) in their Bristol, TN office. FINRA BrokerCheck indicates that Mr. Holler was discharged from his employment with SSN on or about August 10, 2017 due to his alleged participation in “unapproved and undisclosed outside business activity…”

Pursuant to a Letter of Acceptance, Waiver, and Consent (“AWC”), through which Mr. Holler neither admitted or denied FINRA Enforcement’s findings, he accepted both the two-year suspension, as well as monetary penalties including a $10,000 fine and disgorgement of $49,790 in commissions received through the sale of unregistered Woodbridge securities to various investors. As encapsulated in the May 2018 AWC, Mr. Holler purportedly violated FINRA Rule 3280(b), an industry rule that prohibits brokers from participating in private securities transactions, without first providing written notice to their employer firm. Such written notice must set forth in detail the proposed transaction, as well as the financial advisor’s proposed role with regard to the contemplated transaction and whether he or she will receive any compensation in connection with the transaction.

According to FINRA Enforcement’s findings, from September 2016 – August 2017, Mr. Holler solicited various investors to purchase unregistered securities in certain Woodbridge Mortgage Investment Funds as offered through the Woodbridge Group of Companies (“Woodbridge”) of Sherman Oaks, CA. Further, FINRA Enforcement determined that Mr. Holler sold approximately $1.4 million in Woodbridge promissory notes to some 19 individuals, 9 of whom were SSN customers. In derogation of FINRA Rule 3280, Mr. Holler purportedly did not provide SSN with prior written notification of these private securities transactions.

As has been alleged by the SEC, Woodbridge and its owner and former CEO, Mr. Robert Shapiro, purportedly “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 Steven Peiken, Co-Director of the SEC’s Enforcement Division, the Woodbridge “[b]usiness model was a sham. The only way that Woodbridge was able to pay investors their dividends and interest payments was through the constant infusion of new investor money.”

Irrespective of whether Mr. Holler’s alleged outside business activity was conducted without his employer’s knowledge, brokerage firms like Securities Service Network nonetheless have a duty to ensure that their registered representatives are adequately supervised. As such, brokerage firms must take reasonable steps to ensure that their brokers follow all applicable securities rules and regulations, as well as adhere to the firm’s internal policies and procedures. In instances when brokerage firms fail to adequately supervise their financial advisors, they may be held liable for losses sustained by investors.

Attorneys at Law Office of Christopher J. Gray, P.C. have significant experience representing investors in disputes involving broker misconduct, including claims against broker-dealers for their failure to supervise. 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.

Investors in Cole Credit Property Trust IV, Inc. (“Cole Credit IV”) appear to have incurred substantial principal losses, based on the pricing of a recent tender offer. Recently, third party real estate investment firm MacKenzie Realty Capital, LP (“MacKenzie”) initiated a tender offer to purchase shares of Cole Credit IV at a price of $6.01/share. Therefore, investors who invested in Cole Credit IV through the offering at $10/share will incur substantial losses on their initial investment of approximately 40% (exclusive of commissions paid and distributions received to date).

Cole Credit IV’s real estate portfolio is geographically diverse, and is focused on investments in “income-producing, necessity single-tenant retail properties and anchored shopping centers subject to long-term net lease,” as stated on the company’s website. As a publicly registered non-traded REIT, Cole Credit IV was permitted to sell securities to the investing public at large, including numerous unsophisticated retail investors who bought shares through the IPO upon the recommendation of a broker or money manager. Cole Credit terminated its offering on April 4, 2014.

Non-traded REITs pose many risks that are often not readily apparent to retail investors, or adequately explained by the financial advisors and stockbrokers who recommend these complex investments. One significant risk associated with non-traded REITs has to do with their high up-front commissions, typically between 7-10%. In addition to high commissions, non-traded REITs like Cole Credit IV generally charge investors for certain due diligence and administrative fees, ranging anywhere from 1-3%.

Furthermore, non-traded REITs are generally illiquid investments. Unlike traditional stocks and mutual funds, non-traded REITs do not trade on a national securities exchange. Thus, many investors in non-traded REITs have come to learn too late that their ability to exit their investment position is limited. Typically, investors in non-traded REITs can only exit their investment position through redemption directly with the sponsor, and then on a limited basis, and often at a disadvantageous price. According to publicly available information, Cole Credit IV’s share redemption program is currently oversubscribed, leaving shareholders owning approximately 34 million shares largely unable to redeem and exit their illiquid investment position via that route.

However, in some circumstances, as here, investors may be presented with limited market-driven opportunities — such as a tender offer — to sell their shares at what may be a disadvantageous price.

Investors in non-traded REITs like Cole Credit IV may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment (such as its lack of liquidity or the potential for loss of principal) was misrepresented by the stock broker. Investors may contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or via email 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.

Non-traded real estate investment trusts (REITs) are investments that pose a significant risk that the investor will lose some or all of his initial investment. Non-traded REITs are not listed on a national securities exchange, limiting investors’ ability to sell them after the initial purchase. Such illiquid and risky investments are often better suited for sophisticated and institutional investors, rather than retail investors such as retirees who do not wish to have their money tied up for years, or risk losing a significant portion of their investment. Non-traded REITs usually have higher fees for investors than publicly-traded REITs and can be harder to sell.

A partial list of non-traded REITs is as follows (not all of the REITs listed have performed poorly):

American Realty Capital – Retail Centers of America, Inc.

American Realty Capital Daily Net Asset Value Trust, Inc.

American Realty Capital Healthcare Trust II, Inc.

American Realty Capital Hospitality Trust, Inc.

American Realty Capital New York City REIT, Inc.

American Realty Capital Trust V, Inc.

Behringer Harvard Opportunity REIT I

Behringer Harvard Opportunity REIT II

Carey Watermark Investors Incorporated

Carter Validus Mission Critical REIT

CNL Growth Properties

CNL Healthcare Properties Inc.

CNL Lifestyle Properties, Inc.

Cole Credit Property Trust IV, Inc.

Cole Credit Property Trust V, Inc.

Cole Office & Industrial REIT

Cole Real Estate Income Strategy (Daily NAV), Inc.

Corporate Property Associates 17 – Global, Inc.

Corporate Property Associates 18 – Global

Dividend Capital Diversified Property Fund Inc.

Global Income Trust, Inc.

Griffin Capital Essential Asset REIT, Inc.

Griffin-American Healthcare REIT III

GTJ REIT, Inc.

Hines Global REIT, Inc.

Hines Real Estate Investment Trust, Inc.

Industrial Income Trust, Inc.

Inland Real Estate Income Trust, Inc.

InvenTrust Properties Corp.

Jones Lang LaSalle Income Property Trust, Inc.

KBS Legacy Partners Apartment REIT, Inc.

KBS Real Estate Investment Trust I, Inc.

KBS Real Estate Investment Trust II, Inc.

KBS Real Estate Investment Trust III

KBS Strategic Opportunity REIT, Inc.

Northstar Healthcare Income, Inc.

Northstar Real Estate Income II, Inc.

Northstar Real Estate Income Trust, Inc.

Phillips Edison Grocery Center REIT I, Inc.

Phillips Edison Grocery Center REIT II, Inc.

Realty Finance Trust, Inc.

RREEF Property Trust

Steadfast Income REIT

Strategic Realty Trust Inc.

TIER REIT Inc.

United Realty Trust, Inc.

Brokers and financial advisors are required to make investment recommendations that are consistent with their clients’ risk tolerance, net worth, investment objectives and experience in the market. However, due to the high sales commissions brokers typically earn for selling REITs – as high as 15%- brokers can be tempted to make “one size fits all” recommendations to investors in order to reap commissions. These high up-front fees and commissions can negatively affect performance over time, as illustrated by the estimated $50 billion that non-traded REITs have cost customers.

If you have suffered significant losses as a result of unsuitable recommendations of non-traded REITs or other non-conventional investments by a stockbroker or financial advisor, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact an investor rights 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.

According to the allegations made by one investor, Berthel Fisher failed to make the proper disclosures and perform adequate due diligence regarding the TNP 2008 Participating Notes Program. A complaint was filed in the U.S. District Court for the Northern District of Iowa on July 8, which stated, “Berthel Fisher had actual knowledge of the misrepresentations and omission in the 2008 [private-placement memorandum] and failed to investigate red flags that pointed to other misrepresentations and omissions.”

The deal’s sponsor, Thompson National Properties LLC, and chief executive Tony Thompson have also been under investigation by securities arbitration lawyers for the TNP Strategic Retail Trust Inc., a non-traded REIT, and the TNP 12% Notes Program. Allegedly, the TNP Strategic Retail Trust was recommended to many investors for which it was unsuitable, given their age, risk tolerances and investment objectives. Reportedly, the 12% Notes Program, which was designed to raise capital for tenant-in-common real estate operations, suspended interest payments to investors and was in danger of defaulting on two loans.

In addition, a complaint filed in the U.S. District Court for the Central District of California alleged “misrepresentations, mismanagement, misappropriation of investor funds and other misconduct” on the part of Thompson and his team regarding another TNP-sponsored deal, TNP Kodak, or TNP 6700 Santa Monica Boulevard. According to stock fraud lawyers, it is possible that some brokerage firms may be held liable for inadequate due diligence or the unsuitable recommendation of TNP investments to investors.

If you suffered significant losses in the TNP 2008 Participating Notes Program LLC, TNP Strategic Retail Trust Inc., TNP 12% Notes Program or TNP Kodak, you may be able to recover your losses through Financial Industry Regulatory Authority 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.

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.