Formed in April 2011, FIP LLC is structured as a Delaware limited liability company, with its principal place of business in Irvine, CA. Formerly, FIP LLC conducted business as Pensions, Annuities & Settlements, LLC. Additionally, FIP LLC has business relationships with the following marketing affiliates: Cash Flow Investment Partners, LLC, BuySellAnnuity, Inc. and Pension Advance, LLC.

FIP LLC’s business model is predicated on soliciting pensioners through the websites of its marketing affiliates to enter into certain contracts, pursuant to which the pensioner receives a lump sum of money in exchange for some or all of the respective pensioner’s monthly pension payments, for a fixed period of time (typically, 5-10 years). In addition, FIP LLC enters into contracts with investors (primarily retail investors), through which the investors provide money for the lump sum cash payments and subsequently receive some or all of the pensioner’s monthly payments.

Such structured cash flow investments based upon pension or disability income streams — such as those marketed and sold by FIP LLC — are very complicated and fraught with risk. For example, while some investors may actually realize a profit on their FIP investment, in other scenarios a pensioner from whom an investor purchased a FIP may die prematurely, thus ending the income stream the investor had made a lump sum payment on. In other instances, the pensioner may argue that the agreement underlying the FIP is invalid and seek to renege on the contract, thus placing the investor’s anticipated income stream at risk. Additional risks associated with FIPs include the product’s typically high expense (commissions may be 7% or higher), the product’s illiquid nature (once money is committed to the investment, it cannot be readily exited like selling shares in stock or a mutual fund), and lack of information regarding the investment itself (unlike publicly traded securities, investments in FIPs do not have the same disclosure requirements as publicly traded securities).

As recently reported, about 370 investment intermediaries nationwide sold investments in structured cash flows through FIP LLC. Upon information and belief these intermediaries received upfront commissions between 6-10% on capital invested. Most recently, certain state securities regulators have determined that the up-front payments made to pensioners are, in fact, unlawful loans charging pensioners allegedly usurious interest rates. Furthermore, it has been estimated that approximately 1,000 investors have lost at least $100 million in connection with investing in structured cash flows though FIP LLC.

Attorneys at Law Office of Christopher J. Gray, P.C. have significant experience in representing investors who have incurred losses in connection with a range of esoteric and illiquid investment products, including private placement offerings, as well as unregistered securities offerings in various investment programs, including insurance-backed investments products. Investors may contact our office at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation.

On July 27, 2018, two affiliated small business lenders — 1 Global Capital (a/k/a 1^st Global Capital, and 1 West Capital (collectively, “1GC”) — filed for Chapter 11 protection in Bankruptcy Court in the Southern District of Florida. Based in Hallandale Beach, FL, the two affiliated lenders are under the same common ownership and are in the business of purportedly providing small business loans known as “direct merchant cash advances,” to various clientele. In connection with the bankruptcy filing, 1GC’s two primary executives, Messrs. Carl Ruderman and Steven A. Schwartz, relinquished their control over the company and tendered their resignations.

As reported, 1GC had around 1,000 individual unsecured creditors prior to filing for bankruptcy. These creditors had loaned 1GC money with the understanding that these funds would then be invested in direct merchant cash advances. Creditors received monthly statements which demonstrated how their investments had supposedly been allocated, in addition to being provided with an online portal to track their investments.

In total, 1GC has reported more than $283 million in unsecured lender claims. Of the 20 largest creditors, all of them are individuals or retirement accounts. Prior to the bankruptcy filing, the SEC had opened an investigation into whether 1GC was engaging in “[p]ossible securities laws violations, including the alleged offer and sale of unregistered securities by unregistered brokers, and by the alleged commission of fraud in connection with the offer, purchase and sale of securities.” At this stage, both the SEC and the U.S. Attorney’s Office for the Southern District of Florida, which recently commenced a parallel criminal investigation, are investigating allegations of possible wrongdoing or malfeasance at 1GC.

In light of these allegations and 1GC’s recent bankruptcy filing, some recent commentary has drawn a comparison to the events surrounding the Woodbridge Group of Companies’ bankruptcy filing and the SEC’s December 2017 charges against Woodbridge, alleging that the firm’s founder and former CEO, Robert Shapiro, had orchestrated a $1.2 billion Ponzi Scheme. While the investigation into 1^st Global Capital continues, investors are encouraged to actively monitor the situation as it unfolds.

Creditors who invested in any 1^st Global Capital direct merchant cash advances upon the recommendation of 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 investment.

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, particularly on esoteric and more opaque investments that are not registered with the SEC, and as such, are typically offered via private placement. Further, firms and their brokers must ensure that investors are informed of the risks associated with an investment, and additionally 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.

Investors who wish to discuss a possible claim 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.

On July 18, 2018, the SEC filed a lawsuit in the District of Connecticut naming Temenos Advisory, Inc. (“Temenos”) and George L. Taylor (“Taylor”) as Defendants and essentially alleging that Defendants made improper recommendations of certain private placement investments to their investment advisory clients. A copy of the SEC Complaint is accessible here: SEC v Temenos & Taylor

Temenos, founded by Taylor, is a Connecticut corporation headquartered in Litchfield, CT, with additional offices located in St. Simons Island, GA and Scottsdale, AZ. Temenos has been registered with the SEC as a registered investment advisor (RIA) since 1999, and is owned by Mr. Taylor and a trust that was purportedly established for purposes of benefiting Taylor’s former business partner.

As alleged by the SEC, prior to 2014, Temenos’ business was largely focused on the sale of traditional financial products to its clientele, including “[m]utual funds, exchange traded funds, variable annuities, and publicly traded stocks.” Like many RIAs, Temenos charged an advisory fee to its customers based upon a percentage of assets under management. However, as alleged in the Complaint, beginning in 2014 Temenos began recommending private placement investments to its clients: “Between 2014 and 2017, Defendants placed more than $19 million in investments by their clients and others in [the securities of] four private issuers … And they did so without ever sufficiently examining the marketing claims, financial statements, or business activities of those companies.”

As discussed in several recent blog posts, with increasing frequency retail investors have been solicited to invest in so-called private placements. According to a recent Wall Street Journal article, “In 2017 alone, private placements using brokers totaled at least $710 billion….” A private placement, sometimes called a non-public offering, is simply an offering of a company’s securities that are not registered with the Securities & Exchange Commission (“SEC”). Pursuant to federal securities laws, a company may not offer or sell securities unless the offering has been registered with the SEC or an exemption from registration applies.

Perhaps the greatest risk associated with private placement investments concerns the lack of transparency and information available to the retail investor. On the one hand, when an investor decides to purchase publicly traded common stock or shares in a mutual fund or ETF, he or she will have the opportunity to first review a prospectus, as required by the SEC. However, with respect to private placements, no such prospectus is filed with the SEC — rather, private placement securities are typically offered through a Private Placement Memorandum (“PPM”). Ultimately, it is incumbent on the brokerage firm or RIA offering a private placement investment to its customers to conduct adequate due diligence on the investment in order to determine its suitability.

As alleged by the SEC, Temenos recommended unsuitable and risky securities in four private placements, as follows:

• “Company A marketed an emergency response communications product. Between February 2014 and February 2017, Temenos solicited approximately $11.2 million of investments in Company A from their advisory clients and other individuals.”
• “Company B purported to be building a fiber optic connection between locations along the east coast of the United States. Between September 2014 and March 2017, Temenos solicited approximately $7 million of client investments in Company B.”
• “Company C marketed itself during the relevant time period as a crowdfunding investment portal. Between March 2016 and January 2017, Defendants solicited $805,000 of client investment in Company C.”
• “Company D purported to have developed a new water purification technology. From in or about December 2014 to in or about July 2015, Temenos, through Taylor, solicited investments in Company D.”

As alleged in the Complaint, Temenos failed to conduct even basic due diligence on the four private placement investments marketed to its customers: “Throughout the relevant period, Taylor made statements to clients that misleadingly suggested that the private placement investments… had been carefully vetted and selected from a large group of potential offerings based on their favorable risk/return potential, and were suitable for any wealthy investor.” The SEC has further alleged that Temenos failed to inform clients that the RIA was receiving compensation from the recommended private placement companies.

Investors who have purchased unregistered securities through a private placement may have legal claims if the investment was solicited through a misleading sales presentation or if the recommendation to purchase the investment was unsuitable. Investors may contact Law Office of Christopher J. Gray, P.C. by telephone or email newcases@investorlawyers.net to schedule a no-cost, confidential consultation.

On June 19, 2018, the Securities and Exchange Commission (“SEC”) filed a Complaint against various individuals and entities — including former financial advisor John Charles Piccarreto, Jr. (CRD# 6276418) of San Antonio, TX — in furtherance of the SEC’s efforts to “stop an ongoing fraudulent scheme in which the Defendants have raised more than $102 million from at least 637 investors across the United States since 2011.” As alleged by the SEC, Defendants Perry Santillo and Christopher Parris of Rochester, NY purportedly orchestrated a fraudulent Ponzi-like scheme predicated upon first buying or taking over books of business from retiring investment professionals from around the country.

According to the Complaint, after acquiring new investors and assets, Messrs. Santillo and Parris (each formerly registered with FINRA) would coordinate their sales efforts with Defendants, including John Piccarreto, Jr., in order to allegedly persuade victims into withdrawing savings from traditional investments, in order to transfer the capital into issuers controlled by Messrs. Santillo, Parris, or certain of their associates. The SEC has alleged that the Defendants would “falsely claim that their investors’ money [would] be used to operate businesses in fields such as financial services, insurance, real estate development, and medical laboratories.” In actuality, however, the SEC has alleged that Defendants would transfer funds received into “multiple accounts held in the names of different entities” controlled by Defendants. While some of the funds were purportedly used to repay investors in typical Ponzi-fashion, the SEC has alleged that the bulk of the monies were misappropriated by the Defendants.

With regard to Mr. Piccarreto, the SEC has alleged that, in one instance, he met with an elderly investor from Austin, TX in February 2015. As alleged, Mr. Piccarreto convinced the 80 year old investor, who suffered from dementia, into putting $250,000 into an entity controlled by Defendants: Percipience. Mr. Piccarreto later emailed the investor’s daughter, in response to her concerns with the Percipience investment, that “I know this is scary for you and you are just looking out for dad but I promise you I will not let anything happen to any of the money.” In total, the SEC has alleged that Mr. Piccarreto misappropriated approximately $1.3 million in investor money.

According to FINRA BrokerCheck, former financial advisor John Piccarreto, Jr. was previously affiliated with First American Securities, Inc. (CRD# 35841) from June 2014 – July 2015. In July 2017, he voluntarily consented to a two-year suspension from the securities industry, as well as a deferred fine of $15,000, pursuant to a Letter of Acceptance, Waiver & Consent (“AWC”) accepted by FINRA Enforcement on June 20, 2017. As determined by FINRA Enforcement, Mr. Piccarreto allegedly “participated in at least 20 private securities transactions, including some transactions by elderly customers, by way of unregistered, private” offerings without providing written notice to his employer, First American Securities.

Brokerage firms including First American Securities have an affirmative obligation 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 adhering 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.

Attorneys at Law Office of Christopher J. Gray, P.C. have successfully resolved a number of disputes on behalf of investors, including cases involving Ponzi schemes and related 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.

Investors in Woodbridge Units or Notes, as further defined below, who purchased a Woodbridge investment based upon a recommendation by former financial advisor Alan Harold New (CRD# 2892508) may be able to recover losses through securities arbitration. Publicly available information through FINRA BrokerCheck indicates that Alan New was formerly affiliated with broker-dealer NYLife Securities LLC (“NYLife”) (CRD# 5167) in their Fort Wayne, IN office, from June 2004 – August 2016.

As recently reported, the Woodbridge Group of Companies, LLC (“Woodbridge”) and certain of its affiliated entities filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware (Case No. 17-12560-KJC) on December 4, 2017. Beginning as early as 2012, Woodbridge and its affiliates offered securities nationwide to numerous retail investors through a network of in-house promoters, unlicensed advisors, as well as various licensed financial advisors, including Mr. New. Woodbridge investments essentially came in two forms: (1) so-called “Units” that consisted of subscriptions agreements for the purchase of an equity interest in one of Woodbridge’s Delaware limited liability companies, and (2) “Notes” or what have commonly been referred to as “First Position Commercial Mortgages” or “FPCMs” that consisted of lending agreements underlying purported hard money loans on real estate deals.

As 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.”

As indicated through FINRA BrokerCheck, Alan New currently has five (5) pending customer disputes. Each of these disputes center on similar allegations concerning Mr. New’s alleged involvement in recommending “[u]nregistered and fraudulent investments in Woodbridge Mortgage Investment Fund.” Brokerage firms including NYLife have an affirmative obligation to ensure that their registered representatives are adequately supervised. Consequently, brokerage firms must take reasonable steps to ensure that their registered representatives follow all applicable securities rules and regulations, as well as adhere to the firm’s internal policies and procedures. In those instances when brokerage firms fail to adequately supervise their brokers, they may be held liable for losses sustained by investors.

Under FINRA Rule 3280, if a financial advisor wishes to consummate a private securities transaction, then he or she must first provide the firm with prior written notice, detailing the contemplated transaction. Such a transaction must first be approved by the firm. Furthermore, in the event that the transaction is not approved by the firm, then the broker cannot participate in the transaction.

The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience representing investors in disputes involving broker misconduct, including claims concerning sales of risky, illiquid and opaque financial products. 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 Phillips Edison Grocery Center REIT II (“Phillips Edison II”) were recently solicited by third-party real estate investment management firm MacKenzie Realty Capital, Inc. (“MacKenzie”) in relation to a mini tender offer to purchase Phillips Edison II shares at $14.89 per share. Investors who purchased Phillips Edison II shares through the initial offering acquired their shares at $25 per share (and at $23.75 per share for shares subsequently acquired through the dividend reinvestment program). Accordingly, investors seeking immediate liquidity who elect to participate in the MacKenzie tender offer will incur substantial losses of approximately 40% on their initial investment (excluding commissions and fees, as well any dividend income received to date).

Phillips Edison II was incorporated in June 2013 and is a publicly registered, non-traded REIT. As set forth in its prospectus, Phillips Edison II was “formed to leverage the expertise of our sponsors… and capitalize on the market opportunity to acquire and manage grocery-anchored neighborhood and community shopping centers located in strong demographic markets throughout the United States.” As a publicly registered non-traded REIT, Phillips Edison II was permitted to sell securities to the investing public at large, and as such, the non-traded REIT was marketed nationwide to numerous unsophisticated retail investors. In certain instances, some investors were not fully informed by their financial advisor as to the complex nature and risks associated with non-traded REITs.

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. To begin, one significant risk associated with non-traded REITs has to do with their high up-front commissions, typically between 7-10%; in the case of Phillips Edison II, its prospectus indicates that investors were charged a “selling commission” of 7%. In addition to high commissions, non-traded REITs like Phillips Edison II generally charge investors for certain due diligence and administrative fees, ranging anywhere from 1-3%; as set forth in its prospectus, Phillips Edison II charged investors a 3% dealer manager fee of up to 3% of gross offering proceeds. Such high commission and fees act as an immediate “drag” on an investment.

Furthermore, non-traded REITs like Phillips Edison II are generally illiquid investments. Unlike traditional stocks and mutual funds, non-traded REITs cannot be readily sold and resold on deep and liquid national securities exchanges. Typically, investors in non-traded REITs can only exit their investment position through redemption directly with the sponsor, and even then on a limited basis, and often at a disadvantageous price. Or, investors may be able to sell shares through a limited and fragmented secondary market. Finally, investors may be presented with limited market-driven opportunities — such as a tender offer — to sell their shares at a disadvantageous price.

Investors in Phillips Edison II and other non-traded REITs may have viable FINRA arbitration claims if their stockbroker or financial advisor made an unsuitable recommendation to purchase the investments or solicited the investments via a misleading sales presentation. Investors may contact 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 May 1, 2018, FINRA Department of Enforcement entered into a settlement via Acceptance, Waiver and Consent (“AWC”) with Respondent Laidlaw & Company (UK) LTD. (“Laidlaw”) (BD# 119037). Without admitting or denying any wrongdoing — Laidlaw consented to a public censure by FINRA, the imposition of a $25,000 fine, as well as agreeing to furnish FINRA with a written certification that Laidlaw’s “[s]ystems, policies and procedures with respect to each of the areas and activities cited in this AWC are reasonably designed to achieve compliance with applicable securities laws, regulations and rules.”

In connection with its investigation surrounding the matter, FINRA Enforcement alleged that “From April 2013 through December 2015… Laidlaw failed to establish and maintain a supervisory system and written supervisory procedures (“WSPs”) reasonably designed to ensure that” Laidlaw registered “representatives’ recommendations of leveraged and inverse exchange traded funds (“Non-Traditional ETFs”) complied with applicable securities laws and NASD and FINRA Rules.”

Non-Traditional ETFs are extremely complicated and risky financial products. Non-Traditional ETFs are designed to return a multiple of an underlying benchmark or index (or both) over the course of one trading session (typically, a single day). Therefore, because of their design, Non-Traditional ETFs are not intended to be held for more than a single trading session, as enunciated by FINRA through previous regulatory guidance:

“[t]he performance of Non-Traditional ETFs over periods of time longer than a single trading session ‘can differ significantly from the performance… of their underlying index or benchmark during the same period of time.” FINRA Regulatory Notice 09-31.

Further, because of the inherent complexities and risks embedded in Non-Traditional ETFs, FINRA has explicitly advised broker-dealers and their registered representatives that Non-Traditional ETFs “[a]re typically not suitable for retail investors who plan to hold them for more than one trading session, particularly in volatile markets.” Id.

Pursuant to the AWC, FINRA’s findings of fact allege that Laidlaw registered representatives solicited and effected 869 purchases and 946 sales of Non-Traditional ETFs across 312 customer accounts, totaling in excess of $32,000,000 in transactions. Despite this volume of business in Non-Traditional ETFs, FINRA determined that Laidlaw’s own compliance systems, including its WSPs, “[d]id not require supervisors to review open positions in Non-Traditional ETFs held for extended periods or resulting in unrealized losses and did not impose product-specific limitations on Firm representatives’ ability to recommend trading in or holding Non-Traditional ETFs.” Due to these alleged infractions, FINRA Enforcement alleged that Laidlaw’s insufficient supervisory system gave rise to violations of FINRA Rules 3110 and 2010.

Moreover, brokerage firms like Laidlaw have a duty under NASD Rule 2310 and FINRA Rule 2111 — the so-called suitability rule — to, among other things, perform reasonable diligence to understand the nature of the recommended security. This due diligence “[w]ith respect to leveraged and inverse ETFs… means that a firm must understand the terms and features of the funds, including how they are designed to perform, how they achieve that objective, and the impact that market volatility, the ETFs use of leverage, and the customer’s intended holding period will have on their performance.” See FINRA Regulatory Notice 09-31 and FINRA Regulatory Notice 12-03.

Attorneys at Law Office of Christopher J. Gray, P.C. have substantial experience representing customers in FINRA arbitration cases involving claims against stockbrokers or investment advisors. Investors with questions concerning possible claims involving Non-Traditional ETFs or other non-conventional investments may contact our office at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation.

Financial advisor Mark Kaplan (CRD# 1978048), who was most recently affiliated with Vanderbilt Securities, LLC (CRD# 5953, hereinafter “Vanderbilt”), has voluntarily consented to a bar from the securities industry pursuant to a Letter of Acceptance, Waiver & Consent (“AWC”) signed off on by FINRA Enforcement on March 7, 2018. Without admitting or denying any wrongdoing, Mr. Kaplan consented to the industry bar following FINRA’s investigation and findings concerning allegations of unsuitable and excessive trading in an elderly retail investor’s brokerage account.

According to FINRA records, beginning in 1989, Mr. Kaplan began working as a registered representative for Lehman Brothers. Subsequently, he worked at CIBC Oppenheimer Corp., Morgan Stanley DW Inc., Citigroup, and Morgan Stanley. During the course of his nearly thirty-year career, he has been involved in seven customer disputes, each of which concluded with a settlement.

With regard to the AWC, FINRA Enforcement alleged that “Between March 2011 and March 2015 [Mr. Kaplan] engaged in churning and unsuitable excessive trading in the brokerage account of a senior investor” and thus “[v]iolated FINRA Rules 2020, and 2111, NASD Rule 2310… and FINRA Rule 2010.” FINRA’s findings centered on Mr. Kaplan’s customer, identified in the AWC by the initials ‘BP’, as “[a] 93-year-old retired clothing salesman” who opened several accounts at Vanderbilt with Mr. Kaplan during March 2011.

After BP opened his accounts at Vanderbilt, FINRA Enforcement further alleged that over the ensuing months and years, Mr. Kaplan “exercised de facto control over BP’s accounts” and that the elderly investor “[r]elied on Kaplan to direct investment decisions” while simultaneously “[e]xperiencing a decline in his mental health.” FINRA has further alleged that during this March 2011-2015 time frame, Mr. Kaplan “[e]ffected more than 3,500 transactions” in BP’s accounts, which “[r]esulted in approximately $723,000 in trading losses and generated $735,000 in commissions and markups for Kaplan and [Vanderbilt].”

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 Vanderbilt 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 significant experience representing investors in cases involving excessive trading or churning, 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.

Created as a private hedge fund in 2000, the UBS Willow Fund was sold by UBS Financial Services. Reportedly, an announcement in October 2012 stated that the UBS Willow Fund would be liquidated. On September 6, 2013, the fund’s shareholder report stated, “The fund does not hold investments as of June 30, 2013.”

It’s possible that UBS did not adequately disclose the risks of the fund when making recommendations. Furthermore, many of the investors who received recommendations to invest in the fund reportedly had low risk tolerances and were seeking stable income. According to stock 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.

In addition, securities arbitration lawyers say that the portfolios of some investors may have been over-concentrated in the UBS Willow Fund. Finally, the fund may have strayed from its disclosed strategy, which was to invest in distressed debt, making speculations about foreign sovereign debt credit default swaps instead.

If you suffered significant losses in the UBS Willow Fund because of an unsuitable recommendation, 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 stock fraud lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

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

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

However, according to securities fraud attorneys, 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. Private placements are typically not suitable for individuals with conservative portfolios, low risk tolerances or who need easy access to funds. An investment or recommendation clearly may be unsuitable even if the customer is an accredited investor.

If you suffered significant losses in private placements because of the unsuitable recommendation of your broker or adviser, you may be able to recover your losses through securities arbitration. To find out more about your legal rights and options, contact a stock fraud 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.

In May 2012, a statement of claim was filed with the Financial Industry Regulatory Authority by Saddlebag LLC. The claim alleges that the firm wrongfully invested the client’s assets in illiquid auction-rate securities (ARS). According to securities lawyers, many financial firms sold auction-rate securities as short-term instruments with a highly-liquid nature, much like money market funds.

However, in 2008, the credit crunch resulted in a failure of the ARS market and investors with a piece of the $330 billion market were stuck holding securities that they were unable to sell. Other firms, including Morgan Keegan, have been accused of misleading investors regarding the liquidity risk of auction-rate securities.

Auction-rate securities are tax-exempt, long-term and taxable bonds and their interest rates are connected to the short-term market. Through ARS, issuers can acquire lower short-term rates on long-term financing. Auction-rate securities were marketed as liquid cash alternatives and considered safe before the global credit crunch.

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. According to Thompson Reuters, leading auction-rate securities underwriters included Bank of America, Citigroup, Goldman Sachs, UBS, Lehman Brothers, Morgan Stanley, JPMorgan, Merrill, RBC and Wachovia.

If illiquid investments were unsuitable for you given your age, investment objectives and risk tolerance and you suffered significant losses in the auction-rate securities market, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a stock fraud 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 Financial Industry Regulatory Authority (FINRA) issued an Order Accepting Offer of Settlement which stated, “Mikolasko was an investment banker at HFP who engaged in activity to facilitate the firm’s sale of $3 million in ‘Senior Secured Zero Coupon Notes’ sold to 58 customers of HFP for an entity known as Metals Millings and Mining LLC (‘MMM’). The notes defaulted and investors were not repaid either principal or a promised 100 percent return. Mikolasko allegedly caused material misrepresentations and omissions of material facts to be made in connection with the firm’s sales of the offering. Mikolasko also allegedly participated in various roles to facilitate the offering even though he knew or should have known that HFP had conducted inadequate due diligence concerning the offering and that the due diligence the firm had conducted identified significant ‘red flags’ as to the facts and circumstances of the offering.”

Mikolasko was suspended for 18 months from associating in any capacity with any FINRA member firm and fined $75,000 for his alleged conduct. However, stock fraud lawyers say that clients of Mikolasko may be able to recover losses through securities arbitration.

According to securities fraud attorneys, FINRA rules have established that firms must properly supervise brokers’ activities while they are registered with the firm. Because Mikolasko was registered with HFP Capital Markets at the time of his alleged misconduct — from November 2008 until September 2011 — HFP Capital Markets could be held responsible for his activities and, thus, could be ordered to compensate his clients for losses sustained for the period he was registered with the firm.

If you suffered significant losses as a result of your dealings with Mikolasko, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a stock fraud lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 for a no-cost, confidential consultation.

Recently, Citigroup was found liable for $3.1 million in a FINRA claim filed by a Florida couple. The couple had filed a case in 2010 against Citigroup, alleging negligence and fraud involving more than $1 million in investments. The real estate investments were reportedly made from 2004 to 2007 in condominium developments and real estate projects. The couple’s adviser, Scott Andrew King, was registered with Citigroup from 2002 until 2005. King reportedly referred the claimants to Lawton “Bud” Chiles III without Citigroup’s knowledge. Currently, King works as a broker for Wells Fargo Advisors.

In addition, the claimants were reportedly included in a group of investors who signed personal loan guarantees connected to a $12 million loan to one of the real estate projects. When the loan entered into default, a $10 million judgment was entered against the group. Reportedly, each investor named in the judgment could potentially have to pay the entire amount of the bad loan. The $3.1 million award includes $2.1 million to cover the plaintiffs’ share of the judgment and $1 million in losses. In addition, in the event that the couple is required to pay the entire $10 million judgment, Citigroup will be required to reimburse them the entire amount.

If you were a client of King, or any other full-service brokerage firm-registered representative, who engaged in the practice of “selling away,” you may be able to recover your losses through securities arbitration. To find out more about your legal rights and options, contact a stock fraud lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

According to a FINRA news release, on August 22, 2013, the Financial Industry Regulatory Authority fined Morgan Stanley & Co. LLC and Morgan Stanley Smith Barney LLC for failure to provide reasonable prices in certain municipal bond customer transactions and failure to provide best execution in certain corporate and agency bond customer transactions. The firms were fined $1 million and ordered to pay restitution and interest in the amount of $188,000, above and beyond what Morgan Stanley has already paid. Stock fraud lawyers say Morgan Stanley did not admit or deny the FINRA charges.

Reportedly, the violations affected 116 corporate and agency bond customer transactions and 165 municipal bond customer transactions.

“FINRA found that Morgan Stanley failed to use reasonable diligence to ensure that the purchase or sale price to the customer was as favorable as possible under current market conditions,” the FINRA statement reads. “Morgan Stanley failed to purchase or sell bonds at prices reasonably related to the fair market value of the subject security.”

According to securities fraud attorneys, there may be many other customers of Morgan Stanley or other full-service brokerage firms that did not receive fair pricing or best execution in bonds or other securities.

“Firms must ensure that customers who buy and sell securities — including corporate, agency and municipal bonds — receive execution prices that are consistent with prices available in the marketplace,” notes FINRA’s Executive Vice President of Market Regulation Thomas Gira.

If your full-service brokerage firm has a history of best execution and fair pricing violations and your investments were affected, you may be eligible for reimbursement. To find out more about your legal rights and options, contact a stock fraud lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 for a no-cost, confidential consultation.

ELKs are sometimes called reverse convertibles and can carry high risks. As a hybrid debt security, the return on this type of investment is linked to an underlying equity, most commonly a stock. Usually, ELKs mature in a year and, if the value of the ELK falls below a pre-set price, the investor will not receive cash but, instead, the investment is converted into shares in the underlying security. The value of these shares can be worth less than the investor’s initial investment. According to stock fraud lawyers, ELKs are structured products that are, in some cases, part of a speculative investment strategy that is unsuitable for many investors. According to the Statement of Claim in this case, the 91-year-old female investor was allegedly sold an investment strategy that involved asset allocation that was unsuitable and materially flawed for an investor seeking conservation of principle. The claim is seeking $200,000 in damages for the investor and alleges fraud, breach of fiduciary duty and unsuitable sales. According to securities fraud attorneys, 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 his or her age, investment objectives and risk tolerance. If you received an unsuitable recommendation of an investment strategy involving risky ELKs from Citigroup, or any other full-service brokerage firm, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a stock fraud lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 for a no-cost, confidential consultation.

Despite the name change which, according to the REIT’S president Scott Fordham was supposed to symbolize “how the company reflects the goals and objectives of its tenants and stockholders in everything it does,” investors continue to be trapped in an investment they can’t sell except at a significant discount on the secondary market. Furthermore, according to stock fraud lawyers, the REIT continues to pay zero distributions.

To make matters worse, the REIT’s latest SEC quarterly report disclosed some disturbing information for investors. Reportedly, notes payable amounting to approximately $221.8 million will come due in 2013 and this amount may increase significantly because of several of the REIT’s loans, which are in default. As a result, the REIT may have to pay over $300 million before the end of 2013 because of its outstanding loans. In addition, the REIT had cash and cash equivalents of only $40.7 million and $71.3 million in restricted cash as of March 31, 2013.

Currently, securities fraud attorneys say that the TIER REIT, which is currently valued at $4.01 per share, has lost nearly 56 percent of its value. Furthermore, it is the only major non-traded REIT that does not allow any kind of redemption. Non-traded REITs in general are also inherently risky, which may make them unsuitable for many individuals with conservative risk tolerances and those who need easy access to funds.

If you purchased the Behringer Harvard REIT I, now known as TIER REIT, as a result of your broker or advisor’s recommendation and this investment was unsuitable for you given your age, investment objectives, or risk tolerance, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a stock fraud lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 for a no-cost, confidential consultation.

According to stock fraud lawyers, $50 million in TNP-sponsored high-yield promissory notes were sold to investors, claiming guaranteed principal and interest. A summary of the allegations b7y FINRA in Mr. Thompson and TNP Securities’ BrokerCheck profile states that they “engaged in transactions, practices or courses of business which operated as a fraud or deceit upon the purchaser.” Furthermore, FINRA’s allegations against TNP Securities and Mr. Thompson include the use of deceptive, manipulative or other fraudulent devices, which allege4dly puts them in violation of FINRA Rule 2020 and the Exchange Act of 1934.

Specifically, the complaint discusses the TNP 2008 Participating Notes Program LLC, the TNP Profit Participation Program LLC and the TNP 12% Notes Program LLC.

“During the offering periods for 12% Notes and 2008 Participating Notes, losses in 2009 of [$25.6 million] took the company’s equity to [-$13.6 million],” but none of the PPMs or supplements for the three offerings “disclosed the increasing likelihood that [TNP] would not be able to meet the proffered guarantees of principal and interest,” the FINRA complaint reads. The FINRA complaint elaborates as follows: “Potential investors, however, saw only the PPM balance sheets that reflected total equity of either $8.5 million or $5 million, respectively.

TNP investors have suffered recently, since two of the note programs ceased making payments and one entered into default.

If you suffered significant losses in the TNP 2008 Participating Notes Program LLC, the TNP Profit Participation Program LLC or the TNP 12% Notes Program LLC, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a stock fraud lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

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

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

Currently, brokers must only adhere to a “suitability standard” in which they only have to make “suitable” recommendations. They 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.

On the other hand, financial advisers are bound by fiduciary duty. According to securities fraud attorneys, this is a much more rigid standard than the suitability standard. In order to act within fiduciary duty, the financial advisor must, by law, act in the best interest of his or her client. It is not enough that the investment be suitable, but they must also be in the client’s best interest.

Stock fraud lawyers say that the Dodd-Frank financial reform law authorized a rule imposing a uniform fiduciary standard, but did not require it. However, the SEC will be focusing on a crowdfunding rule first. Reportedly, it is possible that the crowdfunding rule will come this fall.

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.

In one case, the investors’ trust interviewed multiple money managers and investment firms including Credit Sussie, CitiGroup, Deutsche Bank, LaSalle Bank and Goldman Sachs. All of these firms recommended diversification across traditional asset classes, such as bonds and equities, as well as selective investments in alternative products for special situations.

However, the claim asserts that GenSpring stood out because of its unique approach which would provide better downside protection and better returns through the use of Multi-Strategy Hedge Funds, such as Silver Creek Funds, instead of the bond or fixed income portion of client portfolios. Allegedly, GenSpring officials claimed that their approach, which had been tested thoroughly, would behave like traditional bonds in terms of asset class correlation and volatility while providing returns across all market cycles that were superior to traditional bonds. The trust invested approximately $10 million and stated its primary goal as capital preservation.

In another case, trustees stated that they would need access to the funds within 6 to 18 months for business opportunities and, thus, needed safe, liquid investments. They invested $25 million with GenSpring, using primarily Multi-Strategy Hedge Funds.

In both cases, the Multi-Strategy Hedge Fund investments plummeted with the stock market in late 2008 and early 2009. Traditional bonds, however, rose more than 5 percent. According to stock fraud lawyers, the firm’s clients are at a continued risk of liquidity damage because they are unable to liquidate their very large investments.

Securities fraud attorneys say that there was no reasonable basis for GenSpring to believe that the Multi-Strategy Hedge Funds would provide adequate diversification or perform like bonds.

If you are an ultra-high-net-worth investor who suffered significant losses because of GenSpring’s recommendation of Multi-Strategy Hedge Funds, 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.