skip to main content

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 orĀ 

Suitability

New FINRA Suitability Rule Goes Into Effect

As of July 9, 2012, FINRA’s new suitability Rule (Rule 2111) takes effect to replace the old NASD/FINRA Rule 2310.  The new Rule can be found here. 

The new suitability Rule, and its supplemental material, contains several clarifications which are important for investor protection.  First, the Rule clearly states that recommendations of investment strategies as well as transactions fall under the rule.  The supplemental material further states that “investment strategy” is to be interpreted broadly, including recommendations to hold securities. 

The new Rule also sets out more specifically investor financial information that a registered representative must consider when making recommendations.  Specific information includes:  “customer’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance, and any other information the customer may disclose to the member or associated person in connection with such recommendation.”  The Rule also sets out a standard to be applied in regard to the representative’s efforts to discover customer suitability information:  “reasonable diligence” is required to discover the customer’s investment profile.

The supplemental material to the Rule further clarifies FINRA standards regarding three kinds of suitability:  reasonable-basis suitability, customer-specific suitability, and quantitative suitability.  Reasonable basis suitability is required due diligence on a security before it can be recommended to customers - this issue can arise in private placement or TIC situations where the security is not on a national exchange.  Customer specific suitability is, as described above, recommending a security only if it is suitable for a customer’s specific situation.  Quantitative suitability is in essence a ban on churning - representatives cannot recommend (or trade with discretion) if the number of trades is excessive in light of the customer’s financial situation and investment profile.  Turnover rates and cost-equity ratios are often used to demonstrate the lack of suitability of churned accounts.

Posted by W. Scott Greco on 08/03/12.
ArbitrationBrokerage FirmsChurningFINRAIRAsMutual FundsPrivate PlacementsSECSecurities FraudSuitabilityTICPermalink

AXA fined by FINRA Due to Broker Ponzi Scheme

As set out in this FINRA link, FINRA recently fined AXA Advisors, LLC for its failures to act in relation to the sale by its registered representative of a ponzi scheme.  The Letter of Acceptance, Waiver, and Consent documents failures to supervise by AXA including failures to follow up on red flags regarding the ponzi scheme.  One red flag was a suspicious excel spreadsheet found in an audit of the broker’s office.  The broker also had a checkered regulatory history which made him a “compliance risk.”

Greco & Greco regularly represents investors in “selling away” cases such as these where the broker engages in ponzi schemes or outright steals funds from customers.  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 ponzi scheme or broker theft by a FINRA registered broker, please contact one of our attorneys for a free consultation.

Posted by W. Scott Greco on 06/08/12.
ArbitrationBrokerage FirmsAXA AdvisorsFINRAPonzi SchemeSecurities FraudState RegulatorsSuitabilityUnregistered SecuritiesPermalink

FINRA Fines Multiple Firms for Leveraged and Inverse ETF Sales

As noted in this press release from FINRA, Wells Fargo, Citigroup, Morgan Stanley, and UBS were fined for failing to supervise sales of leveraged and inverse ETFs.  FINRA also alleged failures of a reasonable basis to recommend the securities (i.e. suitability).

FINRA found that:  “from January 2008 through June 2009, the firms did not have adequate supervisory systems in place to monitor the sale of leveraged and inverse ETFs, and failed to conduct adequate due diligence regarding the risks and features of the ETFs. As a result, the firms did not have a reasonable basis to recommend the ETFs to their retail customers.”

Many inverse and leveraged exchange traded funds, including some by Proshares and Direxion, were designed to seek multiples of the exchange they were designed to track.  However, many of these ETFs were designed to reset daily, thereby creating drastic differences in their performance over time compared to the index they were designed to track.  We have seen many situations where many of the risks of these funds were not disclosed to customers.

The prospectus for the Proshares leveraged and inverse ETFs from September 2007 makes clear that these investments were an aggressive day-trading tool, not an investment appropriate or suitable for most retail investors.  Specifically, the prospectus stated:

p. 7:  ‘The Funds do not seek to achieve their stated investment objective over a period of time greater than one day because mathematical compounding prevents the Funds from achieving such results.’
p. 8:  ‘The Funds use investment techniques that may be considered aggressive, including the use of futures contracts, options on futures contracts, securities and indices, forward contracts, swap agreements and similar instruments.’
p. 9:  ‘Certain Funds are ‘leveraged’ funds in the sense that they have investment objectives to match a multiple of the performance of an index on a given day. These Funds are subject to all of the correlation risks described above. In addition, there is a special form of correlation risk that derives from these Funds’ use of leverage, which is that for periods greater than one day, the use of leverage tends to cause the performance of a Fund to be either greater than or less than the index performance times the stated multiple in the fund objective, before accounting for fees and fund expenses’

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 05/24/12.
ArbitrationBrokerage FirmsCitigroupMorgan StanleyUBSWells FargoETFFINRASecurities FraudSuitabilityPermalink

Multiple Investor Awards in Recent FINRA Arbitrations of TIC Claims

A review of recent FINRA Arbitration Awards show that TIC investors have had multiple victories in sales practice claims against the FINRA brokerage firms that sold them Tenant in Common (TIC) investments.  Claims have included securities fraud, breach of fiduciary duty, negligence, failure to supervise, elder abuse, and misrepresentations and omissions.  The following FINRA awards may be found at the FINRA web site:

1.  Hardt, et al. v. LPL Financial LLC.  No. 11-00347.  The arbitration panel in this San Diego, California arbitration awarded $1,367,000.00 in compensatory damages, interest, and costs.  Claims against two other Broker-Dealers were dismissed by Claimants.  The claims related to investments with Direct Invest LLC which included investments in Heron Cove. LLC and Braintree Park, LLC.

2.  Lightfoot, et al. v. Pacific West Securities, et al.  No. 11-00230.  A Seattle, Washington panel submitted another multi-million dollar award:  $1,862,960,65 plus $200,000 in attorneys fees for violations of the Securities Act of Washington.  The panel found a violation of the standard of care by Respondents for “the disavowal by Respondents of any obligation to conduct a suitability analysis for the sale of TICs in the circumstances of a Section 1031 - like kind assets exchange for tax deferral purposes.”  Multiple TICs were involved: TSG Midwest, Evergreen Springs, Argus TriWest, Passco River Park and Passco Promenade.

3.  Griswold v. Burch & Company, Inc., et al.  No. 10-02477.  In this Alaska case, the panel awarded almost all of the compensatory damages requested ($350,000), plus interest for a claim related to Beamer Place Apartments.

4.  Tommerup, et al. v. Waveland Capital Partners LLC, et al.  No. 10-04616.  This Helena Montana arbitration involved two DBSI TIC investments (Executive Park LLC, and DBSI Arrowhead, LLC 1965, 1705 & 1715
Indian Woods Circle), and a request for $410,000 in damages.  The panel awarded $301,875.00 which included interest, and $27,000 of discovery sanctions.

5.  Wiborg, et al. v. Pacific West Securities, Inc.  No. 10-02818.  In another arbitration involving Pacific West (this one in San Francisco), the Panel awarded $300,000 plus $50,000 in punitive damages.  In awarding the punitive damages, the panel described the basis for its finding that Respondent “failed to supervise” the broker involved.  The Claimant alleged damages from two TICs -  DBSI Offices at Brookhollow Tenant-in-Common securities and Garlock & Company Museum Park Garage Tenant-in-Common securities.

Posted by W. Scott Greco on 03/16/12.
ArbitrationBrokerage FirmsBurch & CompanyLPL FinancialPacific West SecuritiesWaveland Capital PartnersFINRAPrivate PlacementsSecurities FraudSuitabilityTICPermalink

TIC CLAIMS ON THE RISE VERSUS BROKERAGE FIRMS

Tenant in Common (TIC) claims against the brokerage firms that sold them have recently resulted in multiple large FINRA arbitration awards, according to this this Investment News article

The use of Tenant-in-Common (TIC) real estate investments in conjunction with IRS 1031 exchanges greatly increased after the 2002 issuance of IRS Rev. Proc. 2002-22 which clarified issues related to the uses of TICs in like-kind exchanges.

TICs since that time have been typically sold as securities by securities salespersons registered with FINRA which is a self-regulatory organization overseeing the securities industry.  These salespersons (registered representatives) are required to be registered with a Broker-Dealer (brokerage firm) also regulated by FINRA.  The sale of TICs by Broker-Dealers and their representatives is very lucrative.  Selling commissions can be 7% or higher, and sponsors also would pay additional percentages to Broker-Dealers for “due diligence” expenses and marketing / selling expenses. 

The failure of securities salespersons and their firms to perform due diligence on the TIC deals they recommend, and on the sponsors of the TIC deals, can result in disastrous outcomes for their customers.  In addition, salespersons must engage in a suitability analysis prior to recommending TIC deals to their customers to ensure that these illiquid investments are suitable for the customer?s financial situation.  Federal and State Securities laws also prohibit the misrepresentation or omission of material facts in conjunction with the sale of a security.  Many state Acts provide for the recovery of losses, attorneys fees, and interest.

FINRA issued guidance to its members back in 2005 regarding the sale of TICs (NASD [now FINRA] Notice to Members 05-18).  The selling firm had duties with regard to obtaining a clear understanding of the customer?s investment goals and financial status for the purposes of making a suitability determination.  The firms’ representative also had to take into account the illiquid nature of the TIC interest, the risks from over-concentration, and the ?investment potential of the underlying real estate asset(s).?  In regard to overconcentration, FINRA warned:  “Concentration of an investor?s assets in a single asset class, however, is not suitable for many investors.”

The high sales fees of TICs, combined with the profits and expenses retained by the sponsors, could raise serious suitability concerns for salespersons recommending them as a tax deferral vehicle.  In fact, the Notice 05-18 above further warned: “As fees charged in connection with a TIC exchange increase, the money saved as a consequence of tax deferral will be offset. Accordingly, members should consider the effect of fees on each TIC exchange”

TICs are typically leveraged with a bank loan, and such leverage can unfortunately result in customers’ investments being wiped out should the bank foreclose on the property.  If you have lost monies in an illiquid or foreclosed upon TIC, and believe you may have a claim against the salesperson and firm, please contact one of the attorneys at Greco & Greco for a free consultation.  Greco & Greco regularly represents investors on a contingency basis.

Posted by W. Scott Greco on 02/21/12.
ArbitrationBrokerage FirmsInvest FinancialLPL FinancialFINRAPrivate PlacementsSecurities FraudSuitabilityTICPermalink

Fredericksburg Virginia Registered Rep Indicted

As set out in this Fredericksburg.com article, John Robert Graves, a former FBI agent, was indicted on charges of defrauding Virginia investors out of $1,300,000.  According to the indictment filed in U.S. District Court in Richmond (Case 3:11CR246), Mr. Graves used funds obtained from investors to buy personal real estate, to pay personal expenses and credit cards, to pay himself cash, and to pay back prior investors.

Mr. Graves operated Brooke Point Management in Spotsylvania County since 2003 which provided financial planning, insurance sales, estate planning, and investment advice to customers.  According to FINRA’s Brokercheck report, Mr. Graves had been a registered securities salesperson since 1998 with various firms including, Harrison Douglas, Community Bankers Securities, Fintegra, Questar Capital Corporation, Pacific West Securities, and H. Beck.  The Brokercheck report also discloses multiple pending arbitration claims alleging fraud, negligence, breach of fiduciary duty, and unsuitable investments regarding private placements, limited partnerships and REITs. 

If you wish to discuss a potential securities fraud claim with one of our attorneys, please contact us here for a free consultation.

Posted by W. Scott Greco on 10/13/11.
ArbitrationBrokerage FirmsCommunity Bankers SecuritiesH. BeckPacific West SecuritiesQuestar Capital CorporationPonzi SchemePrivate PlacementsSecurities FraudState RegulatorsVirginiaSuitabilityPermalink

SEC Fraud Charges Regarding The Nutmeg Group LLC

As set out in the SEC Complaint which can be found here, the SEC filed civil fraud claims in Illinois against The Nutmeg Group, LLC, Randall Goulding, and others.  The SEC alleges in its Complaint that Nutmeg was an investment adviser to 15 funds which invested fund assets in private investments in public equity (PIPE) transactions.  As a basis for its fraud claims, the SEC alleges in the Complaint that Nutmeg “improperly commingled investor and fund assets,” “misappropriated over $4 million in fund assets,” “failed to maintain the required books and records,” and “overstated the performances of its Funds to investors.”  (paragraphs 2 and 3 of SEC Complaint). 

All FINRA registered representatives are required to be registered with a FINRA firm (Broker-Dealer).  FINRA firms have legal responsibilities to supervise their registered representatives, and further may be found liable for the wrongful actions of their agents.  Examples of legal grounds for liability of Broker-Dealers in these situations include:

a) under tort and agency law, principals can be found liable for the acts of their agents even if they are entirely innocent and have received no benefit from the transaction;

b) a broker?s Broker-Dealer can also be found liable as a ?control person? of that broker under state and federal securities laws; and

c) claims can be pursued in arbitration based on violations of FINRA rules including Rules related to supervision, suitability, and outside business activities.

If you were sold investments in Nutmeg Group funds by a FINRA registered representative, and you would like to discuss legal options with an attorney, please contact Greco & Greco for a free consultation with one of our lawyers.

Posted by W. Scott Greco on 06/08/11.
ArbitrationBrokerage FirmsPonzi SchemePrivate PlacementsSECState RegulatorsColoradoFloridaSuitabilityUnregistered SecuritiesPermalink

Unsuitable ETF trading results in large losses for investors

Greco & Greco’s attorneys have represented a significant number of investors over the past several years who have suffered large amounts of losses in their securities accounts due to the improper and unsuitable trading of ETFs by their brokers.  Many inverse and leveraged exchange traded funds, including some by Proshares and Direxion, were designed to seek multiples of the exchange they were designed to track.  However, many of these ETFs were designed to reset daily, thereby creating drastic differences in their performance over time compared to the index they were designed to track.  We have seen many situations where many of the risks of these funds were not disclosed to customers. 

The prospectus for the Proshares leveraged and inverse ETFs from September 2007 makes clear that these investments were an aggressive day-trading tool, not an investment appropriate or suitable for most retail investors.  Specifically, the prospectus stated:

? p. 7:  ?The Funds do not seek to achieve their stated investment objective over a period of time greater than one day because mathematical compounding prevents the Funds from achieving such results.?
? p. 8:  ?The Funds use investment techniques that may be considered aggressive, including the use of futures contracts, options on futures contracts, securities and indices, forward contracts, swap agreements and similar instruments.?
? p. 9:  ?Certain Funds are ?leveraged? funds in the sense that they have investment objectives to match a multiple of the performance of an index on a given day. These Funds are subject to all of the correlation risks described above. In addition, there is a special form of correlation risk that derives from these Funds? use of leverage, which is that for periods greater than one day, the use of leverage tends to cause the performance of a Fund to be either greater than or less than the index performance times the stated multiple in the fund objective, before accounting for fees and fund expenses.?

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 01/23/11.
ArbitrationBrokerage FirmsUBSETFFINRASuitabilityPermalink

McLeod Ponzi Scheme Preys on Government Employees

The SEC filed an Emergency Complaint on June 24, 2010 against the Estate of Kenneth Wayne McLeod, F&S Asset Management Group, and Federal Employee Benefits Group, alleging that Mr. McLeod engaged in a ponzi scheme.  The SEC release and Complaint can be found here.  The Complaint alleges that Mr. Mcleod solicited federal government workers across the country to invest in a purported bond fund (the FEBG Bond Fund) which offered “guaranteed, tax-free returns of eight to ten percent annually in the fund.”  In reality, the fund did not exist and Mr. McLeod used newly invested funds to pay off old investors, a classic ponzi scheme.  Mr. McLeod raised $34 million from current investors. 

According to this Florida Times Union article, Mr. McLeod killed himself days after confessing to investigators. 

Mr. McLeod was a FINRA registered representative of Lincoln Financial Securities Corporation until May, 2010.  Prior to Lincoln, Mr. McLeod was FINRA registered with Capital Analysts, Incorporated and Washington Square Securities.  FINRA firms have legal responsibilities to supervise their registered representatives, and further may be found liable for the wrongful actions of their agents.  Examples of legal grounds for liability of Broker-Dealers in these situations include: 

a)  under tort and agency law, principals can be found liable for the acts of their agents even if they are entirely innocent and have received no benefit from the transaction;

b) a broker’s Broker-Dealer can also be found liable as a ?control person? of that broker under state and federal securities laws; and

c) claims can be pursued in arbitration based on violations of FINRA rules including Rules related to supervision, suitability, and outside business activities.

If you are a victim of the FEBG bond fund ponzi scheme, and you would like to discuss legal options with an attorney, please contact Greco & Greco for a free consultation with one of our lawyers.

Posted by W. Scott Greco on 07/02/10.
ArbitrationBrokerage FirmsCapital AnalystsLincoln Financial SecuritiesWashington Square SecuritiesFINRAPonzi SchemeRetirementSECSuitabilityPermalink

Medical Capital Charged With Fraud by SEC

Medical Capital Holdings is another private placement investment that has been subject to claims of fraud by the SEC.  In the Amended Complaint found on the Receivership site the SEC alleges that despite promises in the offering memoranda from Medical Capital not to use investor funds to pay administrative fees, 24% of investor funds were paid out as administrative fees, and the companies engaged in sham intercompany transactions to pay back principal and interest to investors in prior offerings. 

Furthermore, as set out in this Orange County Register article, the head of Medical Capital (Sidney Field) had previously had his insurance license revoked by California, had been sued twice by state insurance regulators for racketeering and fraud, and had filed bankruptcy.

Investors who were sold these offerings by their stock brokers and have suffered losses may have claims that they can bring in FINRA arbitrations against their brokerage firms.  Firms selling such offerings have due diligence duties prior to approval of their sale, and representatives are required to only make suitable recommendations to their customers.  Additionally, representatives may not misrepresent the risk of securities they recommend, and they must disclose material facts related to risk.  Greco & Greco is pursuing claims in arbitration on behalf of customers who were sold these products.  If you think you may have a claim, please contact us for a free consultation with one of our attorneys.

Posted by W. Scott Greco on 03/19/10.
ArbitrationBrokerage FirmsCapWestGunn AllenFINRAPrivate PlacementsSECSuitabilityPermalink

QUEEN SHOALS INVESTMENT FRAUD

According to this Western District of North Carolina Department of Justice release, Sidney Hanson of Charlotte, North Carolina pleaded guilty in July, 2009 to securities fraud, mail fraud, and money laundering in relation to an investment scheme known as Queen Shoals.  The SEC has also filed a Complaint related to the investment scheme.

The SEC states in the above Complaint that the Hansons and their sales force sold almost $33 million in “private loan agreements” to investors around the country.  The investments were allegedly to be placed in a diversified portfolio? of precious metals, foreign currency and treasury notes, generating high returns while remaining safe in non-depletion accounts.  In reality according to the SEC, the investment funds were invested “in a number of very risky private investment opportunities” and funds from new investors were used to pay off old investors.

Investors who were sold Queen Shoals investments by their stockbrokers, investment advisers, retirement specialists, or financial planners may have claims to be brought against related firms based on securities fraud, suitability, failure to do due diligence, misrepresentations and omissions, and other legal grounds.  Greco & Greco is currently investigating sales by FINRA registered parties in Virginia - please contact us for a free consultation if you believe you may have a claim.

Posted by W. Scott Greco on 11/25/09.
ArbitrationBrokerage FirmsFINRAPonzi SchemeRetirementSECState RegulatorsNorth CarolinaSuitabilityUnregistered SecuritiesPermalink

Provident Royalties / Shale Royalties charged with fraud by SEC

As set out in this SEC Release, Provident Royalties, LLC and many related entities (including Shale Royalties entities) have been charged with engaging in a $485 million offering fraud and orchestrating a ponzi scheme.  According to the SEC’s Complaint and release, “Provident falsely promised yearly returns of up to 18 percent,” and used investor funds from later offerings to pay “expenses related to earlier offerings and returns to investors in those offerings.”  Unaffiliated brokerage firms were solicited by Provident to sell the investments through placement agreements for each offering, thereby selling the investments to retail investors nationwide.

Investors who were sold these offerings by their stock brokers and have suffered losses may have claims that they can bring in FINRA arbitrations against their brokerage firms.  Firms selling such offerings have due diligence duties prior to approval of their sale, and representatives are required to only make suitable recommendations to their customers.  Additionally, representatives may not misrepresent the risk of securities they recommend, and they must disclose material facts related to risk.  Greco & Greco is pursuing claims in arbitration on behalf of customers who were sold these products.  If you think you may have a claim, please contact us for a free consultation with one of our attorneys.

Posted by W. Scott Greco on 11/13/09.
ArbitrationBrokerage FirmsCapWestGunn AllenFINRAPonzi SchemePrivate PlacementsSECSuitabilityPermalink

INVESTIGATION OF WORLD FINANCIAL GROUP CLAIMS

Greco & Greco, in conjunction with local Ohio counsel, is currently investigating alleged claims of individuals sold securities and real estate related investments out of the Ohio and Florida offices of World Financial Group and World Group Securities, specifically including sales made in relation to refinancing of mortgages.

The U.S. Securities and Exchange Commission (SEC) recently filed an enforcement action against five California World Group Securities’ representatives, including a branch manager, for selling unsuitable investments to customers, mostly variable universal life policies (VULs).  The SEC alleged that because many customers did not have the funds necessary to purchase the investments, the representatives urged them to refinance their homes from fixed rate mortgages into subprime adjustable rate negative amortization mortgages.  Read the SEC Release and Complaint here.

If you think you may have a claim and wish to speak to an attorney, please contact Greco & Greco toll free at 877-821-5550.

Posted by W. Scott Greco on 11/26/08.
Brokerage FirmsWorld Group SecuritiesSECSuitabilityUnregistered SecuritiesPermalink

Auction Rate Securities Failures

Auction Rate Securities and Auction Rate Preferred Securities (ARS) are securities made up of long term bonds or preferred stock with variable interest rates and yields.  The yields are periodically reset through Dutch auctions.  ARS are often marketed and sold by a single dealer with the only resale market being through a successful auction.  Problems have arisen in recent months as a result of the failures of the auctions, leaving investors in the lurch and unable to redeem the security.  As set out in this SmartMoney article, ARS have been marketed as a safe, liquid alternative to money market funds.  Investors believing they had their money in a safe liquid investment are understandably concerned by the failures in the marketplace for these securities, and our firm has been monitoring the situation closely and discussing the matter with concerned individuals and businesses.  Misrepresentations and omissions in the sale of a security can form the basis for a claim for securities fraud as well as other legal claims for recovery of damages.

As recently as 2006, the SEC censured 15 of the largest brokerage firms for sales and auctions of Auction Rate Securities. As stated by the SEC in its press release, “since the firms were under no obligation to guarantee against a failed auction, investors may not have been aware of the liquidity and credit risks associated with certain securities.”  The SEC further stated that “the firms violated Section 17(a)(2) of the Securities Act of 1933, which prohibits material misstatements and omissions in any offer or sale of securities.”  The fifteen firms which were censured were Bear, Stearns & Co., Inc., Citigroup Global Markets, Inc., Goldman Sachs & Co., J.P. Morgan Securities, Inc., Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated/ Morgan Stanley DW Inc., RBC Dain Rauscher Inc., A.G. Edwards & Sons, Inc., Morgan Keegan & Company, Inc., Piper Jaffray & Co., SunTrust Capital Markets Inc., Wachovia Capital Markets, LLC, and Banc of America Securities LLC.  Read the SEC Order here.

UBS appears to be the first firm to actually begin lowering the values of auction rate securities on its customers’ statements, as reported by many news sources on March 29 including this Reuters article.  Citing a Wall Street Journal article, Reuters reported that the markdowns could exceed 20 percent for some customers.  Additional concessions from other firms may be forthcoming as the first quarter of 2008 ends.

State Regulators, including Massachusetts, have also begun investigations of the auction rate securities market with Massachusetts reportedly issuing subpoenas to UBS, Merrill Lynch, and Bank of America. 

The Financial Industry Regulatory Authority (FINRA) released an Investor Alert on March 31, 2008 regarding auction rate securities which purports to set out various options for investors stuck with these products.  FINRA, which claims to be a “trusted advocate for investors,” notably fails to mention contacting an attorney or filing an arbitration claim as options.  If you are an investor who was sold Auction Rate Securities, and you would like to discuss your legal options with an attorney, please Contact Greco & Greco.

Link to Securities-Lawyers.net Auction Rate Securities page.

Posted by W. Scott Greco on 03/03/08.
Auction Rate Securities (ARS)BondsBrokerage FirmsA.G. EdwardsBanc of AmericaBear StearnsCitigroupDeutsche BankFerris Baker WattsLehman BrothersMerrill LynchMorgan KeeganMorgan StanleyPiper JaffrayRBC Dain RauscherSuntrustUBSWachoviaFINRAState RegulatorsMassachusettsSuitabilityPermalink

News from SEC’s Senior Summit

The SEC reported at its 2nd Annual Senior Summit that it was working on codifying suitability rules as they apply to recommendations for the purchase of securities by stock brokers, and further clarifying sales practice principals for investment professionals.  If properly crafted, additional guidance in these areas should help prevent abuse of investors as well as provide additional tools for attorneys representing investors who have been abused by their stock brokers.

The SEC, FINRA, and state regulators also reported the results of their “free lunch” sweep of seminars targeted as seniors.  The findings included 59% of the brokerage firms involved failing to properly supervise the seminars, and 23% of the seminars including advice that was unsuitably risky for senior investors.

InvestmentNews article.

FINRA Investor Alert.

Posted by W. Scott Greco on 09/21/07.
FINRASECState RegulatorsSuitabilityPermalink

Page 2 of 3 pages  < 1 2 3 > 

Most recent entries

Categories

Archives

RSS 2.0