www.InvestmentFraud.PRO

I Discuss In Today's New York Times...

2012-02-02T06:35:00.001-08:00

Why the Facebook deal is so risky for retail investors. The entire article can be viewed at the link below. Despite its sizzle and investment sex appeal, purchasing Facebook shares is extremely risky for retail investors. Unlike many technology IPOs, at least Facebook is profitable. But great risks still exist. The company has an extremely limited operating history as the company was only founded in 2004. The company operates in an extremely competitive industry with many major, deep pocketed rivals and potential rivals like Google. In addition, most of the gains will be had by those who owns the shares prior to the shares trading publicly. At its anticipated IPO later this year, Facebook will be three times more expensive than Google was at its IPO— and nearly 40 times more expensive than the average large IPO of the last four decades. This investment poses significant risk to retail investors. We represented dozens of investors who got burned in hot IPOs in the late 90s. It is unfortunately deja vu all over again.

http://dealbook.nytimes.com/2012/02/01/investors-get-the-chance-to-assess-facebooks-potential/?scp=1&sq=Stoltmann&st=cse

FINRA Hits Schwab For Attempts to Limit Class Actions

2012-02-01T13:18:00.001-08:00

FINRA stepped up to the plate today and charged Charles Schwab & Co. with violating FINRA's rules by trying to force customers to waive their rights to bring class actions against the firm. The entire release is cut and pasted below. Many brokerage firms are doing or contemplating inserting the same sort of waivers. To FINRA's credit, it has made it clear by bringing this action that these sorts of stunts by brokerage firms won't be tolerated.

FINRA Charges Charles Schwab & Co With Violating FINRA Rules by Using Class Action Waiver in Customer Agreements

WASHINGTON — The Financial Industry Regulatory Authority (FINRA) announced today that it has filed a complaint against Charles Schwab & Company charging the firm with violating FINRA rules by requiring its customers to waive their rights to bring class actions against the firm.

FINRA's complaint charges that in October 2011, Schwab amended its customer account agreement to include a provision requiring customers to waive their rights to bring or participate in class actions against the firm. Schwab sent the amended agreements to nearly 7 million customers.

The agreement also included a provision requiring customers to agree that arbitrators in arbitration proceedings would not have the authority to consolidate more than one party's claims. FINRA's complaint charges that both provisions violate FINRA rules concerning language or conditions that firms may place in customer agreements.

FINRA's complaint seeks an expedited hearing because Schwab's conduct is ongoing, as the firm has continued to use account agreements containing these provisions in opening more than 50,000 new customer accounts since October 2011.

The issuance of a disciplinary complaint represents the initiation of a formal proceeding by FINRA in which findings in the complaint have not been made, and does not represent a decision. Under FINRA rules, a firm or individual named in a complaint can file a response and request a hearing before a FINRA disciplinary panel. Possible remedies include a fine, censure, suspension or bar from the securities industry, disgorgement of gains associated with the violations and payment of restitution.

New Addition to Stoltmann Law Offices...

2012-02-01T11:42:00.000-08:00

Stoltmann Law Offices continues to expand. Starting with us this week is attorney Robert K. Crowe. For approximately 10 years, Mr. Crowe worked as an Assistant United States Attorney in San Francisco, California. He has argued more than a dozen appeals before the Ninth Circuit, and filed briefs in over forty state and federal civil and criminal cases. The FBI selected Mr. Crowe to serve as an instructor for FBI international white-collar crime courses in Russia, Thailand, Brunei, Singapore and Malaysia. Mr. Crowe has tried over fifty cases and handled more than 20 securities arbitrations. His trial experience as a federal prosecutor in complex financial litigation includes:

United States v. Desaigoudar, et al., Case No. 97-0294 VRW (N.D. Cal) (Cal. Micro Criminal Trial): Lead prosecutor in criminal trial of the Chief Executive Officer and Chief Financial Officer of Silicon Valley semiconductor manufacturer California Micro Devices. Defendants fraudulently recognized revenue, filed false financial reports with the Securities and Exchange Commission, and sold company stock while in possession of undisclosed material adverse information. Investor losses exceeded $100 million. The defendants were convicted of twelve out of thirteen felony charges after a lengthy federal jury trial.

United States v. Michael D. Wyner, Case No. CR 94-0237 MHP (N.D. Cal.): Convicted defendant after jury trial of fraudulently inducing 179 investors to invest over $10 million in 19 fictitious real estate development projects. Defendant also filed a false declaration with the Court in a Securities and Exchange Commission enforcement action. The defendant was convicted of all charges and sentenced to federal prison after a jury trial.

United States v. Ross and Doherty, Case No. CR 93-0578 OMP (N.D. Cal): Convicted the principals of a telemarketing firm that raised $7 million from over 100 victim investors for a ponzi scheme. A federal jury convicted the defendants of all charges and they were sentenced to federal prison.

United States v. Boynton, Fritz and Levy, Case No. CR 86-20089 JW (N.D. Cal.): Bank fraud case resulting in the failure of the National Bank of Carmel. Bank officer defendants misrepresented their disbursement of 50% of the bank’s capital to help co-defendant acquire a high tech company. The defendants pled guilty on the eve of trial and were sentenced to federal prison.

United States v. Kevin L. Poulsen, Case No. 41 F.3d 1330 (9th Cir. 1994): Convicted Poulsen of stealing classified defense information and hacking into the phone system to obtain FBI wiretap information which he sold to organized crime figures. Poulsen pled guilty on the eve of trial and served more than three years in federal prison.

Mr. Crowe also has extensive experience in securities arbitrations and securities class action litigation. He served as lead counsel for Charles Schwab & Co. Inc., in San Francisco, CA, representing Schwab and individual Schwab brokers in class action litigation, NASD and NYSE arbitration hearings, and SEC and NYSE investigations. He also worked for Markum Zusman & Compton in San Francisco where his practice areas included representation of plaintiffs in individual and class actions in securities litigation, and defending corporations and individuals in white collar crime cases, regulatory investigations and federal administrative hearings. Mr. Crowe also worked for Girard & Greene LLP in San Francisco where he represented plaintiffs in securities class actions. During this time, he served as lead trial attorney representing Chinese students seeking to vacate a consent decree allowing the San Francisco United School district to assign students to schools based upon racial quotas. The settlement required the school district to implement a race-neutral school assignment plan and to stop giving racial preferences for admission to San Francisco’s most desirable schools. Immediately after law school he worked for four years as a Deputy District Attorney in Brooklyn, New York.

Mr. Crowe graduated from Cornell Law School in 1983 and from the University of Chicago in 1980 where he majored in Politics, Economics, Rhetoric and Law. Mr. Crowe is admitted to practice law in Illinois, California and Massachusetts. His federal court admissions include the Northern District of Illinois (general and trial bar), the Northern and Central Districts of California, and the United States Courts of Appeal for the Seventh and Ninth Circuits.

Lawsuits To Recover Investment Losses Against New England Securities

2012-01-31T13:35:00.000-08:00

This week a FINRA arbitration claims was filed against New York based New England Securities. The losses at issue are approximately $300,000. The claims involve high risk, high commissioned commission private placement and REIT investments, including Ridgewood Energy Funds, Leaf Equipment Leasing Funds, Wells REIT, and Inland American REIT. In many instances, these securities were sold to clients without the full risks being made known. In other instances, an impermissible concentration of the security may have been made. The good news is that in some cases, some, or all of these losses may be recoverable through the FINRA arbitration process. To learn more, please contact our law firm in Chicago, Illinois.

Update On Algird Norkus Fraud...

2012-01-30T12:29:00.000-08:00

Aurora ponzi scheme mastermind Algird Norkus was sentenced last week by U.S. District Judge Frederick J. Kapala to 63 months in federal prison for mail fraud. He also was ordered to serve three years of supervised release after he gets out of prison, and to pay restitution of $4,560,975.40. Many of the victims of his scheme wished to see a far greater sentence but the judge followed the no longer mandatory sentencing guidelines in imposing the sentence. We continue to represent approximately 50 of his victims in lawsuits and arbitration claims attempting to recoup stolen funds from his previous employers like Madison Avenue Securities.

My What A Tangeled Web David Lerner Weaves...

2012-01-30T12:12:00.000-08:00

More horrible news for David Lerner and his brokerage firm. Today FINRA filed an AMENDED complaint against David Lerner as an individual for misleading investors in the wake of FINRA's action against his firm and his Apple REITs. Reuters' Suzanne Barlyn details how Lerner sent letters to more than 50,000 customers in July to "counter negative press" about the action, according to the amended complaint. The letter also discussed a possible opportunity for Apple REIT shareholders to participate in a sale or listing on a national exchange to dispose of their shares at a reasonable price, according to the complaint. According to FINRA, these were misleading actions. The entire article can be viewed at the link below.

We have spoken to dozens of David Lerner clients and continue to represent victims in the Apple related REITs. Unfortunately, these representations made by Lerner's brokers had the intended impact-to delay people from filing statement of claims to recover their losses and frozen funds.

http://www.reuters.com/article/2012/01/30/us-finra-davidlerner-idUSTRE80T1MJ20120130

Return of the Boiler Room...

2012-01-26T14:21:00.000-08:00

The SEC today charged a Fort Lauderdale-based firm and its founder with conducting a fraudulent boiler room scheme in which they hyped stock in two thinly-traded penny stock companies while behind the scenes they sold the same stock themselves for illegal profits. If the allegations are true, this is a classic example of a boiler room that reminds me of the Stratton Oakmonts of the 1990s. The entire release can be viewed at the link below.

http://www.sec.gov/news/press/2012/2012-18.htm

Monster FINRA Award Gainst Citigroup and Citigroup Global Markets

2012-01-26T12:53:00.000-08:00

Citigroup recently got drilled by a FINRA arbitration panel for almost $17 million. The Claimants were awarded $15.8 million in compensatory damages. They were also given $1 million in "sanctions" by the arbitrators. The panel did not specify why the sanctions were awarded. The award was to a team of Citigroup institutional advisers. James Bryan Minchello and Ryan Minchello filed the case in 2009, alleging that Citigroup failed to compensate them for certain transactions. The case number is 09-02800 and it was heard in Boston, Massachusetts.

Lawsuits To Recover Wells Fargo Global Dividend Advantage Opportunity Fund

2012-01-26T11:32:00.001-08:00

We are currently investigating the Wells Fargo Global Dividend Advantage Opportunity Fund. The Fund may have been sold to elderly and retired or conservative clients as a conservative way to invest in international dividend paying companies. Unfortunately for investors who owned the fund, it has dropped from approximately $20.30 a share in 2007 to $8 share in 2012. For clients who have been burned in the fund, please contact our law firm to learn about investment loss recovery.

Our Investigation Into Merrill Lynch and Phil Scott

2012-01-26T11:28:00.001-08:00

We are currently investigating Merrill Lynch and Phil Scott a/k/a Walter Schlaepfer, and the Phil Scott Team. Over the past eight months, two FINRA arbitration panels rendered Awards on behalf of customers of Phil Scott and Merrill Lynch who sought total damages of about $2.67 million. Collectively, the Panels awarded the Claimants about $2 million in compensatory damages, attorneys' fees, costs, interest, and forum fees. The Claimants alleged Phil Scott made unsuitable recommendations to place their assets in the Merrill Lynch Phil Scott Team Income Portfolios which were invested in 100% equities. If you have sustained losses with Mr. Scott or Merrill Lynch, please contact our law firm for a no obligation consultation.

Behringer Harvard Victims Demanding Answers

2012-01-26T11:18:00.000-08:00

Clients who have sustained losses in Behringer Harvard continue to demand answers. While FINRA arbitraion claims are the weapon of choice of burned clients against the brokerage firms who sold the non-traded REITs, some clients have taken to asking FINRA Enforcement directly. Investment News has an article entitlted Behringer Harvard client wants answers after seeing fund drop by 96%. The entire article can be viewed at the link below. If you have sustained losses in the Behringer Harvard Short-Term Opportunity Fund I LP, please contact our law firm to hear what legal options exist to recover those losses.

http://www.investmentnews.com/article/20120124/FREE/120129967

Complex Investments And Surging Arbitration Claims

2012-01-26T10:49:00.001-08:00

Hundreds of FINRA arbitration claims have been filed by investors in the last 3 years against brokerage firms like AXA Advisors, Merrill Lynch, Citigroup, LPL, Sagepoint, ING, UBS, Royal Alliance and others where losses were sustained in "complex products." These claims have included investments like non-traded REITs (Amreit, Behringer Harvard, Cornerstone, Desert Capital, Lightstone), mutual funds that hold complex products (CIP Leveraged, Leaf Equipment Leasing Income Fund III, Highland Floating, Cole Credit Property Trust) and Tenants in Common (Sequoia at Stonebriar and Retreat at Stonecrest).

FINRA recently issued a Notice to Members to brokerage firms for supervisory and sales practice related issues because of all the complaints associated with these illiquid and esoteric products. FINRA Notice To Members 12-03, entitled Heightened Supervision of Complex Products, "provides guidance to firms about the supervision of complex products, which may include a security or investment strategy with novel, complicated or intricate derivative-like features, such as structured notes, inverse or leveraged exchange-traded funds, hedge funds and securitized products, such as asset-backed securities. According to FINRA, these features may make it difficult for a retail investor to understand the essential characteristics of the product and its risks. The entire release can be viewed at the link below.

The Notice to Members discloses that fact that a product is “complex” indicates that it presents an additional risk to retail investors because its complexity adds a further dimension to the investment decision process beyond the fundamentals of market forces. The Notice warns members about what additional steps need to be taken for firms to ensure brokers are adequately disclosing these risks and the investments are suitable.

We expect to see a continued wave of investor lawsuits related to these complex and esoteric products. Many clients have already filed FINRA arbitration claims to recover losses with these products. To learn how losses can be recouped, please contact our law firm in Chicago, Illinois for a no obligation consultation at 312.332.4200 or www.InvestmentFraud.PRO

http://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p125397.pdf

Stolen Funds From Client Accounts?

2012-01-26T10:41:00.000-08:00

Unfortunately over the years, clients of major brokerage firms have had funds stolen or otherwise converted from their accounts. Sometimes, the funds stolen are from a financial advisor, Other times it is a family member or friend. Sometimes, it is a complete stranger. FINRA just issues a Notice to Members this week warning brokerage firms about these risks.

Finra issued Regulatory Notice 12-05: Verification of Emailed Instructions to Transmit or Withdraw Assets From Customer Accounts. According to the Release: "FINRA has received an increasing number of reports of incidents of customer funds stolen as a result of instructions emailed to firms from customer email accounts that have been compromised. These incidents highlight some of the risks associated with accepting instructions to transmit or withdraw funds via email. FINRA recommends that firms reassess their policies and procedures to ensure they are adequate to protect customer assets from such risks." The entire release can be viewed at the link below.

This release will likely be very important in future FINRA arbitration claims and lawsuits where the clients have had funds stolen from their account. To learn more about how these losses can be recovered, please contact us.

http://www.finra.org/Industry/Regulation/Notices/2012/P125463

Merrill Lynch Gets Hammered By FINRA (Again)

2012-01-26T10:25:00.000-08:00

Merrill Lynch got hammered by FINRA once again this week. FINRA fined Merrill Lynch, Pierce, Fenner & Smith $1 million for failing to arbitrate disputes with employees relating to retention bonuses. Merrill Lynch brokers who participated in the bonus program had to sign a promissory note that prevented them from arbitrating disagreements relating to the note, forcing the registered representatives to resolve disputes in New York state courts. This action is ironic since it is Merrill Lynch that places a a mandatory, binding arbitration award in all of its new account applications and contracts with clients. Usually, Merrill wants to be in arbitration as opposed to court. Merrill Lynch likely wasn't as concerned with what may be disclosed in employment actions involving brokers as it is with what may be discovered in court when a client sues the firm. The entire release can be viewed at the link below.

http://www.finra.org/Newsroom/NewsReleases/2012/P125455

Citigroup Gets Hammered By Regulators (Again)

2012-01-19T12:47:00.000-08:00

Once again, Citigroup Global Markets gets hammered by FINRA for research related problems. The entire release from FINRA's website is cut and pasted below. According to FINRA, Citigroup repeatedly failed to disclose potential conflicts in interest in their research reports in 2007 through 2010. These are extremely serious allegations, especially since Citigroup Global Markets in April of 2003 in a settlement with the SEC agreed to pay $150 million as disgorgement and an additional $150 million in penalties for very similar conduct. Citigroup apparently failed to learn its lesson despite a massive previous fine, a slew of FINRA arbitration claims and lawsuits and a horrible PR debacle. Some firms apparently never learn.

FINRA Fines Citigroup Global Markets $725,000 for Failure to Disclose Conflicts of Interest in Research Reports

WASHINGTON — The Financial Industry Regulatory Authority (FINRA) announced today that it has fined Citigroup Global Markets, Inc. $725,000 for failing to disclose certain conflicts of interest in its research reports and research analysts' public appearances.

Citigroup failed to disclose potential conflicts of interest inherent in their business relationships in certain research reports it published from January 2007 through March 2010. Citigroup and/or its affiliates managed or co-managed public securities offerings, received investment banking or other revenue from, made a market in the securities of and/or had a 1 percent or greater beneficial ownership in covered companies, and did not make these required disclosures in certain research reports. In addition, Citigroup research analysts failed to disclose these same potential conflicts of interest in connection with public appearances in which covered companies were mentioned.

Brad Bennett, FINRA Executive Vice President and Chief of Enforcement, said, "Citigroup failed to make required conflict of interest disclosures which prevented investors from being aware of potential biases in its research recommendations. Firms need to provide investors with full and accurate information so they will be able to take it into consideration before making an investment decision."

FINRA found that Citigroup failed to disclose the required information because the database it used to identify and create the disclosures was inaccurate and/or incomplete due primarily to technical deficiencies. In addition, Citigroup failed to have reasonable supervisory procedures in place to ensure that the firm was populating its research reports with required disclosures.

In concluding this settlement, the firm neither admitted nor denied the charges, but consented to the entry of FINRA's findings.

FINRA's investigation was conducted by Jeanne Elmadany under the supervision of Susan Light, Enforcement Chief Counsel.

Class Action Lawsuit Filings Increase in 2011

2012-01-19T12:42:00.000-08:00

According to Stanford Law School, federal securities fraud class action filing activity increased slightly in 2011. A total of 188 federal securities class actions were filed in 2011 compared with 176 filings in 2010, with an equal number of actions (94) being filed in the first and second halves of the year. The number of class actions filed was 3.1 percent below the annual average of 194 filings observed between 1997 and 2010. The court system is still trying to digest cases rleated to the 2008-2009 market crash. The entire release can be viewed at the link below.

http://www.marketwatch.com/story/securities-class-action-filings-increase-slightly-in-2011-according-to-report-by-stanford-law-school-and-cornerstone-research-2012-01-19

Behringer Harvard President: "Its valuation will go down in the long run"

2012-01-17T07:08:00.000-08:00

Investors at brokerage firms like Amerirpise, Securities America, LPL and other major brokerage firms continue to get take a hit due to the plummeting value of Behringer Harvard related REITs. Fortunately, many victims have already filed arbitration claims to recover these losses. Behringer Harvard REITs, including the Behring Harvard Opportunity REIT I Fund, were pitched by some financial advisors as a conservative, stable value fund. Some of our clients have reported high pressure sales techniques and a "hard sale" in 2006, 2007 and 2008. Unfortunately, many of the clients who purchased non-traded REITs were conservative or elderly clients who couldnt withstand the volatility associated with a concentrated sector bet.

For Behringer Harvard Opportunity REIT I Fund investors, the worst news is likely still to come. According to Investment News, Robert Aisner, the president and chief executive of the REIT's parent, recently stated because the REIT is shedding assets, its valuation will go down in the long run. The Trust's estimated value at the end of 2011 was $4.12 a share, down 46% from $7.66 a year earlier.

The biggest non-traded REITs at the end of 2011? In order, they are as follow:

1) Inland American Real Estate Trust
2) Inland Western Retail Real Estate Trust
3) Wells REIT II
4) Behringer Harvard REIT I
5) KBS Real Estate Investment Trust
6) Corporate Property Associates 16 Global
7) Cole Credit Property Trust II
8) Dividend Capital Total Realty Trust
9) CNL Lifestyle Properties
10) KBS Real Estate Investment Trust II
11) Corporate Property Associates 15
12) Hines Real Estate Investment Trust
13) Healthcare Trust of America
14) Apple REIT Nine
15) Apple REIT Eight
16) Apple REIT Seven
17) Apple REIT Six
18) Lightstone Value Plus REIT
19) Apartment Trust of America
20) Cole Credit Property Trust I

We have filed multiple FINRA arbitration claims against the brokerage firms who sold investors non-traded REITs. In some cases, the frozen funds or investment losses can be recovered. To learn more, please visit www.ReitFraudRecovery.com or contact our law firm in Chicago at 312.332.4200.

Lawrence Lee Investment Losses?

2012-01-16T14:32:00.000-08:00

We have filed multiple FINRA arbitration claims in the last 2 years against the brokerage firms who employed Chicago based investment advisor Lawrence Lee. The claims relate to churning, unsuitable investment recommendations, fraud, failure to supervise and other related claims.

The firms he has worked for include National Securities Corp., Brokers Express, Rockwell Global, Access Financial and McDonald Investments. According to his CRD, Mr. Lawrence Lee has at least nine customer complaints filed against him as well as three terminations from brokerage firms. In addition, the Illinois Securities Department has filed a Notice of Hearing against Mr. Lee scheduled for February 14, 2012 at 10:00 am.

According to the Illinois Securities Department, Mr. Lee was arrested in 1987. A superseding indictment charged Lee with seven felony counts, including aggravated criminal sexual assault, criminal sexual assault, residential burglary and four other felonies. The Illinois Securities Department has also alleged Mr. Lee did not file tax returns for years 2006 through 2009.

If you have sustained investment losses related to Mr. Lee, please contact our law firm in Chicago, Illinois (312.332.4200 or www.InvestmentFraud.PRO) to learn whether those investment losses can be recovered on a contingency fee basis.

Update of www.ReitFraudRecovery.com!

2012-01-16T14:31:00.005-08:00

We have updated our website www.ReitFraudRecovery.com to include information related to the Behringer Harvard Short Term Opportunities Fund. This high commissioned, illiquid non traded REIT was pitched to investors nationwide as a conservative real estate play. In reality, it was a high risk, fee laden sector bet that in many instances was inappropriately sold to clients. To learn more, please contact us or visit www.ReitFraudRecovery.com

Life Partners Holdings Lawsuits...

2012-01-16T14:31:00.003-08:00

We are currently investgating the brokerage firms who sold investments related to Life Partners Holdings, Inc. Among the brokers/brokerage firms we are investigating are RIM Securities, Cambridge Legacy Securities, KCD Financial, or Allied Beacon Partners. We are also investiagting financial advisor Bradford H. Blazar. Clients of Rim and Blazar have alleged that he pitched them to invest their retirement assets into fractional interests in life settlement contracts which were acquired from a subsidiary of Life Partners Holdings, Inc. If you have sustained investment losses in securities related to Life Partners, legal options, including FINRA arbitration claims, lawsuits and class action lawsuits may exist. To learn more, please contact our law firm in Chicago, Illinois or visit www.InvestmentFraud.PRO

Unpleasant Surprise for Behringer Harvard Short-Term Opportunity Fund

2012-01-16T14:30:00.001-08:00

This month clients in the Behringer Harvard Short-Term Opportunity Fund are receiving a shocking surprise-almost a complete loss on their investment. Many clients at full service brokerage firms like Securities America were promised, assured, or otherwise led to believe the Behringer Harvard Short-Term Opportunity Fund was a safe place to invest. Many elderly clients were sold the Fund in massive quantities. Unfortunately, many of the representations were simply not true. Investors in the Behringer Harvard Short-Term Opportunity Fund I LP, which had about $130 million in total assets, recently saw its valuation drop to 40 cents a share (down from $6.48 a share Dec. 31, 2010). These losses have been devastating to those who invested in the fund. Fortunately, FINRA arbitration claims and lawsuits can be used to recover these losses for certain clients. To learn more, please contact our law firm at 312.332.4200 or visit www.reitfraudrecovery.com.

Lawsuits To Recover Steven Salutric/Results One Losses

2012-01-16T14:25:00.000-08:00

We have filed mutliple arbitration claims and lawsuits against Illinois based financial advisor Steven W. Salutric, Results One Financial LLC and Charles Schwab & Co. Inc. According to our lawsuits, as well as the Illinois Securities Department, Salutric made unauthorized withdrawlas of client funds from the accounts at Schwab for at least 17 different clients that totalted at least $1.8 million. It is also alleged Salutric forged client signatures on written withdrawal request forms. For clients who have sustained losses through similar conduct by Mr. Salutric, please contact our law firm in Chicago, Illinois at 312.332.4200 or visit www.InvestmentFraud.PRO to learn about recovery options.

Even More Bad News For Devestated Behringer Harvard Victims

2012-01-13T06:42:00.000-08:00

The bad news continues to pile up for Behringer Harvard purchasers. The value of the nontraded REIT continues to get hammered. Behringer Harvard's Opportunity REIT I value dropped to $4.12 per share, down from $7.66 a share one year earlier, a 46% drop. The link to the Investment News article below provides more details. Unfortunately, the investment was sold as a low risk real estate play to thousands of investors, many of whom were elderly and retired. These representations were not true. We have filed over a dozen FINRA arbitration claims against the brokerage firms who peddled Behringer Harvard. The good news is in some cases, some, or all, of the investment losses might be recoverable. To learn more, please contact our law firm in Chicago at 312.332.4200 or visit www.ReitFraud.com.

http://m.investmentnews.com/article/20120112/FREE/120119970?template=smartphoneart

A "Severely Neutered SEC"?

2012-01-12T12:52:00.000-08:00

If Judge Rakoff's decision striking down the settlement between the SEC and Citigroup holds up on appeal, what is next for the SEC? In an interview with CNBC.com, I discuss the ramifications of what Judge Rakoff's decison actually means. The entire interview can be viewed at the link below.

http://www.cnbc.com/id/45972402

University of Miami Opens Arbitration Clinic

2012-01-12T12:42:00.001-08:00

The University of Miami School of Law just opened a Investor Rights Clinic. The Clinic provides pro bono legal representation to investors who have small claims against brokerage firms and cant find legal counsel to assist them. The clinics usually represents victims with losses under $20,000 as it is very difficult for clients to find lawyers willing to work on such small cases. The Clinic's phone number is 305-284-8234 and its email address is InvestorRights@law.miami.edu.

Morgan Keegan Rocked Again In FINRA Award...

2012-01-12T07:31:00.000-08:00

More bad news for Morgan Keegan and the James Kelsoe managed bond funds. The firm got rocked in another FINRA arbitration earlier this week. In the case, captioned Richard Fornell, as Trustee of the Fornell Enterprises Inc. 401K Profit Sharing Plan vs. Morgan Keegan, case number 10-02526, the Claimant requested $197,092 and costs in the amount of $40,000. The Panel took the rare step of issuing a reasoned award. According to the award, the arbitrators disclosed the following:

The Panel finds that Respondent is liable on the claims of violation of the Employee Retirement Income Security Act of 1974 ("ERISA"), breach of fiduciary duty, negligence and negligent supervision. Specifically, Claimant proved that Respondent, acting through Claimant's financial advisor, assumed the obligations of a co-fiduciary under ERISA. Claimant also proved that Respondent breached its fiduciary duties under Florida law by making unsuitable recommendations and by negligentiy failing to disclose material facts about the nature of the subject investments. Claimant failed to prove that Respondent had actual knowledge that its wrongful conduct had a high probability of causing damage to Claimant. Claimant did establish its right to an award of attorneys' fees, pursuant to 29 U.S.C. § 1132 (ERISA). However, because Claimant asserted during closing argument that the Panel lacked power under Florida law to determine the amount of fees and did not present any evidence of what fees were incurred, the Panel does not award any attorneys' fees to Claimant. Respondent is liable for and shall pay to Claimant compensatory damages in the amount of $194,976.00, plus interest at the maximum rate allowed under Florida law accruing from December 23, 2011 until the award is paid in full. Respondent is liable for and shall pay to Claimant the sum of $19,342.00, representing costs incurred by Claimant in connection with this arbitration proceeding. Respondent Is liable for and shall pay to Claimant the sum of $300.00, representing reimbursement of the non-refundable portion of the initial claim filing fee previously paid by Claimant to FINRA Dispute Resolution. The Panel's explanation of its decision In the Award is for the information of the parties only and is not precedential in nature.

Arbitrators infrequently give a reason or explanation for why they ruled the way they did. This award continues a long string of awards against Morgan Keegan. We expect this trend to continue as arbitrators continue to review the multiple regulatory actions against the firm and learn of the firm's conduct in managing these funds. To learn more about legal options against Morgan Keegan, please contact us.

More Bad News For TD Ameritrade...

2012-01-10T13:47:00.000-08:00

More bad news for TD Ameritrade. The firm recently got named in a FINRA arbitration claim filed by a group of option traders. The claims related to technical issues with TD Ameritrade Inc. Think or Swim trading platform. According to Investment News, TD Ameritrade's option-trading system would not accept trades that would have reduced risk. The traders claim the firm then sold out positions to meet margin calls, compounding their losses. Other burned clients are considering filing arbitration claims to recover losses for the same issue. For clients who did sustain losses, some, or all, of the losses might be recoverable through the FINRA arbitration process. To learn more, please contact our law firm in Chicago, Illinois for a no obligation consultation or visit www.InvestmentFraud.PRO

Our Investigation Into Grubb and Ellis Apartment REIT Losses

2012-01-08T14:44:00.000-08:00

We are currently investigating the sales practices of brokerage firms who sold Grubb and Ellis Apartment REITs. Clients have sustained losses in these investments. In some cases, unsuitable investment recommendations may have been made. In others, the full risks may not have been disclosed. To learn if investment losses in Grubb and Ellis Apartment REITs are recoverable through FINRA arbitration claims or lawsuits, please contact our law firm in Chicago for a no obligation consultation (312.332.4200) or visit www.InvestmentFraud.PRO.

SEC Charges Illinois Based RIA...

2012-01-05T07:19:00.000-08:00

Yesterday the SEC charged Anthony Fields of Lyons, Illinois with offering to sell fictitious securities on LinkedIn. The entire release is cut and pasted below.

SEC Charges Illinois-Based Adviser in Social Media Scam

Agency Issues Alerts on Social Media Risks for Investors and Firms

Washington, D.C., Jan. 4, 2012 — The Securities and Exchange Commission today charged an Illinois-based investment adviser with offering to sell fictitious securities on LinkedIn and issued two alerts in an agency-wide effort to highlight the risks investors and advisory firms face when using social media.

The SEC’s Division of Enforcement alleges that Anthony Fields of Lyons, Ill. offered more than $500 billion in fictitious securities through various social media websites. For example, he used LinkedIn discussions to promote fictitious “bank guarantees” and “medium-term notes.” The postings resulted in interest from multiple purported potential buyers.

“Fraudsters are quick to adapt to new technologies to exploit them for unlawful purposes,” said Robert B. Kaplan, Co-Chief of the SEC Enforcement Division’s Asset Management Unit. “Social media is no exception, and today’s enforcement action reflects our determination to pursue fraudulent activity on new and evolving platforms.”

According to the SEC’s order instituting administrative proceedings against Fields, he made multiple fraudulent offers through his two sole proprietorships – Anthony Fields & Associates (AFA) and Platinum Securities Brokers. Fields provided false and misleading information concerning AFA’s assets under management, clients, and operational history to the public through its website and in SEC filings. Fields also failed to maintain required books and records, did not implement adequate compliance policies and procedures, and held himself out to be a broker-dealer while he was not registered with the SEC.

One of the alerts issued today – a National Examination Risk Alert titled “Investment Adviser Use of Social Media” – provides staff observations based on a review of investment advisers of varying sizes and strategies that use social media. In growing numbers, registered investment adviser firms are using social media to communicate with existing and potential clients, promote services, educate investors, and recruit new employees.

“As investment advisers increasingly utilize social media to communicate with clients and potential clients, firms need to be mindful of the applicable standards governing those communications,” said Carlo di Florio, Director of the Office of Compliance Inspections and Examinations (OCIE).

The alert reviews concerns that may arise from use of social media by firms and their associated persons, and offers suggestions for complying with the antifraud, compliance, and recordkeeping provisions of the federal securities laws. The alert notes that firms should consider how to implement new compliance programs or revisit their existing programs in the face of rapidly changing technology.

The SEC also issued an Investor Alert titled “Social Media and Investing: Avoiding Fraud” prepared by the Office of Investor Education and Advocacy. The alert aims to help investors be better aware of fraudulent investment schemes that use social media, and provides tips for checking the backgrounds of advisers and brokers. A new Investor Bulletin titled “Social Media and Investing: Understanding Your Accounts” contains best practices including privacy settings, security tips, and password selection aimed to help social media users protect their personal information and avoid fraud.

“More and more, investors are using social media to help them with investment decisions. While social media can provide many benefits for investors, it also makes an attractive target for fraudsters. The Investor Alert provides some useful tips to help investors look out for securities fraud online,” said Lori J. Schock, Director of the Office of Investor Education and Advocacy.

Lawsuit Filed Against Law Firm Proskauer Rose...

2012-01-05T07:14:00.000-08:00

Dozens of investors who say they were fleeced by Allen Stanford's $7 billion Ponzi scheme claim a Proskauer Rose attorney aided and abetted the fraud by "obstructing an SEC investigation" of Stanford's operations. The entire article is in Courthouse News Service and at the link below...

http://www.courthousenews.com/2012/01/05/42789.htm

Burned TIC Investors Consider Their Legal Options...

2012-01-02T10:00:00.000-08:00

We have filed multiple FINRA arbitration claims against brokerage firms like H&R Block/Ameriprise for sales practices related to
Tenant in Common (TIC) properties. The Wall Street Journal recently profiled one of our clients, Mary Boston, in an article entitled In Real Estate, Simple Wins. Unfortunately, massive fees and commissions cause brokers and financial planners to recommend TICs even if they are not in the client's best interest. In addition to the investment losses sustained, in many instances purchasers of TICs have had their remaining funds frozen AND have had to make capital calls back into the investments. We believe many clients seeking 1031 exchanges have had conservative funds lost or frozen in TICs in unsuitable quantities. For clients who have sustained losses or frozen funds in TICs, the FINRA arbitration process can be used to recover these losses or get the funds released. Below is a list of TIC sponsors that investors may have invested in. To learn if the losses or frozen funds can be recovered, please contact our law firm in Chicago, Illinois at 312.332.4200 for a no obligation consultation or visit www.InvestmentFraud.PRO.

AEI Fund Management Inc
St Paul, MN
www.aeifunds.com

American Capital Group
Bellevue, WA
www.acg.com

American Investment Exchange
Hermosa Beach, CA
www.americaninvestmentexchange.com

Argus Realty Investors, LP
San Clemente, CA
www.argusrealty.com

Ashforth Paradigm Capital Advisors
Boston, MA
www.ashforthparadigm.com

Atlas Venture Partners, Inc.
Irvine, CA
www.atlasvp.com

B&H Real Estate Holding, LLC
Encino, CA
www.bh-re.com

Behringer Harvard
Dallas, TX
www.bhfunds.com

BGK-Integrated Group
Santa Fe, NM
www.bgktic.com

Bluerock Real Estate LLC
New York, NY
www.bluerockre.com

Bonaventure Realty Group, LLC
Arlington, VA
www.bonaventure.com

Cabot Investment Properties
Boston, MA
www.cabot1031.com

Capital Real Estate LLC
Denver, CO
www.capitalrealestateusa.com

Cole Companies
Phoenix, AZ
www.colecapital.com

Cottonwood Capital, LLC
Salt Lake City, UT
www.cottonwoodcap.com

Covington Realty Partners
Chicago, IL
www.laramargroup.com

DBSI Group of Companies
Meridian, ID
www.dbsi.com

DeSanto Realty Group
Media, PA
www.desantorealtygroup.com

Direct Invest LLC
Linthicum, MD
www.directinvestllc.com

Dividend Capital
Denver, CO
www.dividendcapital.com

Eliason 1031 Properties Corporation
Saint Germain, WI
www.e1031.com

Equitable Companies, LLC
Los Angeles, CA
www.equitable-companies.com

Evergreen Realty Group, LLC
Pasadena, CA
www.evergreenrealtygroup.com

ExchangePoint Properties, LLC
Beverly Hills, CA
www.exchangepointproperties.com

First Guardian Group, LLC
San Jose, CA
www.firstguardiangroup.com

FOR 1031/ Spectrus Real Estate Group
Boise, ID
www.spectrusgroup.com

FORT Properties, Inc.
Los Angeles, CA
www.fortproperties.com

Franklin 1031 Investments L.L.C.
Oakbrook, IL
www.franklin1031.com

Gemini Real Estate Advisors, LLC
New York, NY
www.gemini-re.com

Grand Peaks 1031 Properties
Denver, CO
www.grandpeaks.com

Granite Investment Group, Inc.
Irvine, CA
www.graniteinvestment.com

Griffin Capital Corp.
El Segundo, CA
www.griffincapital.com

Inland Real Estate Exchange Corporation
Oak Brook, IL
www.inlandgroup.com

International Realty Advisor
San Antonio, TX
www.ira1031.com

Investment Properties of America
Richmond, VA
www.ipofa.com

KBS Capital Markets Group, LLC
Newport Beach, CA
www.kbs-cmg.com

Kodiak Capital Partners L.L.C.
Dallas, TX
www.kodiakcapital.com

Meridian Realty Advisors, LP
Dallas, TX
www.meridiancap.com

Moody National Companies
Houston, TX
www.moodynational.com

National Exchange Advisors, LLC
Sherman Oaks, CA
www.neaexchange.com

Noble Royalties, Inc.
Addison, TX
www.nobleroyalties.com

ORIX Real Estate Capital, Inc.
Dallas, TX
www.orix.com/tic

Parthenon Realty 1031 Investors, LLC
Alpheretta, GA
www.parthenonrealty.com

PASSCO Companies, LLC
Irvine, CA
www.passco.net

Pennbridge Capital
Lehi, UT
www.pennbridge.com

Principle Equity Management
Houston, TX
www.peii.net

Rainier Capital Management, LP
Dallas, TX
www.rainiercapital.com

Real Estate Partners, Inc.
Irvine, CA
www.realestatepartnersinc.com

Real Estate Value Advisors LLC
Richmond, VA
www.revalueadvisors.com

REEF Oil & Gas Partners
Richardson, TX
www.reefsecurities.com

Resource Real Estate, Inc.
Philadelphia, PA
www.resourcerei.com

RK Properties
Long Beach, CA
www.rkprop.com

Sagebrush Realty Holdings LLC
Devner, CO
www.sage1031.com

SCI Real Estate Investments, LLC
Los Angeles, CA
www.sciproperties.com

Sequoia 1031 Companies LLC
Northglenn, CO
www.sequoia1031.com

Southfork
El Dorado Hills, CA
www.southforkinc.com

SRS Investments, LLC
Sarasota, FL
www.srsinvestments.com

Texas Energy Holdings Inc.
Dallas, TX
www.tx-energy.com

The Geneva Organization
Minneapolis, MN
www.genevawealth.com

The Woodlark Companies
White Plains, NY
www.wlfund.com

TIC Capital LLC
Boise, ID
www.ticcapital.com

TIC Properties, LLC
Greenville, SC
www.ticproperties.com

TREC Investment Realty
Las Vegas, NV
www.trecinvestments.com

Triple Net Properties, LLC
Santa Ana, CA
www.1031nnn.com

TSG Real Estate, LLC
Chicago, IL
www.tsgre.com

U.S. Advisors, LLC
Ladera Ranch, CA
www.usa1031.com

Wells Real Estate Funds
Norcross, GA
www.wellsref.com

Western America Equities LLC
Bellevue, WA
www.westernamerica.com

FINRA Arbitration Win Rate: 44%

2012-01-02T08:40:00.001-08:00

Through November of 2011, defrauded investors are winning in FINRA arbitration hearings 44% of the time (see the link below for the complete statistics). This is a drop from 2010 when the win rate was 47%. The leading claims included common stocks (with 771 claims), mutual funds (617) and variable annuities (197). Most common claims include breach of fiduciary duty, negligence, omissions of facts and failure to supervise. We expect another surge of cases to be filed at FINRA in 2012 as more investors sustain investment losses in leveraged exchange traded funds, variable annuities, options and other related investments. To learn how investment losses can be recovered, please contaact us.

http://www.finra.org/ArbitrationMediation/AboutFINRADR/Statistics/

Arbitration Claims Against Barclays...

2012-01-02T08:31:00.000-08:00

Barclays Capital was recently whacked with a $3 million fine by FINRA for various misrepresentations and omissions in the issuance of residential subprime mortgage securitizations. The entire FINRA release is below. Like many Wall Street brokerage firms, Barclays failed to disclose accurate and material information related to securities that plummeted in value. Burned investors have also filed multiple FINRA arbitration claims against the firm for sales practice abuses like unsuitable investment recommendations, churning, fraud and other related actions. Like most brokerage firms, Barclays requires clients who wish to sue the firm to file their claims for recovery at FINRA. To learn more, please contact our law firm in Chicago, Illinois for a no obligation consultation or visit www.InvestmentFraud.PRO

http://www.finra.org/Newsroom/NewsReleases/2011/P125308

FINRA Fines Barclays Capital $3 Million for Misrepresentations Related to Subprime Securitizations

WASHINGTON — The Financial Industry Regulatory Authority (FINRA) announced today that it has fined Barclays Capital Inc. $3 million for misrepresenting delinquency data and inadequate supervision in connection with the issuance of residential subprime mortgage securitizations (RMBS).

Issuers of subprime RMBS are required to disclose historical performance information for past securitizations that contain mortgage loans similar to those in the RMBS being offered to investors. Historical delinquency rates are material to investors in assessing the value of RMBS and in determining whether future returns may be disrupted by mortgage holders' failures to make loan payments.

FINRA found that from March 2007 through December 2010, Barclays misrepresented the historical delinquency rates for three subprime RMBS it underwrote and sold. The inaccurate delinquency data posted on Barclays' website was referenced as historical information in five subsequent RMBS investments and contained errors significant enough to affect an investor's assessment of subsequent securitizations. Additionally, Barclays failed to establish an adequate system to supervise the maintenance and updating of relevant disclosure on its website.

Brad Bennett, FINRA Executive Vice President and Chief of Enforcement, said, "Barclays did not have a system in place to ensure that delinquency data posted on its website was accurate; therefore, investors were supplied inaccurate information to assess future performance of RMBS investments."

In settling this matter, Barclays neither admitted nor denied the charges, but consented to the entry of FINRA's findings.

The investigation was conducted by Allen D. Boyer and Andrew Kampel under the supervision of Susan Light, Enforcement Chief Counsel.

Lawsuits to Recover Martin Wegener Losses

2011-12-23T06:31:00.000-08:00

We continue to investigate financial advisor Martin Wegener. In June of 2010 the Securities and Exchange Commission (SEC) “filed a civil injunctive action against Martin T. Wegener…and two companies formed, owned, and controlled by Wegener, Wealth Resources, Inc. and Wealth Resources, LLC (collectively, Wealth Resources), for fraudulently offering and selling at least $6.5 million in securities.” On November 11, 2011, The Grand Rapids Press reported that Mr. Martin Wegener was also facing felony criminal charges related to the alleged investment scheme. Last week, The Grand Rapids Press stated that Mr. Wegener “pleaded guilty to mail fraud in a $6-million Ponzi-type scheme involving at least 20 investors” and further that he had accepted a plea deal in which he “acknowledged he intended to defraud clients.”

If you've sustained investment losses with Martin Wegener, please contact our law firm in Chicago Illinois for a no obligation consultation on how those losses can be recovered against his employing brokerage firm.

Our Recent CNBC Appearance Discussing SEC Lawsuit Against Fannie and Freddie

2011-12-18T06:30:00.000-08:00

On Friday Andrew Stoltmann appeared on CNBC's Closing Bell with Maria Bartiromo to discuss the SEC lawsuit filed against Fannie Mae and Freddie Mac and its former senior executives. The entire video can be viewed at the link below. This is one of the only major SEC civil lawsuits filed against the executives who are to blame for the near meltdown of the worldwide economy.

GSE Execs Cooperating, Possible Settlement

Our Update of MF Global Fraud on Bloomberg TV Today

2011-12-15T12:31:00.000-08:00

We discussed on Bloomberg TV today (see below) Congressional testimony involving Jon Corzine of MF Global and Terrence Duffy of the CME. The senior executives of the firm, including its CEO, CFO and COO, continue with the Sergent Schultz defense ("we know nothing") and insist they do not know what happened to the missing funds. Terrence Duffy, the head of the CME, the primary regulator and auditor of MF Global, attempts to deflect blame away from the CME (the auditor and regulator of MF Global) and onto the shoulders of Jon Corzine. I discuss these topics and more with Bloomberg's Scarlet Fu below.

Will Corzine Face Obstruction of Justice Charges?

2011-12-14T06:32:00.000-08:00

Too soon to tell but published reports this morning are very troubling for Mr. Corzine. If a CME auditor is correct and Corzine knew of the shift of funds, he could be charged with obstruction of justice based off of his previous Congressional testimony. His testimony in the last week contradicts this crucial issue. If indeed he was told of the shift of funds, he walked into a classic prosectuotrial trap.

MF Global Executive'sTestimony: The Excuses Continue

2011-12-13T10:09:00.000-08:00

Today, additional MF Global executives testified in front of the Senate Agricultural Committee and did about as poorly as Jon Corzine did last week. MF Global's Chief Operating Officer Bradley Abelow and the firm's Chief Financial Officer Henri Steenkamp both claimed ignorance and had no knowledge what has happened to the missing $1.2 billion. This came on the heels of Jon Corzine's testimony last week that was nearly identical. It seems incredible that the three most senior executives at the firm have no idea what happened to the missing client funds.

Jon Corzine's Performance on Capitol Hill

2011-12-09T10:28:00.000-08:00

Yesterday Jon Corzine appeared on Capitol Hill and attempted to put his spin on what happened at MF Global during his watch. Unfortunately, he appeared evasive and provided extremely weak answers on important questions. I discussed his dismal performance on CNBC's Closing Bell with Maria Bartiromo yesterday afternoon. The entire video can be viewed at the link below.

http://video.cnbc.com/gallery/?video=3000061372

Wachovia Bank Hammered by SEC...

2011-12-08T09:01:00.001-08:00

More bad news for Wachovia. The Securities and Exchange Commission today charged Wachovia Bank N.A. with fraudulently engaging in secret arrangements with bidding agents to improperly win business from municipalities and guarantee itself profits in the reinvestment of municipal bond proceeds. The entire release can be viewed at the link below.

http://www.sec.gov/news/press/2011/2011-257.htm

Option Trading: The "Crack Cocaine" of the Brokerage World

2011-11-29T07:03:00.000-08:00

In an article today in Bloomberg, I call option trading the "crack cocaine" of the brokerage world. Why? Huge commissions mean easy money for the brokers who recommend them and they tend to be extremely addictive. The entire article can be viewed at the link below. Unfortunately, clients don't typically realize the risks of option trading and they certainly are not aware of how lucrative the options are for the brokers who recommend them. We have handled FINRA arbitration claims involving active option churning in the past. Fortunately, in some instances, some or all of the investment losses in options can be recovered. To receive a free legal consultation, please contact at 312.332.4200 or www.InvestmentFraud.PRO

http://www.bloomberg.com/news/2011-11-29/online-brokers-in-u-s-hurting-from-decline-in-stock-trading-push-options.html

Bravo Judge Rakoff

2011-11-28T12:29:00.000-08:00

Wonderful news that U.S. District Court Judge Rakoff embarrassed the SEC and forced them to do its job by rejecting the SEC Citigroup settlement. The SEC allowed Citigroup to neither "admit nor deny" liability in the case. Judge Rakoff found this unacceptable. I discuss why this decision was made and the importance of it in today's edition of The Guardian at the link below.

http://www.guardian.co.uk/business/2011/nov/28/citigroup-sec-settlement-rejected-judge

Failure To Supervise Claims Against LPL For Burned Clients

2011-11-23T10:10:00.000-08:00

Brokerage firms are obligated to supervise the actions and activities of its financial advisors. FINRA Conduct Rules impose this obligation on every securities firm in the U.S. Unfortunately, many brokerage firms don't provide the level of resources necessary to supervise in a reasonable manner. Problems often occur when a brokerage firm places a small, one or two registered representative shop in far flung locations. Often, these offices are hard to supervise.

Linsco Private Ledger (LPL) recently got in trouble for failing to supervise a broker. The firm paid a $100,000 fine for violating Oregon securities law in its oversight of a broker in La Grande who sold risky alternative investments to seniors. The case involved LPL broker Jack Kleck, who sold oil & gas partnerships to seniors in their 70s and 80s in rural Oregon. The state Division of Finance and Corporate Securities suspended Kleck's broker-dealer license and fined him in 2007. A subsequent investigation into why LPL failed to halt the sales found that the nation's largest independent broker-dealer wasn't adequately supervising its one-person broker-dealer shops.

For example, Kleck sold one client general partnership units on three separate occasions in 2004 ($20,000 on March 26, 2004, $10,000 on April 20, 2004, and $10,000 on November 7, 2004). Kleck was aware, or should have been aware, of his client's fragile mental state when he sold him these securities. The client allegedly lacked an adequate ability to review the lengthy prospectus and wasn't told about the substantial risks associated with this investment. The Oregon Securities Department determined that because these securities were in a category inconsistent with the client's stated investment objective (“income with moderate growth”), Kleck misrepresented his client's investment objective as being “growth with income” when forwarding transaction related documents to LPL’s alternative investment desk for approval.

Unfortunately, this sort of conduct is not uncommon at brokerage firms. We have represented over 75 LPL Linsco clients in FINRA arbitration claims and lawsuits in the past 12 years. The range of causes of action include fraud, unsuitable investment recommendations, misrepresentations and omissions and other familiar fraudulent conduct. To learn how LPL investment losses can be recovered on a contingency fee basis, please contact our law firm in Chicago (312.332.4200) or visit www.InvestmentFraud.PRO

Claymore Strategic UIT Investment Losses

2011-11-22T13:11:00.000-08:00

We are currently representing clients who have sustained investment losses in the Claymore Strategic Income Unit Investment Trust (“UIT”). UIT’s are durational and passively managed closed-end portfolios put together by investment companies and registered under the Investment Company Act of 1940. Typically, a UIT will have anywhere from twenty to over one-hundred underlying investments. Depending on the UIT’s investment objectives, these Trusts invest in a multitude of equity investments like common and preferred stock and mutual funds, to fixed income securities like bonds, commercial bank notes, collateralized debt/mortgage obligations, and convertible securities.

Importantly, UIT’s are not actively managed and thus, are not saddled with high management fees like most mutual funds, but do however carry with them large deferred sales charges if not held for the duration of the Trust. There is significant risk in investing in a UIT for this same very reason however. Unlike a mutual fund, UITs will not adjust their portfolio or sell distressed positions in volatile markets, thus putting their Net Asset Value (“NAV”) at risk for significant price decreases. Consequently, in a volatile bear market, UITs are uniquely risky investments.

We are representing victims in the Claymore SEC Defined Portfolios Unit 358 Strategic Income Portfolio sold for approximately at $10.1189 per unit. Clients of Fifth Third Bank were told they could expect a return of about 7% per year. Others were told to expect a conservative, stable return. Unfortunately, these representations have proven to be false. Clients in the Claymore Unit 358 Strategic Income Portfolio sustained investment losses sustained massive losses when the UIT went from $10.50 per share to $4.41 per share.

According to its Form S-6 Registration Statement, the Claymore UIT Series 358 was a portfolio of two “Strategic Income” portfolios. The UIT was to invest in closed-end mutual funds containing a 75%-25% mix of fixed income securities and equities. In the “Who Should Invest” section of the registration statement it states “You should consider this investment if: The trust represents only a portion of your overall investment portfolio.”

For clients who have sustained investment losses in the Claymore related UITs, some, or all, of these investment losses might be recoverable through the FINRA arbitration process. To learn more, please contact our law firm in Chicago, Illinois for a no obligation consultation at 312.332.4200 or visit www.InvestmentFraud.PRO

Good News For Burned Wells REIT Investors

2011-11-22T12:39:00.000-08:00

Hundred of investors were burned in Wells related non-traded REITs. The investments were sold to many clients as safe and secure and appropriate for conservative income seeking clients. Unfortunately, these pitches were grossly misleading. FINRA today took action against Wells Investment Securities for the utilization of misleading marketing material for the Wells Timberland REIT. The entire release is "cut and pasted" below. The enforcement action helps clients with FINRA arbitration claims pending as it helps eliminate issues related to whether indeed the sales pieces were deceptive. To learn how Wells REIT related losses can be recovered through arbitration claims or lawsuits, please contact our law firm in Chicago, Illinois at 312.332.4200 or visit www.ReitFraudRecovery.

FINRA Fines Wells Investment Securities $300,000 for Use of Misleading Marketing Materials for REIT Offering

WASHINGTON — The Financial Industry Regulatory Authority (FINRA) announced today that it has fined Wells Investment Securities, Inc. $300,000 for using misleading marketing materials in the sale of Wells Timberland REIT, Inc., a non-traded Real Estate Investment Trust (REIT).

Wells was the dealer-manager and wholesaler for the public offering of Wells Timberland REIT, which invested in timber-producing land. As the wholesaler, Wells reviewed, approved and distributed the marketing materials for Wells Timberland. FINRA found that from May 2007 through September 2009, Wells reviewed, approved and distributed 116 advertising and sales materials containing misleading, unwarranted or exaggerated statements. For example, Wells Timberland's initial offering prospectus stated that it intended to qualify as a REIT for the tax year that ended Dec. 31, 2006; however, it did not qualify for REIT election until the tax year that ended Dec. 31, 2009. The majority of the advertisements and sales literature failed to disclose the significance of Wells Timberland's non-REIT status or suggested that Wells Timberland was a REIT at a time when in fact it had not qualified as a REIT. The communications also contained misleading statements regarding Wells Timberland's portfolio diversification and ability to make distributions and redemptions.

Although non-traded REITs are generally illiquid, often for periods of eight years or more, they can avoid particular tax consequences if they qualify under certain Internal Revenue Service requirements. The Wells advertisements at issue did not make it clear to potential investors who might be seeking such favorable tax treatment, that the investment at issue was not yet a REIT and therefore would not be able to offer the desired tax benefits at the time the ads were being used.

On Oct. 4, 2011, FINRA issued an Investor Alert called Public Non-Traded REITs – Perform a Careful Review Before Investing to help investors understand the benefits, risks, features and fees of these investments.

Brad Bennett, FINRA Executive Vice President and Chief of Enforcement, said, "By approving and distributing marketing materials with ambiguous and equivocal statements, Wells misled investors into thinking Wells Timberland was a REIT at a time when it was not a REIT. Firms need to be mindful that investors rely on marketing materials to disclose truthful, accurate and up-to-date information to help inform their investment decisions."

FINRA's investigation also found that Wells failed to have supervisory procedures in place to ensure that sensitive customer and proprietary information stored on laptops were being adequately safeguarded by appropriate encryption technology.

LPL's Steps To Limit Non-Traded REIT Exposure

2011-11-22T11:55:00.001-08:00

We continue to file FINRA arbitration claims against the brokerage firms who sell non-traded REITS to clients. One of the biggest peddlers of non-traded REITs? Linsco Private Ledger. In a recent Registered Representative article, it is disclosed that LPL has removed 20 percent of the non-traded REITs on its platform and is "stepping up" its due diligence on non-traded REITs. These steps might have been more appropriate to have taken prior to the investments losing 20%-50% of their value.

The biggest problem with non traded REITs are the sky high commissions that cause financial advisors to recommended them regardless of whether they are suitable and appropriate for clients. This is especially true when the recommendations are made to eldery or retired clients. The lack of liquidity is also a significant problem. Liquidity issues must be taken into consideration prior to the recommendation.

We continue to file additional cases against the brokerage firms who sell non-traded REITs. LPL and Ameriprise were two major peddlers of the investments. Below is a list of all of the major non-traded REITs sold to investors. To learn how frozen funds in non-traded REITs can be recovered, please contact our law firm in Chicago, Illinois at 312.332.4200 or visit www.REITFraudRecovery.com

1. Inland American Real Estate Trust
2. Inland Western Retail Real Estate Trust
3. Wells REIT II
4. Behringer Harvard REIT I
5. Corporate Property Associates 16 Global
6. Cole Credit Property Trust II
7. Dividend Capital Total Realty Trust
8. Corporate Property Associates 15
9. CNL Lifestyle Properties
10. KBS Real Estate Investment Trust
11. KBS Real Estate Investment Trust II
12. Hines Real Estate Investment Trust
13. Healthcare Trust of America
14. Apple REIT Nine
15. Apple REIT Eight
16. Apple REIT Seven
17. Apple REIT Six
18. Lightstone Value Plus REIT
19. Apartment Trust of America
20. Cole Credit Property Trust I

SEC Takes Action Against Schwab Executive For YieldPlus Meltdown

2011-11-21T10:01:00.000-08:00

The SEC just announced regulatory action against an executive Vice President of Charles Schwab for the meltdown of the YieldPlus mutual fund. The entire action is cut and pasted below.

SEC v. KIMON DAIFOTIS AND RANDALL MERK, Civil Action No. CV-11-0137 WHA (N.D. Cal., filed Jan. 11, 2011)

FORMER EXECUTIVE AGREES TO INJUNCTION, PENALTY AND SUSPENSION TO SETTLE SEC CHARGES REGARDING SCHWAB YIELDPLUS FUND

The Securities and Exchange Commission today announced that Randall Merk consented to the entry of a permanent injunction, payment of a civil penalty, and a suspension in order to settle a Commission action related to the Schwab YieldPlus Fund. Merk was an Executive Vice President at Charles Schwab & Co., Inc., President of Charles Schwab Investment Management, and a Trustee of the Schwab YieldPlus Fund and other Schwab funds.

In January 2011, the Commission filed a complaint alleging that Merk and another official committed securities law violations in connection with the offer, sale, and management of the YieldPlus Fund. YieldPlus is an ultra-short bond fund that, at its peak in 2007, had $13.5 billion in assets and over 200,000 accounts, making it the largest ultra-short bond fund at the time. The fund suffered a significant decline during the credit crisis of 2007-2008 and saw its assets fall from $13.5 billion to $1.8 billion during an eight-month period.

According to the complaint, Merk misled or failed to inform investors adequately about the risks of investing in YieldPlus. The complaint also alleged that Merk approved other Schwab funds’ redemptions of their investments in YieldPlus at a time when he knew or was reckless in not knowing that a portfolio manager for those funds had received material, nonpublic information about YieldPlus without the authorization of the YieldPlus Fund’s board of trustees.

On November 21, 2011, the SEC filed a consent signed by Merk and a proposed final judgment against him. Without admitting or denying the Commission’s allegations, Merk consented to the entry of a final judgment permanently enjoining him from aiding and abetting violations of, or otherwise violating, Sections 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The proposed final judgment also would enjoin Merk from future violations of Section 34(b) of the Investment Company Act of 1940, which prohibits the making of untrue statements of material fact, or material omissions, in documents filed with the Commission. Merk also agreed to pay a $150,000 civil penalty, which the Commission is seeking to have included in an existing Fair Fund for distribution to injured YieldPlus investors. The proposed judgment is subject to the Court’s approval.

If the Court enters the injunction, Merk also has agreed to settlement of a yet-to-be instituted administrative proceeding in which the Commission would suspend Merk for 12 months from associating with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, and from participating in any penny stock offering.

The Commission previously entered into a $118 million settlement with three Schwab entities regarding the YieldPlus Fund and another bond fund. See Press Release 2011-7 and Litigation Release No. 21806 (Jan. 11, 2011). Litigation continues against Kimon Daifotis, the former lead portfolio manager for the YieldPlus Fund and former Chief Investment Officer for Fixed Income for Charles Schwab Investment Management. See Litigation Release No. 21805 (Jan. 11, 2011).

IMH Secured Loan Loss Investor Update

2011-11-18T14:09:00.000-08:00

Burned investors in the IMH Secured Loan Fund, LLC continue to seek recovery against the brokerage firms and brokers who sold it. According to IMH Financial Corporation latest 10-K annual report published in April 2011, from 2003 until 2008 The IMH Secured Loan Fund, LLC raised $875 million of equity capital. Many clients of brokerage firms were sold the Fund. In some instances, it was pitched as a safe and secure investment. We believe those representations to be false. Member redemption requests were recently suspended. This means that clients that wished to turn the Fund into cash were unable to do so. We believe the liquidity issues were a major risk that was not made clear to many investors prior to the purchase. To learn about what legal loss recovery options, including lawsuits and FINRA arbitration claims, might exist for investors who purchased the IMH Secured Loan Fund, please contact our law firm in Chicago, Illinois or visit www.InvestmentFraud.PRO

Difference in MF Global Brokerage Firm and Commodities Clients

2011-11-11T06:50:00.000-08:00

There are very important differences in clients of MF Global based upon whether they were stock market investors (about 400 clients) or commodities and futures clients (about 50,000). Clients with stock market accounts may be eligible for up to $500,000 compensation through the Securities Investor Protection Corporation if the money missing from MF Global’s ledgers cannot be located. But unfortunately, there is no similar protection for commodities clients. Commodity clients will be thrust into a
bankruptcy proceeding as a normal creditor as noted by NPR's Ilya Marritz. These clients might very well only receive pennies on the dollar. To learn more about the options for recovery, please contact our law firm in Chicago, Illinois.

Update On Algird Norkus and Madison Avenue Securities

2011-11-11T06:36:00.000-08:00

The Kane County Chronicle provided an update today on our Algird Norkus series of cases against Madison Avenue Securities and others. My co-counsel, John Burke, was interviewed in the article. The entire story can be viewed at the link below. As noted by James Nix, senior attorney in the state’s securities enforcement division, Madison Avenue Securities might lose its registration if the hearing officer finds that it failed to supervise its salesman as required by law.

http://www.kcchronicle.com/2011/11/10/attorney-sues-on-behalf-of-ponzi-scheme-victims/ajgv2wb/

SEC Hits an Investment Advisor...

2011-11-10T10:36:00.001-08:00

The SEC just filed an enforcement action against a registered investment advisor. The entire release can be viewed below.

SEC Charges San Diego-Based Investment Adviser and Its President with Fraud
11/10/2011 12:11 PM EST

Washington D.C., Nov. 10, 2011 — The Securities and Exchange Commission today charged a San Diego-based investment advisory firm and its president with fraud for failing to disclose a conflict of interest to clients and materially misrepresenting the liquidity of a hedge fund they managed.

The SEC’s Division of Enforcement alleges that Western Pacific Capital Management LLC and Kevin James O’Rourke urged clients to invest in a security without disclosing that Western Pacific would receive a 10 percent commission. Western Pacific and O’Rourke also failed to register as a broker, failed to provide required written disclosures to clients, improperly redeemed one hedge fund investor’s interest ahead of another’s, and made material misstatements and omissions to clients regarding the fund’s liquidity.

“Investment advisers have a fiduciary duty to act in the best interests of their clients and be forthcoming with them,” said Marshall S. Sprung, Assistant Director in the SEC Enforcement Division’s Asset Management Unit. “Western Pacific and O’Rourke fraudulently breached that duty by failing to disclose the commissions they would receive for the recommended investments and lying to clients about the liquidity of the fund they managed.”

According to the SEC’s order instituting administrative proceedings, Western Pacific and O’Rourke acted as brokers in the non-public offering of stock by Ameranth Inc. during 2005 and 2006. Ameranth paid Western Pacific a 10 percent “success fee.” Even though Western Pacific and O’Rourke advised their clients to purchase the Ameranth stock, they failed to advise each of their clients that they would financially benefit from their clients’ purchases of stock, and failed to provide any clients with the required written disclosures regarding their role in the offering. Western Pacific received $482,745 in success fees from Ameranth, of which $450,495 was due to investments made by its clients.

The SEC’s Enforcement Division also alleges that from 2005 to 2008, Western Pacific and O’Rourke misrepresented the liquidity of The Lighthouse Fund LP, a hedge fund that they formed and managed. Western Pacific and O’Rourke repeatedly stated that only 25 percent of the Lighthouse Fund was invested in illiquid assets, when in fact 90 percent of its assets consisted of illiquid securities.

According to the SEC’s order, Western Pacific used Lighthouse Fund assets to resolve a dispute with a client who no longer wanted his $800,000 of Ameranth stock. O’Rourke caused the fund to buy some of the stock and permitted the client to use the remainder of the stock to finance his investment in the fund. O’Rourke ultimately redeemed the client’s interest in the fund for cash ahead of another client who had previously requested a full redemption.

As alleged in the SEC’s order, Western Pacific and O’Rourke willfully violated Section 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1), 206(2), 206(3), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder.

Defrauded Clients At Morgan Stanley Smith Barney...

2011-11-10T09:55:00.001-08:00

Unfortunately,retail investors frequently get taken in bond related investment scams. Sometimes these scams involve high risk bonds sold as safe and conservative investments. More often, however, clients are taken a little bit at a time.

In no investment is this more prevalent than in corporate and municipal bonds. Bonds trade on a markup basis. This means a bond held in inventory at a brokerage firm like Merrill Lynch for $925 a bond can be marked-up anywhere from $1 all the way to $100 or more per bond. Unfortunately, a retail investor has no way of knowing what this markup will be. It doesn't show up on his or her monthly account statement or on the confirmation. Investors are at the mercy of their brokerage firm to charge a reasonable markup. Not surprisingly, many brokerage firms abuse this trust and include unreasonable markups. We have represented clients in FINRA arbitration's in these sorts of actions and it is far more common than what clients believe.

The latest to get caught with its hand in the cookie jar? Morgan Stanley Smith Barney. FINRA today fined the firm and order restitution to clients for markup abuses. The entire release is cut and pasted below. To learn how bond losses can be recovered, please contact us.

FINRA Fines Morgan Stanley $1 Million and Orders Restitution of $371,000 for Excessive Markups and Markdowns

WASHINGTON — The Financial Industry Regulatory Authority (FINRA) announced today that it has fined Morgan Stanley & Co. Inc. and Morgan Stanley Smith Barney LLC $1 million and ordered $371,000 in restitution and interest to customers for excessive markups and markdowns charged to customers on corporate and municipal bond transactions, and related supervision violations.

FINRA found that Morgan Stanley charged markups and markdowns ranging from below 5 percent to 13.8 percent on corporate and municipal bond transactions, which were higher than warranted given factors including market conditions, the cost of executing the transactions and the value of the services rendered to the customers.

Thomas Gira, Executive Vice President, FINRA Market Regulation, said, "Firms must ensure that customers who buy and sell securities, including corporate and municipal bonds, receive fair and reasonable prices regardless of whether a markup or markdown is above or below 5 percent. Morgan Stanley clearly violated fair pricing standards and FINRA will continue to require firms that violate such standards to make their customers whole."

FINRA found that Morgan Stanley's supervisory system for corporate and municipal bond markups and markdowns was inadequate. The firm's supervisory reports were not designed to include markups and markdowns that were below 5 percent but nonetheless may have been excessive. And before August 2009, Morgan Stanley's policies and procedures considered only one of two charges that the firm added to the price of a bond when it determined whether a markup or markdown was fair and reasonable. Morgan Stanley was also ordered to revise its written supervisory procedures regarding supervisory review of markups and markdowns in fixed income transactions with its customers.

In concluding this settlement, Morgan Stanley neither admitted nor denied the charges, but consented to the entry of FINRA's findings.

MF Global Bond Loss Recovery Options

2011-11-10T06:55:00.000-08:00

Burned clients who were recommended MF Global bonds have viable options for recovering the massive losses they have sustained. Late last week, bonds from MF Global Holdings Ltd. plunged in value as the firm comes under scrutiny by the FBI and prosecutors. The company’s $325 million of senior unsecured 6.25 percent notes due in August 2016 fell 5 cents to 40 cents on the dollar with a yield of 30.3 percent. Unfortunately, brokerage firms like BofA Merrill Lynch, JP Morgan and US Bancorp sold these notes to clients. In some instances, the full risks may not have been disclosed. For example, we believe little to no information was disclosed to purchasers regarding the merits of MF Global and the massive, non-hedged bets the firm took on European debt.

For clients who have sustained losses in the notes, FINRA arbitration claims can be used to recover these losses. Since no class action lawsuits have been filed yet, the arbitration route is the only major recovery option for clients. To learn more, please contact our law firm in Chicago, Illinois for a no obligation consultation at 312.332.4200

Wells Reit Fraud Update: $7.47 Value

2011-11-10T06:40:00.000-08:00

Unfortunately, clients who were scammed into buying Wells REIT II have received more bad news. Wells REIT II just estimated its value is only $7.47. Most of the clients we are representing in FINRA arbitration claims purchased the shares at $10 per share. Many clients were pitched the investment as a "safe" investment. The entire Investment News article that discusses this in detail can be viewed at the link below. We encourage people who were solicited to buy the non-traded REIT to contact us at 312.332.4200 or visit www.reitfraudrecovery.com to learn about recovery options.

http://www.investmentnews.com/article/20111109/FREE/111109929/-1/INDaily01&dailycount=4&issuedate=20111109

More Bad News For MF Global Customers

2011-11-10T06:22:00.001-08:00

Bloomberg reported yesterday that MF Global Inc.’s customers may be required to share some of their cash with other clients unless money missing from some accounts is found. According to Stephen Harbeck, president of the Securities Investor Protection Corp., or SIPC “Distribution of the assets will be pro rata, if there’s insufficient there to fulfill all obligations,” Unless the missing cash is found, people hoping to recover 100 cents on the dollar may have to give up some of it to other customers, Harbeck said yesterday a phone interview. The entire Bloomberg article can be viewed at the link below. We encourage MF Global customers to contact us to learn about their legal options.

http://www.businessweek.com/news/2011-11-10/mf-global-clients-may-be-required-to-share-cash-sipc-head-says.html

SEC Incompetence Hits A New Low

2011-11-09T11:08:00.000-08:00

Today is a big day for the Securities and Exchange Commission and Mary Schapiro. The SEC got grilled today by federal court Judge Jed Rakoff. The SEC made two stunning admissions today. First, SEC lawyers disclosed it “did not devote resources to calculating” how much money investors lost as a result of Citigroup’s conduct. The agency said it was not required to measure investors’ losses. The agency also disclosed in response to Judge Rakoff's previously submitted questions that investor losses were $700 million. The SEC settlement with Citigroup was for $285 million.

It is incredible that the primary watchdog for U.S. investors would claim in court it didn't measure the financial harm done to investors by Citigroup. This should be one of the first things the SEC examines. Instead, it has admitted it didn't know and it wasn't required to know and by extension, really didn't care how much client's lost. In addition, the SEC admits after prodding, total client losses in the Citigroup scam were about $700 million. The SEC is requiring Citigroup to pay only about 40% of the losses as its penalty. And people wonder why brokerage firms continue to defraud clients year after year.

Lawsuits Involving Adageo Energy Partners, LP

2011-11-08T13:02:00.000-08:00

We are investigating the sales practices of Madison Ave Securities in selling Adageo Energy Partners to customers. Adageo Energy Partners in a private placement sold by Madison Avenue. If you've sustained losses in Adageo and were recommended the private placement by Madison Avenue Securities, please contact us to see if the losses can be recovered through a FINRA arbitration claim or lawsuit.

Q&A: How MF Global's Bankruptcy Affects Customers

2011-11-08T07:48:00.000-08:00

The Wall Street Journal has an excellent article entitled Q&A: How MF Global's Bankruptcy Affects Customers. The piece answers many questions that burned MF Global customers have about the bankruptcy proceeding. The entire link is below.

http://online.wsj.com/article/SB10001424052970203733504577024451451072194.html?mod=googlenews_wsj

MF Global Update: MF Global Customers Have A Nov 15 Deadline

2011-11-08T06:55:00.000-08:00

According to Jacob Bunge of Dow Jones, customers of MF Global Holdings Ltd. have until Nov. 15 to request the return of noncash collateral held by the collapsed broker-dealer. The entire article can be viewed at the link below.

http://www.foxbusiness.com/industries/2011/11/07/mf-global-trustee-noncash-property-must-be-claimed-by-nov-15-with-charges/

Latest Cash Grab By Fannie Mae and Freddie Mac

2011-11-04T13:21:00.000-07:00

For a job (so far) poorly done, senior executives at Fannie Mae and Freddie Mac have been rewarded multi-million bonuses. I went on CNBC today to talk about the lunacy of these bonuses. The interview can be viewed at the link below.

http://video.cnbc.com/gallery/?video=3000055604

MF Global Client's SIPC Nightmare Is About To Begin

2011-11-04T08:22:00.000-07:00

Clients of MF Global are about to be introduced to the SIPC nightmare. Historically, SIPC has done what it can to slow down payments to investors OR deny their claims altogether. SIPC has long been run like a for-profit insurance company, doing everything in its power to deny claims rather than protect investor assets. The last published information we've seen indicates just nine investors of 3,368 making claims in the Stratton Oakmont liquidation have received cash or securities. Thousands of clients in the Stratton Oakmont case were denied SIPC coverage by SIPC because they did not complain about unauthorized trades in writing within 10 days. Stratton Oakmont was probably the most notorious boiler room in U.S. history. The refusal of SIPC to make these investors whole was inexcusable.

Don't believe me on how bad SIPC is when they are called to the scene? See the link below to the article entitled SIPC's Scroogelike Ways Draw Scrutiny from the Street.com. Or the Registered Rep article entitled Have SIPC Protectors Run Amok. Or the press release that leads to a Wall Street Journal article entitled U.S. Lawmakers Demand Probe Of Handling Of Madoff Claims by Jessica Holzer. Or a recent article by top journalist Kathy Kristof entitled SIPC considers revamping rules to protect stock investors.

Another issue for MF Global clients is whether SIPC will even have enough mponey to reimburse them. An article in the New York Post in April of this year discusses the massive fees being charged by Irving Picard for the Bernard Madoff work ("Fees charged by the trustee representing Bernie Madoff's victims could help wipe out the $2.5 billion fund of the government-sponsored nonprofit organization that manages the liquidation of failed brokerage firms, the Securities and Exchange Commission's Inspector General said in a report issued on Thursday."). These fees are being paid by SIPC. The entire article can be viewd at the following link: http://articles.nydailynews.com/2011-04-02/sports/29390265_1_madoff-trustee-irving-picard-sipc

SIPC provides phantom protections for customers of brokerage firms. Unfortunately, MF Global victims are about to be introduced to the SIPC nightmare. These problems have been written about for years. Little to nothing has been done.

Andrew Stoltmann

http://www.investoraction.org/wp-content/uploads/2010/09/2000_Street_com.pdf
http://registeredrep.com/mag/finance_sipc_protectors_run/
http://garrett.house.gov/News/DocumentSingle.aspx?DocumentID=245204
http://articles.latimes.com/2010/sep/12/business/la-fi-perfin-20100912

Our MF Global Discussions on Bloomberg TV

2011-11-03T12:27:00.001-07:00

I recently discussed on Bloomberg MF Global and what the future holds for the company, its executives and burned investors. The entire interview can be viewed at the link below.

http://www.bloomberg.com/video/79336874/

MF Global: What Went Wrong & What Can Clients Do?

2011-11-03T11:40:00.000-07:00

We have been asked by the press and others "what went wrong at MF Global and why." We have attempted to answer that question for various media outlets, including Forbes (see below for a recent article) and others. Fortunately for investors who have their funds trapped at the firm and sustained losses investing in MF Global related investments, legal options exist. Which ones?

Investors in MF Global Common Stock: These investors have the class action route option. While no class action lawsuits have been filed, multiple ones will be filed in the very near future. These lawsuits will target the firm and senior executives at the firm, including Jon Corzine.

Investors With Frozen Funds at MF Global: These investors are currently in the SIPC claims process. If all of the accounts are sold to another brokerage firm, these assets will likely be transferred completely in the near future. This is what happened when Lehman Brothers went bankrupt in September of 2008 and the accounts were purchased by Barclays. Some of these clients may have actionable claims against MF Global based on the length of time their accounts were frozen and the volatility of the positions held during the frozen time period.

Investors with MF Global Issued Notes: These clients have sustained a complete loss on their investment. Depending on their financial profile and representations made, they may have actionable arbitration claims against MF Global and maybe even the brokerage firm who sold them the notes for clients who did not purchase the notes at MF Global. Claims may include misrepresentations and omissions, fraud and even potentially suitability claims.

We encourage clients who have been adversely affected by MF Global to contact us to discuss their legal options through either investment lawsuits, class action claims or FINRA actions.

http://www.forbes.com/sites/afontevecchia/2011/10/31/mf-global-the-fall-of-corzine-the-volcker-rule-and-too-big-to-fail/

Burned in MF Global Convertible Senior Notes?

2011-11-03T11:30:00.000-07:00

It appears as though many clients were. MF Global made 2 convertible senior note offerings in the last 12 months. On July 28, 2011, MF Global announced the pricing of an underwritten public offering of $325 million aggregate principal amount of 3.375% Convertible Senior Notes due August 1, 2018.

Earlier in the year, February 8, 2011, the firm disclosed the pricing of an underwritten public offering of $250 million aggregate principal amount of 1.875% convertible senior notes due February 1, 2016. Both of these notes were senior, unsecured obligations of MF Global Holdings Ltd.

Some of the U.S. brokerage firms who sold the notes include Goldman, Sachs & Co., Citi, BofA Merrill Lynch, J.P. Morgan, Deutsche Bank Securities and RBS.

Many brokers sold the notes as a relatively conservative, fixed income investment approprirate for retirees and others who were looking for a conservative income investment. Unfortunately, we believe these representations were false. Basic due dillegence should have noted the extreme positions, including a $6.3 billion gamble in European debt, taken by the firm. Regulators were onsite investigating these positions in the early parts of the summer. Had purchasers of the notes been given the full picture of M.F. Global, it is unlikely they would have purchased.

Clients who purchased the notes potentially have claims against the brokerage firm who sold them as well as MF Global. We encourage purchasers to contact us for a no obligation, consultation of the lawsuit recovery process.

Eric Burns Investment Loss Recovery Process

2011-11-03T11:21:00.001-07:00

We are currently investigating the sales practices of Morgan Stanley Smith Barney and Dimensions Financial Group representative Eric T. Burns. According to regulators, Mr. Burns failed to provide information about allegations of misappropriation of client funds. This occurred while Mr. Burns was employed with Dimensions Financial and/or Morgan Stanley Smith Barney. The Kansas Securities Commissioner issued an emergency order of summary license suspension of Eric Burns for willfully and without cause failing to comply with a request for information issued by the Kansas Securities commission. The good news is that losses associated with his conduct might be recoverable against Morgan Stanley Smith Barney through the FINRA arbitration claims or lawsuits. To learn more, please contact our law firm in Chicago, Illinois for a no obligation consultation or visit www.InvestmentFraud.PRO

Investment News Takes FINRA To Task...

2011-10-31T13:49:00.000-07:00

for its latest "black eye." In an article entitled "Black eye for Finra" Bruce Kelly and Liz Skinner discuss the impact a Finra senior officials doctoring of minutes from internal staff meetings will have on FINRA as it attempts to expand its jurisdiction over registered investment advisors. The entire article can be viewed at the link below.

http://www.investmentnews.com/article/20111030/REG/310309968

Failure To Do Due Dillegence Claims on MF Global 6.25% Senior Notes Due in 2016

2011-10-31T12:55:00.001-07:00

We are investigating the sales practices of the underwriters who sold MF Global 6.25 senior Notes due in 2016. The lead underwriter was Jefferies & Company. The co-managers included Merrill lynch, U.S. Bancorp, Natixis Securities and Sandler O'Neil and Partners. The offering amount was $319 million with a stated coupon of 6.25% and a maturity in 2016. Specifically, we are examining the level of due diligence Jefferies and the co-underwriters performed on these notes prior to selling them.

Prior to the August 3, 2011 offering we believe there were clear and obvious signs of the coming implosion of MF Global. Multiple regulators had already examined MF Global's European, leveraged positions and raised serious questions and inquiries. The (leveraged) positions of the firm were clearly relevant, material pieces of information that should have gone into any analysis of the merits of the Notes. As the underwriters, these companies had certain legal duties and obligations in performing due diligence on the Notes and MF Global.

Our lawsuits for investors who sustained losses in the notes will target both MF Global, the underwriters and the brokerage firms who sold the Notes. We do not intend of naming the full service brokers who recommended the Notes. To learn how investment losses in the MF Global 6.25% senior Notes due in 2016 can be recovered on a contingency fee basis, please contact our law firm in Chicago, Illinois at 312.332.4200 or visit www.InvestmentFraud.PRO

MF Global Shows Need For Stronger Banking Regulations...

2011-10-31T12:53:00.000-07:00

MF Global and Jon Corzine provide the latest clear example of the need for stronger regulation of banks and brokerage firms, including the implementation of the Volcker Rule. Mr. Corzine, according to published reports, took a massive gamble on his views of European debt on a leveraged basis. It appears as though Corzine leveraged his bets too much and took a swing for the fence approach that sank his firm with MF Global filing for bankruptcy protection this morning. This is exactly the type of situation the Volcker Rule is suppose to prevent.

MF Global was not seen as a large enough firm to cause systemic risk in the global economy but its bankruptcy has rattled world markets. Banks and brokerage firms are financially intertwined with the global economy. The largest unsecured creditors owed money by MF Global are JPMorgan Chase with more than $1.2 billion in corporate bonds, and Deutsche Bank with $1 billion in bonds. Banks and brokerage firms remain highly intertwined with the worldwide economy and we still don't know what massive risks are lurking on banks balance sheets. The Volcker Rule is needed to prevent companies like MF Global from taking massive, bet the ranch bets on investments and potentially causing a repeat of the mistakes that led us to 2008.

Our Latest Views in the New York Times...

2011-10-31T12:11:00.000-07:00

On Judge Judge Rakoff can be viewed at the link below. Judge Rakoff is the S.E.C.'s worst nightmare-someone who is unwilling to rubber stamp weak settlements negotiated by the SEC.

http://dealbook.nytimes.com/2011/10/27/judge-rakoff-skeptical-of-s-e-c-settlement-with-citigroup/

Andrew Stoltmann

MF Global Class Action Lawsuit

2011-10-31T11:25:00.003-07:00

We are currently investigating MF Global and its senior executives for actions leading to the collapse of the firm. We are also investigating the firms that underwrote and sold note offerings related to MF Global. Jefferies served as the sole book-running manager for the offering, with BofA Merrill Lynch, BMO Capital Markets, Lebenthal & Co., Commerzbank, Sandler O’Neill + Partners, Natixis and US Bancorp serving as co-managers of the offering. In addition, multiple other brokerage firms, like JP Morgan, sold notes related to the firm.

Our preliminary investigation, as well as published reports, indicate a lack of internal controls at MF Global may have been a root cause of the collapse of the firm. The day it filed for Chapter 11 protection MF Global disclosed a shortfall in customer accounts that may be about $700 million according to some published reports. CME Group Inc., which has the authority to audit those accounts, said it still isn’t sure how much client money was missing.

Craig Donohue, CME Group’s chief executive officer, noted in a recent New York Times article, MF Global violated requirements that it keep clients’ collateral separate from its own accounts. “While we are unable to determine the precise scope of the firm’s violation at this time, we are investigating the circumstances of the firm’s failure,” said Donohue in the same article.

Keeping client collateral separate is one of the most basic obligations brokerage firms have to customers. While it is still unclear how much of a shortfall there may be, if any, published reports indicate it might be large.

In addition, multiple brokerage firms were recommending MF Global related bonds and notes to investors. For example, firms were actively recommending MF Global 6.250% Senior Notes due in 2016 which were offered for sale in August of 2011. The firms recommending these and other MF Global related notes had an obligation to perform the necessary due diligence to determine the soundness of the investment and the firm. In some instances, this may not have been done. In other instances, clients who were recommended the notes may not have been told the true risks.

The good news for burned clients in MF Global related holdings is that FINRA arbitration claims and lawsuits can be used to recover these losses. As a FINRA member, MF Global is obligated to arbitrate claims of customers against it. Thousands of investors have had their accounts frozen at MF Global. Many investors have been unable to trade their account during this time period. These frozen accounts have led to investment losses that may be recoverable against MF Global and its control persons through lawsuits or FINRA arbitration claims. These clients can use the arbitration process to recover their losses. The same is true for clients who have purchased MF Global related notes and bonds.

We encourage clients who have sustained losses investing in the common stock or bonds of MF Global or who have had their portfolio frozen to contact our law firm to discuss legal remedies against the firm and the firms who sold its notes. To learn more, please contact us at 312.332.4200 in Chicago, Illinois or visit www.InvestmentFraud.PRO

TICS Continue to Burn Retail Investors...

2011-10-31T11:25:00.001-07:00

Saturday's Wall Street Journal profiled one of our clients with an FINRA arbitration claim pending against H and R Block and Ameriprise. The article is entitled In Real Estate, Simple Wins. The piece details investment abuses, including unsuitable investment recommendations, in tenancies-in-common ("TICs). TICs are a type of private placement. Regulators are cracking down hard on these sorts of private placements (see NASAA top 10 investor traps of 2011 which include private placements at http://www.nasaa.org/3752/top-investor-traps/).

The article details our client, Mary Boston, and her experience owning two TICs, Sequoia at Stonebriar and The Retreat at Stonecrest. The entire article can be viewed at the link below. The TICs paid the advisor 7%, which was one of the highest commissioned sales products that could be sold. Like variable annuities and structured products, TICs are sold, they are almost never bought.

In addition to the investment losses sustained, in many instances purchasers in TICs have their remaining funds frozen AND have had to make capital calls back into the investments. We believe many clients seeking 1031 exchanges have had conservative funds lost in TICs. For those investors, FINRA arbitration claims can be used to attempt to recoup these losses. To learn how, please contact our law firm in Chicago or visit www.InvestmentFraud.PRO.

http://online.wsj.com/article/SB10001424052970204505304577004122808408172.html

UBS Hammered Again

2011-10-25T14:23:00.000-07:00

Not a good 5 weeks for UBS and its affiliated companies. FINRA just hammered UBS Securities for $12 million. According to FINRA, the company violated Regulation SHO and failed to properly supervise short sales of securities. The entire release can be viewed below.

http://www.finra.org/Newsroom/NewsReleases/2011/P124806

FINRA Fines UBS Securities $12 Million for Regulation SHO Violations and Supervisory Failures
WASHINGTON — The Financial Industry Regulatory Authority (FINRA) announced today that it has fined UBS Securities LLC $12 million for violating Regulation SHO (Reg SHO) and failing to properly supervise short sales of securities. As a result of these violations, millions of short sale orders were mismarked and/or placed to the market without reasonable grounds to believe that the securities could be borrowed and delivered.

In a short sale, the seller sells a security it does not own. When it is time to deliver the security, the short seller either purchases or borrows the security in order to make the delivery. Reg SHO requires a broker-dealer to have reasonable grounds to believe that the security could be borrowed and available for delivery before accepting or effecting a short sale order. Requiring firms to obtain and document this "locate" information before the short sale occurs reduces the number of potential failures to deliver in equity securities. In addition, Reg SHO requires a broker-dealer to mark sales of equity securities as long or short.

FINRA found that UBS' Reg SHO supervisory system regarding locates and the marking of sale orders was significantly flawed and resulted in a systemic supervisory failure that contributed to serious Reg SHO failures across its equities trading business. First, FINRA found that UBS placed millions of short sale orders to the market without locates, including in securities that were known to be hard to borrow. These locate violations extended to numerous trading systems, desks, accounts and strategies, and impacted UBS' technology, operations, and supervisory systems and procedures. Second, FINRA found that UBS mismarked millions of sale orders in its trading systems. Many of these mismarked orders were short sales that were mismarked as "long," resulting in additional significant violations of Reg SHO's locate requirement. Third, FINRA found that UBS had significant deficiencies related to its aggregation units that may have contributed to additional significant order-marking and locate violations.

Lawsuits To Recover MF Global Losses

2011-10-24T06:36:00.000-07:00

We are currently investigating bringing claims and lawsuits against both MF Global and the brokerage firms who sold the firm's bonds. We believe some clients may have been sold investments related to the company without having been disclosed the full risks associated with the investments. To learn how MF Global related investment losses xan be recovered, please contact our law firm in Chicago, Illinis.

Burned By LPL's Jeffrey Ogle?

2011-10-20T15:03:00.000-07:00

We are currently probing the sales practices of of LPL broker Jeffery Dean Ogle. He was recently terminated by Linsco for allegeging violating firm policies regarding customer loans and check writing authority. At least one LPL client has already filed a FINRA arbitration claim against the Colorado based broker for sales of Masterbuilt Estate Homes, Inc., a real estate development company which is purportedly owned by Jeffery Ogle's dad. We have represented over 75 clients in FINRA arbitration claims against LPL in the past 11 years. To learn more about the loss recovery process against LPL, please contact us.

Colorado Reaches Settlement With ETrade Over Auction Rate Securities

2011-10-20T14:17:00.000-07:00

The state of Colorado reached a settlement with ETrade over the firm's auction rate securities abuses. The entire release is below.

Colorado Securities Commissioner Announces Settlement of its Auction Rate Securities Enforcement Action against E*TRADE

Colorado Securities Commissioner Fred Joseph announced today that a settlement in principle has been reached between E*TRADE Securities, LLC, and the Colorado Division of Securities settling its enforcement action against E*TRADE related to its sale of auction rate securities to Colorado investors. Under the settlement agreement, E*TRADE agreed to buy back approximately $3.5 million worth of auction rate securities from Colorado investors who found themselves unable to sell their securities after they had been frozen in the auction rate securities ("ARS") market.
The settlement also includes a broader agreement by E*TRADE to return approximately $100 million to the firm’s clients on a nationwide basis.

The settlement concludes the Division’s enforcement action initiated to sanction E*TRADE’s license in Colorado for alleged violations of the Colorado Securities Act in connection with the sale of auction rate securities to Colorado investors. A hearing was held before Administrative Law Judge Robert Spencer beginning June 6, 2011. On August 12, 2011, Judge Spencer issued his initial decision finding that E*TRADE willfully misrepresented material facts in connection with the sales of auction rate securities to Colorado investors and failed to adequately supervise its financial advisors who sold the auction rate securities to Colorado investors. The Initial Decision by Judge Spencer is not an effective or final order, but was pending with the Securities Commissioner for issuance of a final order.

The settlement also concluded a multi-state investigation of E*TRADE for its role in the sale of auction rate securities for making misleading representations to certain of its clients that auction rate securities were the same as “7 day paper” and were a suitable alternative to money market funds for liquidity purposes. It did so through its sales force, some of whom represented to certain investors that auction rate securities were safe investments for cash management purposes. The auction rate securities markets froze in February of 2008, triggering a flood of complaints from investors who could not withdraw money from their accounts. States received complaints from a wide range of investors who suffered significant financial damage because the money they were told was liquid was tied up in the frozen ARS market.
E*TRADE has agreed to make Colorado investors whole,” said Commissioner Joseph. “Getting this relief for investors was our ultimate goal. I credit the hard work and persistence of the Staff of the Division and the lawyers from the Colorado Attorney General’s office who represented us in our action for achieving this positive result for investors.”

The terms of the settlement include E*TRADE’s agreement to buy back at par all outstanding auction rate securities purchased through the firm by individual investors prior to February 11, 2008, fully reimburse all individual investors who sold their auction rate securities at a discount, reimburse certain investors for the cost of loans after the investor took out a loan from E*TRADE because their securities were frozen, and pay a penalty and the costs of the legal action.

This settlement is the fifteenth that the Securities Commissioner has entered. Previous settlements include Deutsche Bank Securities, Citigroup Global Markets, Bank of America Securities, Credit Suisse Securities, JP Morgan Chase, Merrill Lynch, RBC Capital Markets, UBS Securities, Wachovia Securities, Stifel Nicolaus, Goldman Sachs, Morgan Stanley, TD Ameritrade, and Wells Fargo. The Division continues to investigate possible misconduct by other firms.

Black Eye For Robert Baird Supervisor

2011-10-20T07:54:00.000-07:00

Today's Milwaukee Journal Sentinel detailed a $10,000 fine for a former Robert W. Baird compliance officer. Susan Margaret Labant was fined $10,000 for her role in Baird's alleged failure to comply with some of the regulations governing short sales. The firm was fined $900,000 earlier this year for the conduct. The entire article can be viewed at the link below.

http://www.jsonline.com/business/former-baird-compliance-officer-fined-132206813.html

Non-Traded REITS Hammered In Today's Pittsburgh Post

2011-10-20T07:46:00.000-07:00

The latest high commissioned, toxic investment, non-traded REITs, are hammered in today's Pittsburgh Post. The entire article, with my commentary, can be viewed at the link below. Thousands of investors continue to get burned in non-traded REITs. These high commissioned, illiquid investments were sold to elderly, retired and conservative investors nationally with false representations about the safety of the holdings. Unfortunately, as investors have learned, these representations were not rue. Desert Capital, Apple, Amreit, Behering Harvard, and others have wiped out billions of conservative client funds. To learn how these losses can be recovered, please visit www.reitfraudrecovery.com or contact our law firm at 312.332.4200

http://www.post-gazette.com/pg/11293/1183430-28-0.stm

Leveraged ETFs in SEC's Crosshair?

2011-10-19T10:14:00.000-07:00

SEC Investment Management director Eileen Rominger disclosed in a Senate Banking subcommittee hearing on Wednesday that the SEC is "gathering and analyzing detailed information about specific products," including exchange traded funds. Leveraged ETFs have been blamed by many for some of the extreme volatility in the market in the last 6 months. It is almost certain the SEC will look hard at these products in the next 12 months to see the precise role they have played in the recent market gyrations.

More Repugnant Behavior From Citigroup

2011-10-19T09:56:00.000-07:00

Unfortunately, Citigroup was caught with its hand in the cookie jar, once again. The firm was fined today by the SEC for basically lying to investors about the risks and merits of a CDO. The charges mirror those made by the SEC against Goldman Sachs for the Abacus deal. The main allegations? Citigroup created a CDO and then bet against it without telling anyone. The firm made $160 million and the clients were wiped out. Unfortunately, these sorts of allegations no longer surprise us. So long as criminal charges are not brought against those responsible for these sorts of actions, we can expect this behavior to continue. But as least your Citigroup TARP bailout money saved a worthy firm. The entire release is "cut and pasted below."

http://www.sec.gov/news/press/2011/2011-214.htm

Citigroup to Pay $285 Million to Settle SEC Charges for Misleading Investors About CDO Tied to Housing Market
Former Citigroup Employee Separately Charged for His Role in Structuring Transaction

Washington, D.C., Oct. 19, 2011 – The Securities and Exchange Commission today charged Citigroup’s principal U.S. broker-dealer subsidiary with misleading investors about a $1 billion collateralized debt obligation (CDO) tied to the U.S. housing market in which Citigroup bet against investors as the housing market showed signs of distress. The CDO defaulted within months, leaving investors with losses while Citigroup made $160 million in fees and trading profits.
Additional Materials

The SEC alleges that Citigroup Global Markets structured and marketed a CDO called Class V Funding III and exercised significant influence over the selection of $500 million of the assets included in the CDO portfolio. Citigroup then took a proprietary short position against those mortgage-related assets from which it would profit if the assets declined in value. Citigroup did not disclose to investors its role in the asset selection process or that it took a short position against the assets it helped select.

Citigroup has agreed to settle the SEC’s charges by paying a total of $285 million, which will be returned to investors.

The SEC also charged Brian Stoker, the Citigroup employee primarily responsible for structuring the CDO transaction. The agency brought separate settled charges against Credit Suisse’s asset management unit, which served as the collateral manager for the CDO transaction, as well as the Credit Suisse portfolio manager primarily responsible for the transaction, Samir H. Bhatt.

“The securities laws demand that investors receive more care and candor than Citigroup provided to these CDO investors,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “Investors were not informed that Citgroup had decided to bet against them and had helped choose the assets that would determine who won or lost.”

Kenneth R. Lench, Chief of the Structured and New Products Unit in the SEC Division of Enforcement, added, “As the collateral manager, Credit Suisse also was responsible for the disclosure failures and breached its fiduciary duty to investors when it allowed Citigroup to significantly influence the portfolio selection process.”

According to the SEC’s complaints filed in U.S. District Court for the Southern District of New York, personnel from Citigroup’s CDO trading and structuring desks had discussions around October 2006 about the possibility of establishing a short position in a specific group of assets by using credit default swaps (CDS) to buy protection on those assets from a CDO that Citigroup would structure and market. After discussions began with Credit Suisse Alternative Capital (CSAC) about acting as the collateral manager for a proposed CDO transaction, Stoker sent an e-mail to his supervisor. He wrote that he hoped the transaction would go forward and described it as the Citigroup trading desk head’s “prop trade (don’t tell CSAC). CSAC agreed to terms even though they don’t get to pick the assets.”

The SEC alleges that during the time when the transaction was being structured, CSAC allowed Citigroup to exercise significant influence over the selection of assets included in the Class V III portfolio. The transaction was marketed primarily through a pitch book and an offering circular for which Stoker was chiefly responsible. The pitch book and the offering circular were materially misleading because they failed to disclose that Citigroup had played a substantial role in selecting the assets and had taken a $500 million short position that was comprised of names it had been allowed to select. Citigroup did not short names that it had no role in selecting. Nothing in the disclosures put investors on notice that Citigroup had interests that were adverse to the interests of CDO investors.

According to the SEC’s complaints, the Class V III transaction closed on Feb. 28, 2007. One experienced CDO trader characterized the Class V III portfolio in an e-mail as “dogsh!t” and “possibly the best short EVER!” An experienced collateral manager commented that “the portfolio is horrible.” On Nov. 7, 2007, a credit rating agency downgraded every tranche of Class V III, and on Nov. 19, 2007, Class V III was declared to be in an Event of Default. The approximately 15 investors in the Class V III transaction lost virtually their entire investments while Citigroup received fees of approximately $34 million for structuring and marketing the transaction and additionally realized net profits of at least $126 million from its short position.

The SEC alleges that Citigroup and Stoker each violated Sections 17(a)(2) and (3) of the Securities Act of 1933. While the SEC’s litigation continues against Stoker, Citigroup has consented to settle the SEC’s charges without admitting or denying the SEC’s allegations. The settlement is subject to court approval. Citigroup consented to the entry of a final judgment that enjoins it from violating these provisions. The settlement requires Citigroup to pay $160 million in disgorgement plus $30 million in prejudgment interest and a $95 million penalty for a total of $285 million that will be returned to investors through a Fair Fund distribution. The settlement also requires remedial action by Citigroup in its review and approval of offerings of certain mortgage-related securities.

The SEC instituted related administrative proceedings against CSAC, its successor in interest Credit Suisse Asset Management (CSAM), and Bhatt. The SEC found that as a result of the roles that they played in the asset selection process and the preparation of the pitch book and the offering circular for the Class V III transaction, CSAM and CSAC violated Section 206(2) of the Investment Advisers Act of 1940 (Advisers Act) and Section 17(a)(2) of the Securities Act and that Bhatt violated Section 17(a)(2) of the Securities Act and caused the violations of Section 206(2) of the Advisers Act by CSAC.

Without admitting or denying the SEC’s findings, CSAM and CSAC consented to the issuance of an order directing each of them to cease and desist from committing or causing any violations, or future violations, of Section 206(2) of the Advisers Act and Section 17(a)(2) of the Securities Act and requiring them to pay disgorgement of $1 million in fees that it received from the Class V III transaction plus $250,000 in prejudgment interest, and requiring them to pay a penalty of $1.25 million. Without admitting or denying the SEC’s findings, Bhatt consented to the issuance of an order directing him to cease and desist from committing or causing any violations or future violations of Section 206(2) of the Advisers Act and Section 17(a)(2) of the Securities Act and suspending him from association with any investment adviser for a period of six months.

FINRA Fines 5 Brokerage Firms For...

2011-10-19T06:48:00.001-07:00

"understating the amount of total commissions charged to customers in trade confirmations and on fee schedules by mischaracterizing a portion of the commission charges as fees for handling services." According to FINRA, the handling fees were designed to serve as a source of additional transaction based remuneration for the firm and therefore were far in excess of the cost of the handling-related services the firms provided. The firms fined include Pointe Capital, Inc., John Thomas Financial, A&F Financial Securities, Inc., First Midwest Securities, Inc., and Salomon Whitney LLC. The entore release can be viewed at the link below.

http://www.finra.org/Newsroom/NewsReleases/2011/P124283

FINRA Issues a New Release...

2011-10-19T06:45:00.000-07:00

Entitlted Why Leave Money on the Table—Make the Most of Your Employer's 401(k) Match to encourage greater 401(k) contributions by the nearly 30 percent of American workers who are not contributing enough to receive their full employer match. The entire release can be viewed at the link below.

http://www.finra.org/Newsroom/NewsReleases/2011/P124692

Surging Alternative Investment Arbitration Claims

2011-10-19T06:33:00.000-07:00

In this volatile market, advisors at full service brokerage firms are making an alluring pitch to invest in alternative investments. Alternative investments include private placements, tenants in common (TICs), leveraged exchange traded funds, non-traded REITs and structured products. Under the guise of diversification, clients are being recommended what are speculative, highly illiquid, complex, expensive investments that have not been stress tested. In many instances, the brokerage firms have done very little due diligence on these investments. Thousands of investors have already been burned in high profile, alternative investment collapses like Apple REIT, Desert Capital, Mat 3, Medical Capital, AMREIT, Behering Harvard, Sequoia at Stonebriar, Highland Floating Fund, ICon, Retreat at Stonecrest and others.

A recent survey by Jefferson National Life Insurance of 500 advisers, conducted Aug. 23, found that 68% of the respondents have increased their use of alternative investments, with 22% saying that use has “increased substantially” over the past five years. That trend is likely to continue, as 67% of the respondents said that their allocation to alternative investments will increase.

We predict a large surge of investor lawsuits involving alternative investments in the next three years. Due to the high commissions and fees, often greater than 7%, financial advisors have a major financial incentive to recommend them. Historically, alternative investments were only recommended to wealthy and sophisticated clients. In the last five years, alternative investments have gone “retail” with smaller, retail clients being recommend these high risk, illiquid investments. To learn more, please contact our law firm.

Societe General Hammered In FINRA Arbitration Award

2011-10-17T08:18:00.000-07:00

Societe General SA recently got drilled for $153 million by a FINRA arbitration panel. The case number is 09-03598 and was heard in San Fransisco. The case dealt with a dispute with a fund manager over how to value a derivative instrument that matured during the 2008 financial crisis. Societe General SA and three units will end up paying total net damages of around $61 million, because of earlier payments made to the fund manager. The entire award can be viewed at the link below.

http://finraawardsonline.finra.org/viewDocument.aspx?DocNb=51231

Ameriprise Hammered In NY Times Article

2011-10-17T08:13:00.000-07:00

Yesterday's New York Times had an an excellent articel entitlted Financial Planner's Red Flags. The piece detailed a parade of problematic sales practices at Ameriprise. Unfortunately, the findings of the article are not the least bit surprising. We have filed over 50 FINRA arbitration claims against the firms in the last 11 years for fraud, suitability issues, churning and misrepresentations and omissions. It is nice to see a paper like the New York Times detail some of the problematic sales practices at the firm. The entire article can be viewed at the following link http://www.nytimes.com/2011/10/15/your-money/turning-a-lens-on-ameriprise-financial.html?_r=1&scp=3&sq=Ameriprise&st=cse

More Burned Clients of TDAmeritrade/ThinkorSwim

2011-10-06T11:25:00.003-07:00

We continue to investigate the trading capabilities of TDAmeritrade/ThinkorSwim trading platform. It appears as though many clients were unable to access their accounts and liquidate or trade positions (see below). The operational abilities of brokerage firms must be able to meet the trading demands of customers. While the brokerage firm excuse is often related to unprecedented volatility, this is usually not a compelling reason. To learn if losses related to operational deficiencies can be recovered through FINRA arbitration claims or lawsuits, please contact us for a no obligation consultation at 312.332.4200 or www.InvestmentFraud.PRO

TD Ameritrade’s Thinkorswim Clients Miss Morning Trading
By Margaret Collins and Alexis Leondis - Sep 30, 2011 4:25 PM CT

Some clients at TD Ameritrade Holding Corp. (AMTD) weren’t able to get into their Thinkorswim accounts this morning.

“We encountered some issues just after market open this morning that impacted some of our clients, particularly those on our Thinkorswim downloadable trading platform,” Kim Hillyer, a spokeswoman for Omaha, Nebraska-based TD Ameritrade, said in an e-mail. “We were able to implement a resolution mid-morning, and clients were able to use all of the platform’s functionality thereafter.”

Rick Arroyave, a 48-year-old trader in Dallas, said he couldn’t log in to make a trade after the stock market opened. A message was displayed on the website for users with a phone number to call. He was able to access his account at about 10:50 a.m. New York time.

“It’s an absolute mess,” said Arroyave, who’s been using Thinkorswim for about five years to trade stocks, options and futures. “I’m going to have to look at alternatives because this is not reliable.”

In 2009 TD Ameritrade bought options brokerage Thinkorswim Group Inc. for $749 million to expand beyond equities. The online broker transferred more than 250,000 Thinkorswim accounts to the TD Ameritrade platform in August. Some clients experienced issues with electronic trades in August following the integration.

Lawsuits To Recover Leaf Equipment Leasing Losses

2011-10-06T11:25:00.001-07:00

More clients of brokerage firms are lining up complaining about investment losses in the LEAF Equipment Leasing Income Fund III. One investor recently stated, according to published reports: “LEAF was sold to me as a safe fixed income investment for my retirement. I read the prospectus after I had already given my 'trusted' financial advisor my money. I was told there was nothing to be concerned about. It sucks having one fourth of my retirement savings in limbo. I have now learned the difference between a certified financial planner with a fiduciary duty to their clients and others who are just interested in the largest commission."

The LEAF Equipment Leasing Income Fund III LP was publicly offered by LEAF Financial Corporation. LEAF Financial Corporation is a subsidiary of Resource America, Inc. (REXI). According to a 2008 release from Resource America, the public offering for the LEAF Equipment Leasing Income Fund III was completed within 14 months and raised $119 million. Unfortunately, the LP is losing a great deal of money. It incurred net losses of $17.7 million, $28.8 million and $26.1 million for the years ended December 31, 2008, 2009 and 2010 and a net loss of $2.2 million for the three months ended March 31, 2011. As a result, distributions to limited partners for greatly reduced.

For burned investors, the losses might be recoverable. While no class action lawsuits have been filed, investors who were recommeded the limited partnership through a financial advisor do have legal options through the FINRA arbitration process. Please contact our law firm to speak with an attorney as to how these losses can be recovered through binding arbitration (www.InvestmentFraud.PRO or 312.332.4200)

The CFTC Just Released...

2011-10-06T11:22:00.000-07:00

its annual enforcement results. According to its press release, the Division of Enforcement filed 99 enforcement actions in Fiscal Year 2011 the highest yearly tally in the agency’s history and a 74 percent increase over the prior fiscal year. The entire release can be viewed at the link below.

http://www.cftc.gov/PressRoom/PressReleases/pr6121-11

No Surprise...

2011-10-05T07:27:00.001-07:00

Finra backs the Bachus bill on regulating advisers according to Bloomberg (see link below). FINRA has long salivated at the prospect of regulating investment advisors as a means of doing what governmental and quasi-governmental agencies like FINRA love to do-expand their power. Isn't it troubling, however, that Wall Street's SRO is expanding power after one of the worst stock market drops since the great depression caused in large part by Wall Street?

http://www.bloomberg.com/news/2011-10-05/finra-backs-bachus-bill-on-regulating-investment-advisers-luparello-says.html

ETrade Sales Practices And The Highland Floating Fund

2011-10-05T07:21:00.000-07:00

ETrade financial advisors (called Investment Specialists at the firm) were activly solicting the purchase of the Highland Floating Rate Advantage Fund (XLACX) to clients. In some instances, Etrade Investment Specialists recommended an unsuitable quantity of the fund for some clients' accounts. In these instances, some, or all, of the investment losses (in excess of 40%) can be recovered through the FINRA arbitration claims process. Since there have not been any class action lawsuits filed against Etrade with repsect to this fund, arbitration claims are the only way to recover losses. To learn more about suing ETrade to recover losses in the Highland Floating Rate Advantage Fund, please cotnact our law firm at 312.332.4200 or www.InvestmentFraud.PRO.

Burned in a Brokerage Firm Ponzi Scheme?

2011-10-05T06:30:00.000-07:00

Recently, a group of Texas investors were. FINRA recently fined Merrill $1 million for supervisory lapses related to a broker running a massive ponzi scheme (see below for the entire release). Typically, the lack of supervision is what allows these schemes to flourish. Often, there are multiple red flags that should have alerted the firm to the ponzi scheme. The FINRA arbitration process can be used to recover these losses. We've handled dozens of ponzi scheme cases against brokerage firms like Park Avenue Securities, Stifel Nicolaus, Next Financial, Madison Avenue Securities, First Heartland, Proequities, LPL, ING, Wachovia (now Wells Fargo) and others. To learn how these losses can be recovered, please contact us at 312.332.4200 or visit www.PonziRecoveryCenter.com

FINRA Fines Merrill Lynch $1 Million for Supervisory Failures That Allowed a Registered Representative to Operate a Ponzi Scheme

WASHINGTON — The Financial Industry Regulatory Authority (FINRA) announced today that it has fined Merrill Lynch, Pierce, Fenner & Smith Inc., $1 million for supervisory failures that allowed a registered representative at Merrill Lynch's branch office in San Antonio, Texas, to use a Merrill Lynch account to operate a Ponzi scheme.

Bruce Hammonds, the registered representative, convinced 11 individuals to invest more than $1 million in a Ponzi scheme he created and ran as B&J Partnership for over 10 months. Merrill Lynch supervisors approved Hammonds' request to open a business account for B&J and failed to supervise funds that customers deposited and Hammonds withdrew. FINRA permanently barred Hammonds from the securities industry in December 2009. Merrill Lynch reimbursed all investors who were harmed by Hammond's misconduct.

FINRA found that Merrill Lynch failed to have an adequate supervisory system in place to monitor employee accounts for potential misconduct. Merrill Lynch's supervisory system automatically captured accounts an employee opened using a social security number as the primary tax identification number. However, if the employee's social security number was not the primary number associated with the account, the system failed to capture the account in its database. Instead, Merrill Lynch solely relied on its employees to manually input these accounts into its supervisory system. FINRA also found that from January 2006 to June 2010, Merrill Lynch failed to monitor an additional 40,000 employee/employee-interested accounts, which were not reported for certain periods of time and therefore not available on the supervisory system.

Brad Bennett, FINRA Executive Vice President and Chief of Enforcement, said, "Firms must ensure their supervisory systems are designed to properly monitor employee accounts for potential misconduct. Merrill Lynch's inadequate supervisory system and the firm's excessive reliance on employee self-reporting enabled Hammonds to facilitate his Ponzi scheme to the detriment of investors."

FINRA Continues To Warn Investors About Non-Traded REITs

2011-10-04T13:02:00.000-07:00

High commissions and an illiquid investment? What's not to like? Plenty. FINRA issued a Notice To Members this morning warning investors about the toxic nature of non-traded REITs (see below). We have filed dozens of FINRA arbitration actions in the last two years seeking to recover client losses and frozen funds in these products. Regulators are finally trying to police the sales of these products.

http://www.finra.org/Newsroom/NewsReleases/2011/P124582

FINRA Issues Investor Alert on Public Non-Traded REITs

WASHINGTON — The Financial Industry Regulatory Authority (FINRA) today issued a new Investor Alert called Public Non-Traded REITs-Perform a Careful Review Before Investing to help investors understand the benefits, risks, features and fees of these investments. While investors may find non-traded REITs appealing due to the potential opportunity for capital appreciation and the allure of a robust distribution, investors should also realize that the periodic distributions that help make non-traded REITs so appealing can, in some cases, be heavily subsidized by borrowed funds and include a return of investor principal. Additionally, early redemption of shares is often very limited, and fees associated with the sale of these products can be high and erode total return.

"Confronted with a volatile stock market and an extended period of low interest rates, many investors are looking for products that offer higher returns in turbulent times. However, investors should be wary of sales pitches that might play up non-traded REITs' high yields and stability, while glossing over the lack of liquidity, fees and other risks," said Gerri Walsh, FINRA's Vice President for Investor Education.

Real estate investment trusts (REITs) pool the capital of numerous investors to purchase a portfolio of properties—from office buildings to hotels and apartments, even timber-producing land—which the typical investor might not otherwise be able to purchase individually. There are two types of public REITs: those that trade on a national securities exchange and those that do not. FINRA's alert focuses on publicly registered non-exchange traded, or simply non-traded REITs.

Public Non-Traded REITs outlines the features, complexities, risks and costs associated with non-traded REITs.

* Distributions are not guaranteed and may exceed operating cash flow. In newer programs, distributions may be funded in part or entirely by cash from investor capital or borrowings. Distributions can also be suspended for a period of time or halted altogether.
* Lack of a public trading market creates illiquidity and valuation complexities. Most non-traded REITs are structured as a "finite life investment," meaning that at the end of a given timeframe, the REIT is required either to list on a national securities exchange or liquidate. Many factors affect the valuation of non-traded REITs, including the portfolio of real estate assets owned, strength of the trust's balance sheet, overhead expenses and cost of capital.
* Early redemption is often restrictive and may be expensive. Most non-traded REITs place limits on the amount of shares that can be redeemed prior to liquidation. These limits can be as restrictive as 5—or even 3—percent of the weighted average number of shares outstanding during the previous year. Additionally, the redemption price is generally lower than the purchase price, sometimes by as much as 10 percent.
* Non-traded REITs can be expensive. State and FINRA guidelines limit front-end fees to 15 percent, but a 15-percent front-end fee on a $10,000 investment means that only $8,500 is going to work for an investor.

Public Non-Traded REITs-Perform a Careful Review Before Investing also warns investors about private REITs—generally sold only to accredited investors—which not only do not trade on an exchange, but are also generally exempt from Securities Act registration. FINRA cautions that it is extremely difficult for investors to make an informed decision about private REITs due to their lack of disclosure documents.

FINRA's Attempt To Clean Up Non-Traded REIT Industry

2011-09-29T13:45:00.001-07:00

One of the biggest surges in our FINRA arbitration practice in the last 12 months involve non traded REITs including Inland, Apple, Behringer Harvard, Desert Capital, and others. FINRA, in response to investor complaints, just proposed a new rule that will go far in cleaning up sale practice abuses in the non-traded REIT universe. FINRA proposed changes to Rule 2340. This rule governs customer account statements. Under the new proposal, the massive fees and commissions associated with non traded REITs (sometimes up to 15% of the principal invested) would be required to be immediately deducted from the client's principal.

In other words, if a clients purchased a non traded REIT, the value that would need to show up on a client's account statement would be, depending on the REIT purchased, $8.50 instead of $10. This is a rule that was desperately needed. If clients had any idea how much they were being charged for the non traded REIT, few, if any would purchase the investment. This new rule will open many eyes and make sales of these illiquid, high commissioned products MUCH more difficult.

We continue to prosecute dozens of arbitration claims against the brokerage firms who sold non traded REITs. To learn more, please contact us.

Gibraltar Partner/Rahfco Loss Recovery Process?

2011-09-29T13:24:00.000-07:00

We are currently investigating Edward Jones' supervisory procedures involving two of the firm's financial advisors who engaged in selling away resulting in millions in client investment losses. Gibraltar Partners and others, including the Rahfco Funds LP, were running an alleged Ponzi scheme according to federal regulators. At least two Edward Jones brokers were raising funds that eventually led to a complete loss for the Edward Jones clients involved with this scam. The good news is that some, or all, of these losses might be recoverable. To learn more, please contact our law firm to determine how these losses can be recovered against Edward Jones through arbitration claims and lawsuits (312.332.4200 or www.InvestmentFraud.PRO).

Lawsuits To Recover Country Crossing Investment Losses

2011-09-29T12:54:00.000-07:00

We are investigating claims for investors in the $87 million Country Crossing entertainment center in Alabama. Many investors in the project were not told either verbally or in the offering documents that electronic bingo, the "profit center" and "economic catalyst" of the entertainment project was illegal in Alabama. In fact, Governor Bob Riley continues his campaign to shut down gambling halls statewide. e believe this is material, important information. In many instances, the investment was too risky and too speculative for most investors.

The electronic bingo parlor was supposed to be sandwiched between the Lorrie Morgan Hot Chicken restaurant and John Anderson's Cafeteria. The gambling hall will feature 1,700 of the controversial machines. Unfortunately, the fate of the crucial bingo machines, and with them the entire solvency of the operation, rests in the hands of the extremely conservative Alabama Supreme Court, which earlier this month issued a preliminary ruling against similar machines in White Hall, an electronic gaming development about 30 miles west of Montgomery.

In addition, many investors were promised 15% returns in the investment. We believe these representations were wildly inaccurate and used as a means to convince investors to invest in the project. The subscription agreement describes an investment method that appears to directly contradict the explanations that were given by some of the sales reps and counsel to investors. According to our investigation, the project was also undercapitalized with only a slight chance of being completed. It appears as though it was not disclosed to investors that the project developer was under investigation and eventually indicted for bribing legislatures related to a gambling bill introduced in the Alabama House in early April 2008.

We believe material information was simply not disclosed to investors. Investors are already suing advisors who recommended the project and even law firm Greenberg Traurig and attorney Pamela Linden. For clients who wish to file a lawsuit to recover investment losses in the Country Crossing entertainment project on a contingency fee basis, please contact our law firm for a no obligation consultation (312.332.4200 or InvestmentFraud.PRO)

"Why Did the Arbitrators Rule The Way They Did"

2011-09-29T11:01:00.000-07:00

One of the most frustrating aspects of FINRA arbitration awards is the lack of reasoning as to why the arbitrator ruled the way they did. Many investors and brokers who go through the arbitration process find this lack of explanation to be very problematic. While FINRA recently implemented a rule allowing the Claimant to request an explanation, most lawyers for the Claimants do not request an explanation out of fear of increasing the odds of a motion to vacate. When arbitrators do issue a reason for their award, it is typically fascinating reading. A recent award against Morgan Keegan provides a rare explanation for why the arbitrator awarded punitive damages. The justification, taken directly from the Award, is below.

Respondent Morgan Keegan's Compliance Department, in a memorandum dated
August 28, 2006 that was addressed to Financial Advisors (FA) and Branch Managers (BM), said that before any recommendation of a Hedge Fund is made to a client, the FA must review the client's New Account Form to ensure that the product is suitable. The memorandum also says that before the BM signs the subscription agreement, the New Account Form should be reviewed to ensure that the investment objectives clearly indicate that the investment is appropriate. The memorandum also goes on to say that if the account is predominantly composed of this investment (hedge fund), "speculation" should be one of the primary objectives. It goes on to say that if the documents do not indicate the transaction is appropriate, the BM must reject the transaction.

The investment in question was a Hedge Fund (Greenwich Sentry LLP), which
comprised 100% of the investments in the Claimants' account. Claimants' New Account
Form indicates that "speculation" was the last (not primary) of Claimants' investment
objectives. Claimants also testified that "speculation" was the last of their investment objectives. While Claimants' New Account Form indicates that Claimants had over 5 years investment experience in stock, mutual funds and insurance/annuity products, it also indicates that Claimants had less than one year investment experience in options and other investments (which would include hedge funds).

Respondent Morgan Keegan claims that it did adequate due diligence. Respondent
Morgan Keegan's own procedures call for SUBSTANTIAL DUE DILIGENCE to be
performed on alternative investment products. NASD Notice to Members 03-07
(Claimants' Exhibit 8) calls for the performance of substantial due diligence into a
hedge fund before making any recommendation to a customer. Based upon the
evidence presented at the hearing, the Panel believes that Respondent Morgan Keegan
did very little due diligence on the hedge fund investment in question and certainly did not perform substantial due diligence. Respondent Morgan Keegan failed to produce, as ordered by the Panel, the Price Waterhouse Audited Report of Greenwich Sentry, which it indicated that it relied on. Respondent Morgan Keegan did not do an available Internet Search. Respondent Morgan Keegan admitted that it did not even request the Audited Report of Bernard L Madoff Securities (the firm that implemented the investment strategy and also was the custodian of the hedge fund assets), which
according to Claimants' Expert Witness, would had led to Red Flags. Respondent
Morgan Keegan did not even produce a detailed report indicating the extent and results of its due diligence, nor did it produce any evidence of any follow-up review to indicate ongoing monitoring required as part of its due diligence.
The Panel believes that there is clear and convincing evidence that Respondent Morgan
Keegan was grossly negligent in not performing Substantial Due Diligence and as a
result it fraudulently misrepresented the risk of this investment to Claimants. The Panel believes that this resulted in the total loss of Claimants' investment.

The entire case caption is Jeffrey S. Lieberman and Marisel Lieberman v. Morgan Keegan and Julio Almeyda, #10-00009.

In Defense of the Volcker Rule

2011-09-29T09:01:00.000-07:00

The New York Times has an excellent article today in defense of the Volcker Rule (Trading Scandal, A Reason to Enforce the Volcker Rule). The Volcker rule bans banks from trading for their own profit in securities and derivatives and bans them from investing in or sponsoring hedge funds. The rule is probably the most important component to come out of the Dodd Frank Act. The $2.3 billion loss by UBS trader Kweku Adoboli reminded many of the importance of the Volcker Rule. Time writer Jesse Eisinger article is a must read. The link to the story is below.

http://dealbook.nytimes.com/2011/09/28/in-rogue-trading-scandal-a-reason-to-enforce-the-volker-rule/?scp=3&sq=Volcker&st=cse

New Hope For Burned McGinn Smith Investors?

2011-09-29T09:00:00.001-07:00

Victims of New York based brokerage firm McGinn Smith are taking a stab at collecting damages from McGinn's Smith's clearing firm. By way of background, Finra Enforcement alleged in a complaint last year that McGinn Smith sold $89 million in income notes to 515 investors in four fraudulent securities offerings by four limited liability companies managed and controlled by the founder of the firm.

The firm allegedly falsely promised investors that their funds would be earmarked for a broad array of public and private investments. Instead, Smith misused the majority of the offering proceeds to benefit 26 business entities that he, McGinn and/or another firm owner controlled, or in which they maintained a financial interest.

Likely suspecting McGinn Smith not to have the financial resources to make good an any arbitration award, the investors have named National Financial Services (NFS) alleging negligence in the National Financial Services handling of accounts for McGinn Smith.

NFS, a Boston-based company served as a "clearing broker" for McGinn Smith. In that role, NFS provided "back office" support for McGinn, Smith that ranged from purchase and sales advice to issuing monthly statements to investors. The arbitration claim was only recently filed and will likely take 12-14 months to resolve.

Burned Merrill Lynch Brokers in FACAAP Continue To Sue

2011-09-29T07:18:00.000-07:00

Former Merrill Lynch brokers continue to file FINRA arbitration claims for issues related to their deferred compensation plan. FINRA arbitrators have awarded dmamages to Merrill brokers related to the action of of the firm. During September 2008, Bank of America negotiated a deal over the weekend to acquire Merrill Lynch. The companies announced the deal the next day, September 15, 2008. Many Merrill lynch brokers were very surprised.

Merrill Lynch eventually realized that the impending merger triggered “change of control” clauses that would affect shares of Merrill Lynch stock held in brokers’ FACAAP and other equity compensation plans. Pursuant to the FACAAP, LTICP, Growth Award, Wealthbuilder and other deferred plans, if a broker resigned for “Good Reason,” as defined in the plans, Merrill Lynch must immediately vest and pay the awards to its departed brokers in cash.

This was a major change from Merrill Lynch's longtime interpretation of the stock plans. Previously, if a broker left for the competition, such awards would be cancelled and revert back to Merrill Lynch. However, due to the announcement of the merger, any broker who voluntarily resigned for “Good Reason” after September 15, 2008 would receive their awards payable in cash.

Pursuant to the plan documents, such awards must vest around $37 per share even though MER stock was trading much lower on the September 15, 2008 announcement of the change in control of Merrill Lynch. Merrill Lynch and BoA realized this was a major problem. The firms attempted to limit their risk by making brokers waive any rights to “Good Reason” resignation following a change of control in the Retention Agreement that was offered to many Merrill brokers during November 2008.

This palced brokers in an untenable position. If they agreed to the Retention, brokers would waive their right to “Good Reason” vesting following the change of control. If they did not agree to the Retention, they would be removed from the highly-beneficial account redistribution list. Making the decision more difficult to brokers, Merrill Lynch delayed the release of the new 2009 compensation plan, which was detrimental to most brokers producing revenue less than $600,000 per year, until after the deadline for signing the Retention.

Based upon the activity undertaken by Merrill Lynch managers to force brokers to sign the Retention Agreement and waive their rights to “Good Reason” vesting, including threats of removal from the account redistribution list if the Retention Agreement was not executed, even brokers who signed the Retention Agreement may have a cause of action for vesting under the plans. Pursuant to the plan documents, there is no “cut off” for claiming “Good Reason” resignation. A Merrill Lynch broker resigning today for “Good Reason” would be entitled to vesting under the FACAAP and other plans following the change in control of Merrill Lynch.

Many brokers resigned for “Good Reason” following the announcement of the change in control of Merrill Lynch on September 15, 2008 due to some detrimental impact to their status, position, compensation, benefits or fringe benefits. However, Merrill Lynch cancelled each broker’s deferred holdings and refused to pay out any funds for “Good Reason” resignation. Estimates of the value of MER stock and cash that have been retained by Merrill Lynch that should have vested to brokers resigning for “Good Reason” range from $100 to $300 million and were a windfall to Merrill Lynch and Bank of America.

We can assist Merrill brokers with recovering compensation for Merrill's actions. The named partner in the law firm is a former Merrill Lynch financial advisor. TO LEARN MORE, please contact our law firm in Chicago, Illinois for a no obligation consultation at 312.332.4200

Can I Sue ETrade For Highland Floating Fund Losses?

2011-09-29T07:15:00.003-07:00

Yes. Though not usually associated with a brokerage firm that gives investment advice, E*Trade does have a small division that does give investment recommendations to clients of the firm. For some of these clients, ETrade brokers recommended the Highland Floating Rate Opportunities Fund (XLACX) in 2005, 2006 and 2007. In some instances, the true risks of the fund were misrepresented to clients.

For example, Highland's sales literature distributed to some ETrade clients claims that the fund seeks "capital preservation and the management of credit risk while utilizing leverage to increase yield potential." Verbal representations made by some ETrade financial advisors to clients included claims that they could receive a higher return without adding any significant risk or very little risk. One of the main reasons the Highland Floating Rate funds performed so poorly is that it invested heavily in loans that were rated as below investment grade or "junk." This risk was not made clear to some clients of ETrade who purchased the fund.

Burned clients can recover investment losses in the Fund through the FINRA arbitration process. The process usually takes 12 months from beginning to end. Clients can be awarded anything from their losses and attorney fees to no compensation. Each claim rises or falls on its individual facts and circumstances of the client. To learn how losses in the Highland Floating Fund can be recovered, please see www.InvestmentFraud.PRO or call our law firm at 312.332.4200

Raymond James Caught With Hand in Cookie Jar...

2011-09-29T07:01:00.001-07:00

FIRNA today ordered Raymond James to establish a $1.69 million restitution fund for clients who were charged "unfair and unreasonable commissions on securities transactions." Finra found the firm was overcharging clients on lower priced securities transactions and the firm didn't have reasonable supervisory systems in place to catch the problem. The link to the full release is below (along with the cut and pasted main parts of FINRA's action).

http://www.finra.org/Newsroom/NewsReleases/2011/P124536

FINRA Orders Raymond James & Associates, Inc. and Raymond James Financial Services, Inc. to Pay $1.69 Million in Restitution for Charging Unfair Commissions

WASHNGTON — The Financial Industry Regulatory Authority (FINRA) ordered Raymond James & Associates, Inc. (RJA) and Raymond James Financial Services, Inc. (RJFS) to pay restitution of $1.69 million to more than 15,500 investors who were charged unfair and unreasonable commissions on securities transactions. FINRA also fined RJA $225,000 and RJFS $200,000.

FINRA found that from Jan. 1, 2006 to Oct. 31, 2010, RJA and RJFS used automated commission schedules for equity transactions that charged more than15,500 customers nearly $1.69 million in excessive commissions on over 27,000 transactions involving, in most instances, low-priced securities. The firms' supervisory systems were inadequate because the firms established inflated schedules and rates without proper consideration of the factors necessary to determine the fairness of the commissions, including the type of security and the size of the transaction.

Brad Bennett, FINRA Executive Vice President and Chief of Enforcement, said, "Raymond James failed to adequately monitor its supervisory systems and as a result, both Raymond James & Associates and Raymond James Financial Services overcharged thousands of customers on their securities transactions. Broker-dealers must ensure that their automated systems set commission charges that are fair to investors."

FINRA required the firms to revise their automated commission schedules to conform to the requirements of the Fair Prices and Commissions Rule. In addition to requiring RJA and RJFS to repay approximately $1.69 million in overcharges, each firm is required to calculate and repay additional overcharges from Nov. 1, 2010, through the date that each firm revised its schedule.