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Securities Fraud Blog

Greco & Greco, P.C.

W. Scott Greco

Fight Investment Fraud

Greco & Greco's lawyers represent investors to recover losses caused by securities fraud, churning, lack of suitability, negligence, sales of unregistered securities, unauthorized trading, and other misconduct by stock brokers, investment advisors, financial planners and their firms.

For a Free Attorney Consultation, call us at 877-821-5550 or 

Suitability

Washington DC Investment Advisor Dawn Bennett Barred by SEC

As set out in this SEC Order from an Administrative Law Judge (https://www.sec.gov/alj/aljdec/2016/id1033jeg.pdf), Dawn Bennett has been barred from the securities industry by the SEC. Dawn Bennett was a Washington DC area advisor who was previously registered to sell securities with Western International Securities.

Judge Grimes also imposed over one million dollars of fines and disgorgement against Ms. Bennett.  The findings in the above Order included the following:

"Respondents repeatedly overstated their AUM [Assets Under Management] by at least $1.5 billion in Barron’s magazine, on a radio show hosted by Bennett, and in various other advertisements and communications with existing and prospective clients to create the impression that Respondents were larger and more successful players in the industry than was actually the case."

Judge Grimes' Order ultimately found that "Respondents made multiple material misstatements with scienter regarding AUM and investor performance. They therefore violated Securities Act Section 17(a)(1) and (2), Exchange Act Section 10(b), and Exchange Act Rule 10b-5(a), (b), and (c)." 

Greco & Greco is a law firm located in the Virginia, DC, Maryland area representing investors against securities brokerage firms and advisors involving cases of securities fraud, unsuitable investments, misstatements, churning, and other investment fraud causes of action.  We have previously represented harmed investors in FINRA arbitration proceedings against Ms. Bennett and Western International Securities.  If you would like to discuss potential claims, please contact Scott Greco for a free consultation (http://www.securities-lawyers.net/contact.html).

Posted by W. Scott Greco on 07/12/16.
ArbitrationBrokerage FirmsWestern International SecuritiesFINRAFraudSECSuitabilityPermalink

Virginia Broker Andrew Corbman Suspended by FINRA

FINRA, a regulator of the securities industry, recently issued a Letter of Acceptance, Waiver, and Consent (AWC) regarding former FSC Securities Corporation broker, Andrew Corbman. Pursuant to the AWC, Mr. Corbman was suspended for one month from being registered with any FINRA firm.

Mr. Corbman was registered with FSC Securities from 2/2008 - 1/2011, Kovack Securities from 01/2011 – 11/2015, and Newbridge Securities from 11/2015 - 3/2016. 

The AWC may be found here:  http://disciplinaryactions.finra.org/Search/ViewDocument/64878  In the AWC, FINRA alleges that “Between April 2009 and March 2010, while registered with a FINRA member firm, Corbman made unsuitable recommendations to three customers that were inconsistent with the customers’ investment objectives and risk tolerances and resulted in overconcentration oftheir liquid net worth in these investments. From April 2009 through June 2009, Corbman improperly recommended to two ofhis customers, who were a married couple with growth objectives and moderate risk tolerances, to purchase unsuitablehighly risky leveraged, inverse Exchange-Traded Funds (Non-Traditional ETFs”).”

The AWC further states:  “The investments that Corbman recommended were unsuitable as they were over-concentrated and exposed each customer to a risk of loss that exceeded each customer’s risk tolerance and investment objectives. Therefore, Corbman’s conduct violated NASD Rule 2310 and FINRA Rule 2010. Additionally, between March 2010 and January 2011, Corbman distributed a sales brochure for an alternative mutual fund to at least 10 of his customers that contained information that was misleading and failed to provide a sound basis for evaluating the alternative mutual fund referenced in it.”

Mr. Corbman’s registered offices over the last 12 years were in Ashburn and Lansdown, Virginia.

If you believe you may have a suitability or misrepresentation case regarding your investments, and wish to speak to a local Virginia attorney, please contact Scott Greco for a free consultation (http://grecogrecolaw.com/contact.html).

Posted by W. Scott Greco on 03/25/16.
ArbitrationBrokerage FirmsKovack SecuritiesFSC SecuritiesFINRASecurities FraudState RegulatorsVirginiaSuitabilityPermalink

Capitol Securities Censured and Fined for Reverse Convertible Notes and Other Conduct

FINRA recently entered a Letter of Acceptance Waiver and Consent regarding Capitol Securities Management Inc. regarding various alleged sales practice violations. The AWC can be found here:  http://disciplinaryactions.finra.org/Search/ViewDocument/63638 The issues addressed by the AWC involved supervision, its anti-money laundering program, and the alleged unsuitable sales of Reverse Convertible Notes. 

FINRA stated at page 3:  “CSM, acting through RS, recommended and effected 24 unsuitable purchases of customized RCNs totaling approximately $4 million for the accounts of eight customers. Most ofthe customers were over the age of 60 and had modest or conservative investment objectives and risk profiles. Furthermore, all of the customers’ accounts were heavily concentrated in RCNs, with the amounts ofthese investments constituting a substantial portion oftheir net worth. RS’s recommendations were unsuitable given the customers’ risk tolerance, investment objectives, ages and net worth.”

If you would like a free consultation with an attorney to discuss potential claims, please contact Greco & Greco at http://www.securities-lawyers.net/contact.html

Posted by W. Scott Greco on 02/02/16.
Reverse Convertible NotesArbitrationBrokerage FirmsCapitol Securities ManagementFINRAFraudSuitabilityPermalink

Investigation Regarding Randy Watts of Winchester, Virginia

Greco & Greco is currently investigating possible claims regarding a Winchester, Virginia financial advisor, Randy Watts.  Mr. Watts operated under the name Watts Financial Group, and was registered to sell securities with Lincoln Financial Securities until November, 2015.

If you believe you may have a legal claim regarding investments with Mr. Watts or Lincoln Financial, please contact Scott Greco for a free consultation:  http://www.securities-lawyers.net/contact.html

Posted by W. Scott Greco on 12/22/15.
ArbitrationBrokerage FirmsLincoln Financial SecuritiesFINRAFraudPonzi SchemeSecurities FraudState RegulatorsVirginiaSuitabilityUnregistered SecuritiesPermalink

SEC and FINRA FINE UBS OVER PUERTO RICO BOND FUNDS

The SEC and FINRA have brought charges and fined UBS relating to sales practices and supervision of their UBS Puerto Rico Bond Funds.

The SEC press release and Orders can be found here: http://www.sec.gov/news/pressrelease/2015-217.html.  The SEC alleged that UBS Financial Services of Puerto Rico (UBSPR) failed to supervise its broker in relation to solicited loans used to purchase additional UBSPR closed end funds, while failing to disclose the risks of this strategy and misrepresenting the safety of the strategy.  The SEC further alleged that UBSPR did not implement reasonable supervisory procedures and had inadequate systems in place to prevent and detect this wrongful conduct. 

UBS was censured and fined over fourteen million dollars.

FINRA also fined UBSPR for actions related to its Puerto Rico Bond funds - see the press release here (http://www.finra.org/newsroom/2015/finra-sanctions-ubs-puerto-rico-185-million-supervisory-failures) which states the following:

“...for more than four years, UBS PR failed to monitor the combination of leverage and concentration levels in customer accounts to ensure that the transactions were suitable given the customers’ risk objectives and profiles. The firm failed to implement a reasonably designed system to identify and prevent unsuitable transactions in light of the unique Puerto Rican economy, in which retail customers typically maintained high levels of concentration in Puerto Rican assets and often used those highly concentrated accounts as collateral for cash loans. Despite UBS PR’s knowledge of these common practices, it failed to adequately monitor concentration and leverage levels to identify whether certain customers’ CEF transactions were suitable in light of the increased risks in their existing portfolio.”

The above sales practices and lack of supervision have formed the basis of hundreds of FINRA arbitration claims pending against UBS and UBSPR.  If you would like to speak to an attorney about possible claims related to UBS of Puerto Rico bond funds, please read more about these claims at Greco & Greco’s website (http://www.securities-lawyers.net/ubs_puerto_rico.html) and contact Scott Greco for a free consultation (http://www.securities-lawyers.net/contact.html).

Posted by W. Scott Greco on 10/09/15.
Closed End Funds ( CEF )Puerto RicoArbitrationBondsBrokerage FirmsUBS Financial Services of Puerto RicoUBSFINRAMutual FundsSECSecurities FraudSuitabilityPermalink

Success of FINRA Arbitration Claims against UBS regarding Puerto Rico Bond Funds

To date, FINRA Arbitration Panels have issued five awards relating to claims filed by investors against UBS and UBS of Puerto Rico regarding their Puerto Rico Closed End Bond Funds (CEFs). 

The Awards (for cases filed after the 2013 crash of the CEF market) are summarized below:

1.  Bauza v. UBS Financial Services of Puerto Rico, et al..  Greco & Greco represented the Claimant in this case which resulted in the first award against UBS regarding the Puerto Rico CEFs.  UBS claimed that the Claimant only had $8,000 in net losses from the funds, but the panel awarded $200,000.00.  The case was tried in Washington, DC.

2.  Rosado v. UBS Fin. Serv. of Puerto Rico, et al.  Claimant sought $1,033,596 in damages.  The arbitration panel issued a written opinion (not common in FINRA arbitrations) making the following findings:  a.  “In the process of reducing its exposure in the CEFs by some 75%, UBS undertook an internal push for its brokers to sell its inventory to customers;” b. “this account was extremely over-concentrated and clearly unsuitable for Claimant;”  and c.  “proper and required supervision could have prevented Claimant’s losses or at least limited them greatly.”

The panel Ordered UBS to rescind the sales of the CEFs by repurchasing Claimant’s account for $1,000,000.

3.  Ramis v. UBS Fin. Serv. of Puerto Rico, et al.  The Claimants in this case requested 2 - 2.5 million dollars in compensatory damages.  The panel awarded $250,000 against UBS.

4.  Rodriguez Gonzalez v. UBS Fin. Serv. of Puerto Rico, et al.  Claimants requested damages at the end of the hearing of 3 to 6 million dollars.  The panel awarded $2,545,000.00. 

5.  Lopez Del Valle v. UBS Fin. Serv. of Puerto Rico et al.  This case involved a large number of Claimants, however, all but three Claimants settled their claims prior to the final hearing.  The orignal Statement of Claim requested ten million dollars in damages, but the award is not clear how much of those damages were requested by the three remaining Claimants.  The arbitration panel awarded $2,395,402.00 in compensatory damages, interest from the filing of the Statement of Claim, $50,000 in costs, $5,000 in expert witness fees, and significantly, $479,079.80 in attorneys fees.

In summary, all of the arbitration panels that have heard these cases have issued awards in favor of Claimants, with one also awarding attorneys fees.  If you would like to speak to an attorney about possible claims related to UBS of Puerto Rico bond funds, please read more about these claims at Greco & Greco’s website (http://www.securities-lawyers.net/ubs_puerto_rico.html) and contact Scott Greco for a free consultation (http://www.securities-lawyers.net/contact.html).

Posted by W. Scott Greco on 09/04/15.
Closed End Funds ( CEF )Puerto RicoArbitrationBondsBrokerage FirmsUBSFINRAFraudMutual FundsSuitabilityPermalink

First FINRA Arbitration Award Against UBS of Puerto Rico Regarding Bond Funds

Greco & Greco is pleased to report the first FINRA Arbitration Award against UBS Financial Services of Puerto Rico relating to the crash of UBS closed end bond funds in 2013 which were sold to Puerto Rico residents.  W. Scott Greco represented the Claimant customer in the case of Bauza v. UBS Financial Services of Puerto Rico, et al.  The arbitration panel awarded $200,000 in damages to the Claimant, despite claims by UBS that Claimant’s net out of pocket losses were less than $10,000. 

The case involved a heavy over-concentration of the Claimant’s UBS account in proprietary UBS closed end bond funds pursuant to UBS’s recommendations.  The funds invested heavily in Puerto Rico bonds using leverage (a speculative investment technique), and had significant geographic concentration risk.

Read about the arbitration award in this Reuters article.

If you wish to discuss claims againt UBS involving these funds, please contact Scott Greco for a free consulation.

Posted by W. Scott Greco on 05/18/15.
ArbitrationBondsBrokerage FirmsUBS Financial Services of Puerto RicoUBSFINRAFraudMutual FundsSecurities FraudSuitabilityPermalink

Vienna Virginia Financial Advisor Pleads Guilty to Defrauding Customers

Ismail Elmas plead guilty on October 21, 2014 to a Count of Wire Fraud in the U.S. District Court for the Eastern District of Virginia.  According to the U.S. Attorney’s Office press release (which can be found here), Mr. Elmas worked at Apple Financial Services, an affiliate of Apple Federal Credit Union during the time of the offense.

FINRA’s Brokercheck Report for Mr. Elmas states that Mr. Elmas was previously registered as a securities registered representative with CUNA Brokerage Services and CUSO Financial Services, both FINRA Broker-Dealers.  The Brokercheck Report states that he was terminated by CUSO because he “allegedly converted funds for personal use…”

The above press release references that Elmas admitted to misappropriating client funds given to him for legitimate investments, and that he defrauded more than 10 of his clients, many of whom were seniors and widows. 

Greco & Greco is currently investigating and pursuing claims against the parties involved in the Elmas case.  Greco & Greco regularly represents investors in “selling away” cases such as this where the broker sells unauthorized securities or converts funds away from his firm.  Customers may attempt to recover their losses in FINRA arbitration and/or court by demonstrating firms’ failures to supervise, failure to follow up on red flags, and by arguing the firm is responsible for the acts of its agent under the legal theories of respondeat superior and vicarious liability.  Federal and state securities laws also mandate liability of control persons (such as brokerage firms) if certain requirements are met.  If you are a victim of Mr. Elmas, please contact one of our attorneys for a free consultation.

Posted by W. Scott Greco on 10/27/14.
ArbitrationBrokerage FirmsCUSOCUNAFINRAFraudSecurities FraudState RegulatorsVirginiaSuitabilityUnregistered SecuritiesPermalink

FINRA fines JP Turner for Leveraged and Inverse ETF sales

The securities industry self-regulatory body, FINRA, recently required JP Turner & Company to pay $700,000 in restitution to customers who lost money in unsuitable leveraged and inverse exchange traded funds (ETFs).Press Release here.

According to FINRA:

“FINRA found that J.P. Turner failed to establish and maintain a reasonable supervisory system and instead, supervised leveraged and inverse ETFs in the same manner that it supervised traditional ETFs. The firm also failed to provide adequate training regarding these ETFs. In addition, J.P. Turner allowed its registered representatives to recommend these complex ETFs without performing reasonable diligence to understand the risks and features associated with the products. As a result, many J.P. Turner customers held leveraged and inverse ETFs for several months. J.P. Turner also failed to determine whether the ETFs were suitable for at least 27 customers, including retirees and conservative customers, who sustained collective net losses of more than $200,000.”

In June of 2009, FINRA issued a Regulatory Notice (09-31) regarding these Non-Traditional ETFs.  The Notice states:  ‘inverse and leveraged ETFs that are reset daily typically are unsuitable for retail investors who plan to hold them for longer than one trading session, particularly in volatile markets.’

If you suffered losses in your brokerage accounts resulting from your broker’s trading in ETFs, and you would like to discuss your potential claim with an attorney, please contact Greco & Greco.

Posted by W. Scott Greco on 12/13/13.
ArbitrationBrokerage FirmsJ.P. TurnerETFFINRAFraudSecurities FraudSuitabilityPermalink

State Securities Regulators release new list of top investor threats

NASAA (the North American Securities Adminstrators Association) has released its 2013 list of top financial product and practice threats to investors here.

The top threat is one that we at Greco & Greco see often - Private Offerings.  As stated by NASAA:  “These offerings commonly are referred to as Reg D/Rule 506 offerings, named for the exemption in federal securities laws that allows private placements to be sold to investors without registration). By definition these are limited investment offerings that are highly illiquid, generally lack transparency and have little regulatory oversight. While Reg D/Rule 506 offerings are used by many legitimate companies to raise capital, they carry high risk and may not be suitable for many individual investors.”

These private offerings are often high risk investments.  Be wary should your stockbroker or investment advisor recommend them to you as safe or low risk.

Other potential threats listed by NASAA include real estate investment schemes, high yield investment and ponzi schemes, affinity fraud, self directed IRAs, Oil and Gas Drilling Programs, and digital currency.

If your stockbroker or investment advisor has sold you a product without disclosing the risks involved, or if you think you are a victim of a fraudulent investment scheme, please contact Greco & Greco for a free consultation.

Posted by W. Scott Greco on 11/08/13.
Affinity FraudArbitrationBrokerage FirmsFraudIRAsPonzi SchemePrivate PlacementsSecurities FraudState RegulatorsSuitabilityPermalink

UBS Puerto Rico Funds Suffering Drastic Losses

Since 1995, UBS Financial Services Inc. of Puerto Rico (UBS PR) has been the primary underwriter for 14 separately organized closed end fund companies and 9 co-managed closed end fund companies.  The funds primarily held Puerto Rico municipal bonds and were available only to Puerto Rico residents.  Many of these funds’ values have collapsed recently, resulting in massive losses in UBS PR customer accounts.

The background of these Puerto Rico funds can be found here in a SEC cease and desist Order from 2012.  The Order, to which UBS PR consented entry, finds that UBS PR “willfully violated Section 17(a) of the Securities Act, which prohibits fraudulent conduct in the offer and sale of securities, and Sections 10(b) and 15(c) of the Exchange Act and Exchange Act Rule 10b-5, which prohibit fraudulent conduct in connection with the purchase or sale of securities.”

UBS Puerto Rico Funds referenced in the SEC Order include:

Puerto Rico Fixed Income Funds I – VI
Puerto Rico Mortgage Backed & US Govt. Fund
Tax-Free Puerto Rico Funds I and II
Tax-Free Puerto Rico Target Maturity Fund
Puerto Rico AAA Portfolio Target Maturity Fund
Puerto Rico AAA Portfolio Bond Funds I and II
Puerto Rico GNMA & U.S. Gov. Target Maturity Fund
Puerto Rico Investor’s Tax-Free Funds I – VI
Puerto Rico Tax-Free Target Maturity Fund I and II
Puerto Rico Investors Bond Fund I

The SEC Order, which was issued in 2012, discusses at length a voluminous number of misrepresentations and omissions in relation to these funds, which purportedly represented “the largest single source of revenue for UBS PR.”  The SEC found that the “market values” reported by UBS PR were “misleading” because they were “simply what UBS PR thought they should be, not true market prices.”  Despite warnings and concerns in 2008 about the concentration of customer investments in these funds, UBS PR continued to promote the sales of these funds through its financial advisors.  In response to high levels of these funds being owned by UBS PR on its own books, the SEC details how UBS PR encouraged sales to customers and reduced its inventory by “undercutting customer sell orders.”

Specific findings made by the SEC in its Order include the following:

Page 3.  “Since 1995, UBS PR has been the primary underwriter of fourteen separately organized closed-end fund companies’ CEFs [closed-end funds] with a total market capitalization of approximately $4 billion, and nine co-managed closed-end fund companies’ CEFs with more than $1 billion in total market capitalization.”

“The CEFs represent the largest single source of revenue for UBS PR. For example, between 2004 and 2008, the CEF business generated 50% of annual total revenues for UBS PR and UBS Trust Company combined, which included Fund advisory and administration fees, and primary and secondary market sales commissions.”

Page 2.  “During 2008 and 2009, UBS PR, its former CEO (“CEO”) and its Head of Capital Markets (“HCM”) made misrepresentations and omissions of material facts to numerous retail customers in Puerto Rico regarding the secondary market liquidity and pricing of UBS PR-affiliated, non-exchange-traded closed-end funds (“CEFs” or “Funds”). For example, UBS PR claimed CEF prices were based on market forces such as supply and demand. However, UBS PR did not disclose that CEF prices were set solely at the discretion of the trading desk. Moreover, although UBS had certain disclosures about liquidity in prospectuses (not supplied to secondary market customers) and on its website, it did not adequately disclose, among other things, that as the dominant CEF broker-dealer, UBS PR controlled the secondary market. In reality, any secondary market sales investors wanted to make depended largely on UBS PR’s ability to solicit additional customers or willingness to purchase shares into its inventory.”

“As UBS PR, the CEO and the HCM promoted CEF sales throughout 2008, they knew investor demand was significantly declining relative to supply. For much of 2008, UBS PR purchased millions of dollars of CEF shares into its own inventory while promoting the appearance of a liquid market with stable prices, without disclosing UBS PR’s actions were propping up prices and liquidity.”

“But in the spring of 2009, UBS PR’s parent firm determined UBS PR’s growing CEF inventory represented a financial risk to the firm. The parent company directed UBS PR to substantially reduce its inventory of CEF shares. To accomplish the reduction, UBS PR and the HCM executed a plan, dubbed “Objective: Soft Landing” in one document, in which UBS PR routinely offered and sold its CEF shares at prices that undercut pending customer sell orders.”

“During this period, numerous UBS PR customers were also attempting to sell their holdings but UBS PR’s actions effectively prevented certain customers from selling their CEF shares. Between March and September 2009, UBS PR sold about $35 million, or 75%, of its inventory to investors. At the same time, UBS PR increased its efforts to solicit sales of CEFs while continuing to misrepresent how it was setting secondary market prices and the liquidity of the market. UBS PR also did not disclose its withdrawal of market support. By September 2009, when UBS PR completed its CEF inventory reduction, the market price of certain funds had declined by 10-15%.”

Page 4.  “The CEF share prices in UBS PR customers’ monthly account statements were similarly misleading in that they described “market values.” As with the newspaper prices, these prices were simply what UBS PR thought they should be, not true market prices.”

Page 6.  “Notwithstanding his knowledge of the weak demand for CEF shares in the secondary market, the CEO repeatedly misled UBS PR’s financial advisors throughout the fall of 2008 into continuing to promote CEF sales. In numerous e-mails, he repeatedly misstated the strength, stability and liquidity of the CEF market. The CEO did not disclose to the sales force the liquidity issues in the secondary market, or that UBS PR was keeping the CEF prices high by increasing its CEF inventory.”

Page 9.  “UBS PR did not disclose to its customers it was substantially reducing the use of its inventory to support the CEF market. UBS PR also continued to accept customer limit orders without disclosing that it was undercutting those limit orders to sell UBS PR’s shares first. UBS PR also failed to disclose the conflict of interest created by recommending CEFs to investors while selling its own shares.”

Page 11.  “UBS PR willfully violated Section 17(a) of the Securities Act, which prohibits fraudulent conduct in the offer and sale of securities, and Sections 10(b) and 15(c) of the Exchange Act and Exchange Act Rule 10b-5, which prohibit fraudulent conduct in connection with the purchase or sale of securities.”

Page 12.  “UBS PR shall, within 14 days of the entry of this Order, pay disgorgement of $11,500,000.00, prejudgment interest of $1,109,739.94, and a civil money penalty of $14,000,000.00 to the Securities and Exchange Commission.”

The risk in the funds was also increased by leverage within the funds, and according to news reports, leverage within customer accounts.  According to this New York Times article, UBS customers in the funds “were encouraged by its brokers to borrow even more money to invest in those funds.”  Such leverage of already leveraged investments can lead to increased risk as well as increased losses.

If you have suffered losses in the above funds with UBS PR, and wish to speak to an attorney with our firm at no charge to discuss your legal options, please contact Greco & Greco.

Posted by W. Scott Greco on 10/01/13.
ArbitrationBondsBrokerage FirmsUBS Financial Services Inc. of Puerto RicoFINRAFraudSECSecurities FraudSuitabilityPermalink

Consent Order in Maryland Case Against Joseph Giordano

The Securities Commissioner of Maryland entered a Consent Order against former FINRA registered representative Joseph A. Giordano in May, 2013.  The Order can be found here. 

According to the Consent Order, Giordano violated the Maryland Securities Act by “misrepresenting or omitting to disclose material facts to investors, and making unsuitable recommendations.”  The investments at issue were Empire bonds and debentures.

Giordano was a FINRA registered securities salesperson with Capital Investment Group, Inc. from October, 1992 to June, 2012.  Mr. Giordano’s FINRA Brokercheck report states that he was terminated for cause by Capital Investment Group for “selling away and making false and misleading statements to the firm.”  The Consent Order states that Capital Investment Group raised issues of concern regarding Empire Corporation debentures in 2006.

Greco & Greco regularly represents investors in “selling away” cases such as this where the broker sells unauthorized securities away from his firm.  Customers may attempt to recover their losses in FINRA arbitration by demonstrating firms’ failures to supervise, failure to follow up on red flags, and by arguing the firm is responsible for the acts of its agent under the legal theories of respondeat superior and vicarious liability.  Federal and state securities laws also mandate liability of control persons (such as brokerage firms) if certain requirements are met.  If you are the victim of a fraudulent sale of securities by a FINRA registered broker, please contact one of our attorneys for a free consultation.

Posted by W. Scott Greco on 09/09/13.
ArbitrationBondsBrokerage FirmsCapital Investment Group, Inc.FINRAFraudSecurities FraudState RegulatorsMarylandSuitabilityUnregistered SecuritiesPermalink

David Lerner Associates Fined by FINRA for sale of Apple Reits

As shown by this FINRA Order, FINRA sanctioned David Lerner and Associates for sales of Apple REIT Ten and markups related to municipal bonds and CMO’s.  Of the $14 million in fines and restitution, approximately $12 million is to be paid to affected customers.

The wrongful conduct alleged by FINRA includes the following:  1) failure to do proper due diligence on Apple REIT Ten prior to approving its sale to customers, many of whom were elderly and unsophisticated, 2) misrepresentations of the REITs performance, value, and returns, 3) false statements in sales seminars and letters describing the REITs, 4) improper markups, and 5) supervisory violations.

David Lerner Associates has had a great incentive for the sale of the Apple REITs - it earns 10% on every sale and has sold $7 billion of the REITs since 1996.  These revenues account for 60-70% of DLA’s business according to FINRA.  As stated by FINRA:  “Many of DLAs customers are senior and/or unsophisticated, and DLA solicits customers by general means such as the internet, radio, cold callings, mailings, and open-invitation seminars at senior centers, restaurants, and country clubs.”

Details of the restitution program may be found here.  As stated, the remediation plan does not prevent investors from pursuing additional losses through arbitration.  If you suffered losses in REITs and you would like to discuss your case for free with one of our attorneys, please contact Greco & Greco.

Posted by W. Scott Greco on 10/30/12.
ArbitrationBrokerage FirmsDavid Lerner AssociatesCMOs / CDOsFINRAFraudREITsSecurities FraudState RegulatorsNew YorkSuitabilityPermalink

Insurance and Life Settlement related claims regarding California Broker Winterrowd

Greco & Greco is currently pursuing claims on behalf of investors relating to wrongful conduct in life insurance sales, life settlement sales, and variable annuity withdrawals by Neil Winterrowd.  Mr. Winterrowd was formerly a FINRA registered representative of Crown Capital Securities LP and J.P. Turner & Company LLC.  According to FINRA’s Brokercheck, J.P. Turner discharged Mr. Winterrowd for “Improper handling of customer funds” related to variable annuities.  If you believe that you may have been a victim of the above conduct, please contact one of our attorneys for a free consultation.

Posted by W. Scott Greco on 10/12/12.
ArbitrationBrokerage FirmsCrown CapitalJ.P. TurnerInsuranceLife SettlementsSecurities FraudState RegulatorsCaliforniaVirginiaSuitabilityVariable AnnuitiesPermalink

SEC Releases Financial Literacy Study

Pursuant to the Dodd-Frank Act, the Securities and Exchange Commission (SEC) was required to conduct a study identify the financial literacy of retail investors in the U.S.  The study can be found here. 

Not surprisingly, the study showed that retail investors consistently lacked financial literacy of basic investment issues, and lacked critical knowledge about investment fraud.  The report states:  “... studies have found that investors do not understand the most elementary financial concepts, such as compound interest and inflation.  Studies have also found that many investors do not understand other key financial concepts, such as diversification or the differences between stocks and bonds, and are not fully aware of investment costs and their impact on investment returns.”

Despite most individuals’ lack of financial literacy, and the fact that most individuals rely on investment professionals due to their own lack of investment knowledge, a standard defense raised by brokerage firms in FINRA arbitrations is to blame the victim and claim that the investor understood the risks involved in following the broker’s advice.  This study refutes the common defense that almost every individual is a “sophisticated investor” capable of understanding the risks involved.  If you suffered losses due to the wrongful acts of a broker, advisor, or brokerage firm, please contact one of our attorneys for a free consultation.

Posted by W. Scott Greco on 08/31/12.
ArbitrationBondsBrokerage FirmsFINRARetirementSECSecurities FraudSuitabilityPermalink

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