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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.

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Suitability

Suitability of Hedge Funds

Hedge funds are largely unregulated investment funds which are typically limited to investment by accredited investors, i.e. high net worth individuals, pension funds, and other institutional investors.  These funds are not restricted by many of the regulations and disclosure requirements of mutual funds, and they have evolved into a widely diverse industry investing in an array of traditional and non-traditional investments. 

As set out in the NASD Notice to its Members linked below, the NASD / FINRA has expressed its concern regarding the sale of hedge funds by its representatives to retail customers.  The Notice emphasizes that the risks and disadvantages associated with hedge funds must be fully disclosed to retail customers, and the sales representative or member must use due diligence to investigate the fund and must make a customer specific determination of suitability for the customer?s situation.
NASD Notice to Members

Posted by W. Scott Greco on 08/16/07.
Hedge FundsNASD RegulationSuitabilityPermalink

CMOs and Mortgage Backed Securities

CMOs, or collateralized mortgage obligations, are bundles of mortgages which are then divided up for sale by investment banks.  Different types of these mortgage backed securities can vary widely in risk for investors, but recent problems with the subprime mortgage lending market could portend future problems for individual investors who have been sold these types of securities without their brokers fully explaining the risks involved.  As set out in the following linked news stories, customers of Brookstreet Securities and Wedbush Morgan Securities have filed arbitration claims against their brokerage firms related to the sale of CMOs and other mortgage securities.
Wall Street Journal article
Orange County Register Article

Posted by W. Scott Greco on 07/20/07.
Brokerage FirmsBrookstreetCMOs / CDOsSuitabilityPermalink

Wachovia Fine Related to Fee Based Accounts

Fee based accounts with brokerage firms are typically an alternative to commission accounts in which the account is charged a fixed annual fee or an annual percentage fee based on the assets in the account.  These accounts may not be suitable for all customers.  As set out in the link below, the NASD fined Wachovia for ?failing to adequately supervise its fee-based brokerage business between 2001 through 2004.?
NASD Press Release

Posted by W. Scott Greco on 07/20/07.
Brokerage FirmsWachoviaNASD RegulationSuitabilityPermalink

Early Retirement Pitches

Beware of sales pitches allowing early retirement which are based upon aggressive unrealistic annual returns without disclosure of the risks involved with such an aggressive strategy.  As set out in the below NASD Investor Alert, following such a program may result in the depletion of your retirement nest egg if the broker is unable to meet the aggressive advertised annual returns. 
NASD Investor Alert
See also the NASD charges against Citigroup regarding early retirement seminars in Charlotte, North Carolina for employees of Bellsouth.
NASD News Release

Posted by W. Scott Greco on 07/20/07.
Brokerage FirmsCitigroupNASD RegulationRetirementSuitabilityPermalink

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