Financial Counsel by Eccleston Law

FINRA Finds Both Claimant and Respondent/Counter-Clamaint Wells Fargo Advisors Liable on Breach of Promissory Note and Breach of Contract Theories

In March 2011, Jason Schlesinger filed a Statement of Claim with the Financial Industry Regulatory Authority (FINRA) alleging breach of contract and seeking $1 million in compensatory damages, punitive damages, costs, and attorneys' fees. He also sought a declaration that Wells Fargo, LLC may not enforce the promissory note against him. In the Matter of the FINRA Arbitration Between: Jason Martin Schlesinger, Claimant v. Peter Yan Hong; Wallace Lawrence Key; Wells Fargo Adivsors, LLC, Respondents v. Jason Martin Schlesinger, Counter-Respondent.

In particular, Schlesinger (Claimant) alleged that he was fraudulently induced to join Wachovia Securities by a couple of promises. Those promises were: "a position in which he would be the sole broker in a start-up hub office specializing in high net worth investors; and that he would have access to a pool of names of so called orphan accounts left from a previous merger of Wachovia Securities and Gold West World Savings." See Statement of Claim.

Claimant understood this to be a promise that he would be entitled to receive all the leads of the bankers in the new office since he would be the only broker in the office. Respondents denied these allegations and asserted affirmative defenses.

In Wells Fargo Adivsor's (Respondent/Counter-Claimant) Counterclaim, it asserted that Claimant breached a promissory note (Note) executed by Claimant. It was alleged that when Claimant joined Wachovia the Note was executed for $925,306 on April 14, 2008. Furthermore, on July 16, 2010 the Note was amended and went down to $792,776. Respondent/Counter-Claimant requested the principal balance due on the Note ($734,052.27) plus 3.25% annual interest, costs, and attorneys' fees.

The FINRA Arbitration Panel (Panel) did not find fraud on behalf of the recruiters Respondents Peter Yan Hong and Wallace Lawrence Key. The Panel did find, however, there was considerable confusion on the part of Respondents as to why Claimant was paid only $87,000 for his first year at Wachovia Securities. There was also confusion on how it was calculated.

Ultimately, the Panel found Claimant liable and he was ordered to pay $734,052.27 to Respondent/Counter-Claimant Wells Fargo Advisors. In addition, the Panel found Respondent/Counter-Claimant Wells Fargo Advisors liable to Claimant and ordered it to pay him $100,000. Thus, the net final award that Claimant owed was $634,052.27.

FINRA Finds Merrill Lynch Liable for Libel and Wrongful Termination

In January 2011, Nicole Cannava filed a Statement of Claim with the Financial Industry Regulatory Authority (FINRA) seeking $68,117 in compensatory damages plus interest, attorneys' fees, costs, and expungement of her Central Registration Depository (CRD) as a result of alleged libel on her Form U5 and for wrongful termination. In the Matter of the FINRA Arbitration Between Nicole Alise Cannava, Claimant, v. Merrill Lynch Pierce Fenner & Smith Inc., Respondent. Merrill Lynch denied the allegations and asserted affirmative defenses.

In April 2012, the FINRA Arbitrator hearing the dispute found Merrill Lynch liable and ordered it to pay Cannava $68,117. In addition, the Arbitrator found defamation and recommended the expungement of the answers to Question 14J(1) on Cannava's Form U4 and Questions 7F(1) on her Form U5.

In the section "Termination Disclosure" in Form U4, Question 14J states: "Have you ever voluntarily resigned, been discharged or permitted to resign after allegations were made that accused you of: [V]iolating investment-related statutes, regulations, rules, or industry standards of conduct? [F]raud or the wrongful taking of property? [F]ailure to supervise in connection with investment-related statutes, regulations, rules or industry standards of conduct?"

In the section "Termination Disclosure" in Form U5, Question 7F it states: "Did the individual voluntarily resign from your firm, or was the individual discharged or permitted to resign from your firm, after allegations were made that accused the individual of: [V]iolating investment-related statutes, regulations, rules or industry standards of conduct? [F]raud or the wrongful taking of property? [F]ailure to supervise in connection with investment-related statutes, regulations, rules or industry standards of conduct?"

Specifically, the Arbitrator recommended that the answers to the above questions be changed from "Yes" to "No," and also the Disclosure Reporting Pages that accompany the questions be enitrely expunged. Lastly, the Arbitrator recommended that the "Reason for Termination of Discharge" in the Form U5 be replaced with "Voluntary."

Succession Plans Become a Necessity with an Aging Base of Brokers

Many large institutions have been bustling around while attempting to implement a plan to retain business. This is because of older brokers who continue to age and who have even older clients. On April 18th, a six-person panel at the Securities Industry and Financial Markets Association (Sifma) addressed this issue of succession planning.

Chief administrative officer private wealth management at Robert W. Baird, Scott Falk, said there are two approaches that work well for their organization to talk transferring business to a younger advisor:

First, there are Baird qualified teams which is a creative group with various generations of advisors. Within this team there are certain rules and incentives to carry this on. Second, there is the codified succession planning. Baird has put together a binder of information and in turn formalized a program to make it easier for advisors to prepare in advance and accomplish succession plans.

Specifically, business growth begins to slow down, usually through attrition (either for health reasons or age), for advisors aged around 50. The problem typically comes to fruition when it comes time to sell their book and advisors do not have much left. It is said the most serious concern is when advisors reach the average age of 59 and do not have a plan in place to recruit younger representatives. Advisors fall victim to this problem when they fail to plan to transfer client relationships and the problem is right there in front of them. Not to mention, the number of advisors to take over the book is not very deep.

Another solution for this problem was created by RBC Wealth Management - US. That firm created a plan that creates a team with an "anchor," which facilitates conversation between the advisors. An "official" team, according to the firm, has to have a formal strategy with roles and responsibilities as well as a succession plan for death and/or disability.

There are other firms that have used different spins on the aforementioned plans to prevent this issue from occurring. Either way it is nice to see that firms are recognizing the issue of the aging base of brokers and have been active to implement plans to remedy the problem.

Eccleston Law Investigates Two Houston-area Firms Following SEC Charges of Fraudulent $10 Million Note Offering

The attorneys at Eccleston Law have launched an investigation of the firms Evolution Capital Advisors (“Evolution Capital”) and Evolution Investment Group I (“EIGI”) following charges that the firm raised more than $10 million from over 80 investors through several fraudulent note offerings. The notes were sold through Community Banker Security.On August 10, 2011, the Securities and Exchange Commission (“Commission”) filed suit in the United States District Court for the Southern District of Texas against the two firms for their roles in the fraudulent note offering. Evolution Capital was an investment adviser registered with the Commission until June 2010. The SEC alleges that, in the offerings, Evolution Capital and EIGI falsely promised that the notes were safe and secured by assets guaranteed by the United States government. The firms also falsely promised that they would use leverage to purchase the assets securing the notes. In fact, according to the SEC’s complaint, the assets securing the notes were subject to significant, undisclosed default and prepayment risk. Moreover, the defendants never obtained leverage to purchase the assets. The SEC further alleges that the defendants paid themselves more than $2.5 million in fees and expenses and used approximately $2.7 million from the second note offering to make Ponzi-like payments to investors in the first note offering. As a result of defaults and prepayments on the underlying assets, the failure to obtain leverage, and the excessive Ponzi-like payments and fees, the SEC alleges that the defendants do not have sufficient assets to repay investors in accordance with the notes. If you are an investor that has suffered losses investing with Evolution Capital Advisors or Evolution Investment Group I, please contact one of our attorneys at 312-332-0000 to discuss your recovery option. Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by securities fraud, unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

Eccleston Law Investigates AIC

The attorneys at Eccleston Law have launched an investigation of AIC following charges that the firm participated in the fraudulent sale of notes to investors. AIC was originally owned by Community Banker Security (“CBS”) and Waterford Investor Services. If you are an investor that has suffered losses investing with AIC, Community Banker Security, or Waterford Investor Services, please contact one of our attorneys at 312-332-0000 to discuss your recovery options. Eccelston Law represents individual and institutional investors nationwide to recover their investment losses caused by securities fraud, unsuitable investment recommendations, and breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

Apple REIT Board of Directors Recommends Against Consolidating Apple REITs; Investors Still Stuck in Illiquid REIT Investments

Investors in Apple REITs sold by David Lerner Associates have little chance of getting their frozen funds of the illiquid real estate investments following the rejection of consolidation talks by a special committee of the Apple REIT board of directors. 

The recent 8-K reads as follows:

"As previously announced, the board of directors of Apple REIT Eight, Inc. (the “Company”) authorized the evaluation of a potential consolidation transaction in which the Company, Apple REIT Six, Inc., Apple REIT Seven, Inc. and Apple REIT Nine, Inc. would be combined, and designated a special committee of all of its non-management directors to continue the evaluation process. The board of directors of each of Apple REIT Six, Inc., Apple REIT Seven, Inc. and Apple REIT Nine, Inc. (the “other Apple REITs”) also appointed a special committee. The Company announced today that the special committee of its board, and the special committee of the board of each of the other Apple REITs, have recommended to their respective full boards not to move forward with the potential consolidation transaction at this time. The Company’s board and the board of directors of each of the other Apple REITs have accepted the recommendation of its special committee and determined not to move forward with the potential consolidation transaction at this time.

The Company will evaluate any future potential liquidity events as appropriate for the Company. These events which, as previously disclosed, the Company expects to pursue within approximately seven years of the initial closing in its best efforts offering of its units may include a listing of its common shares on a national exchange, disposition of all of its assets in a manner permitting distributions to shareholders or a merger, consolidation or other combination. The timing and taking of any of these actions would be subject to and conditioned on the Company’s board of directors determining the action to be prudent and in the best interests of the shareholders. However, the Company is under no obligation to take any of these actions, and these actions, if taken, might be taken after the seven year period mentioned above."

If you are an investor that has suffered losses investing with David Lerner in the Apple REITs, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

Robert Van Zandt Investor Recovery Continues Following Felony Charges for Operating Massive Ponzi Scheme

Investors who suffered losses with Robert Van Zandt may still be able to pursue their recovery options following the annoucnment that Robert Van Zandt was arrested  and charged in a 35 count indictment for operating a massive multi-million dollar Ponzi scheme spanning a number of years.

According to the indictment and statements, Robert Van Zandt turned real estate investment opportunities into a Ponzi scheme starting in approximately 2008 by guaranteed high rates of return to new investors in his real estate projects that may have been impossible to build. Instead of using it to develop real estate, Bob Van Zandt allegedly used to pay previous investors or for his own personal use.  It is believed that he raised over $4.6 million from February 2008 through January 2011 alone.

If you are an investor that has suffered losses investing with Robert Van Zandt, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

Sean Agahi Investment Loss Recovery Options

The attorneys at Eccleston Law are actively seeking to represent investors who have suffered losses investing with Sean Agahi, financial advisor registered with First Allied Securities, Inc. According to a recent FINRA arbitration claim, Sean Agahi invested certain clients in a variety of alternative investment product  including limited partnerships and private placement Real Estate Investment Trusts ("REITs"). In most cases, these investments pay larger commissions than traditional securities like stocks, bonds, and mutual funds. However, these securities are often riskier than traditional investment recommendations.  In some cases, financial advisors like Sean Agahi may making unsuitable investment recommendations by recommending that clients invest in risky aternative nvestment products. 

If you are an investor that has suffered losses investing with Sean Agahi, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

 

 

Return on REITs Become an Issue for Investors

Investors are beginning to discover some downsides to a special type of real-estate investment trust (REIT). These are not publicly traded and small investors are starting to find out that these REITs are being valued a lot lower than they were expected to be.

Recently, Retail Properties of America Inc., which is one of the largest owners of U.S. strip malls and shopping centers, became aware that their shares were valued at $3.20 in April 2012 when they were valued at $6.95 in June 2011. Investors became aware of this information when the REIT went on the New York Stock Exchange. In addition, Cornerstone Core Properties REIT Inc. also disclosed their value when it went public. Its stock was actually valued at $2.09 when it was sold to investors at $8 in 2008. In a shareholder letter in March 2012, shareholders were notified of this devaluation of the stock.

In turn, investors filed grievances at the Financial Industry Regulatory Authority (FINRA) against the investment advisers who recommended these non-traded REITs to them. This isn't the first time FINRA has been notified of these valuation issues with non-traded REITs. Back in 2011 the Securities and Exchange Commission and FINRA began to crack down on investment advisors to provide their customers with better disclosures on the non-traded REITs share valuations. FINRA has also proposed new rules that would set guidelines for non-traded REITs disclosures with financial-advisers.

Also, in 2011, FINRA initiated suit against David Lerner Associates Inc., (David Lerner) which is a New York brokerage firm. David Lerner targeted elderly and unsophisticated investors and sold Apple REITs that were unsuitable for them. Advocates of the non-traded REITs, however, still state that the share prices have the potential to rise if conditions become better. As of now, property prices are still low and subsequently the non-traded REITs have lost value.

FINRA to Issue New Guidelines for Non-Traded Business Development Companies (BDCs)

The Financial Industry Regulatory Authority Inc. (FINRA) may soon issue an investor alert warning against investing in non-traded BDCs, or business development companies. Securities commissioner, A. Heath Abshure, noted that in the past one or two filings were regular;  more recently, there are at least 10 non-traded BDCs  either raising money or in line to become offerings.

BDCs were created by Congress in the 1980s as a response to a perceived crisis in the capital markets during the 1970s. They were meant for small and growing companies, effectively providing them access to capital. Eric Schwartz, chief executive of Cambridge Investment Research Inc. notes, “[non-traded BDCs have a lot of appeal right now”.  BDCs invest in the debt and equity of growing companies. The product is usually reserved for investors with a net worth of $250,000 or more, or a net income of at least $70,000 combined with a net worth of at least $70,000. Investors are to be informed of the product’s illiquidity. Currently, there are about 28 publicly traded BDCs ranging in value from $10 million to $3 billion.

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by securities fraud, unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

If you are an investor that has suffered losses investing in a non-traded BDCs, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

VelocityShares Daily 2x VIX Short-Term ETN Loss Recovery Attorneys

If you have suffered losses in Credit Suisse's VelocityShares Daily 2x VIX Short-Term ETN ("TVIX") that were recommended by a broker or financial adviser, you may be able to recover your losses through FINRA arbitration.

The TVIX is an exchange traded note ("ETN") that was designed to track an an index that is linked to the the Chicago Board Options Exchange Volatility Index (also known as the "VIX").  This ETN was designed to deliver returns that are double (2x) the daily direction of the VIX.  Investors use the TVIX to hedge stock portfolios.

Since 2009, various VIX ETNs have become available to retail traders, expanding a space that was previously reserved for more sophisticated and insitutional traders. 

Like stocks or other exchange-traded funds, the TVIX ETNs trade on the open market. However, these are actually debt-backed securities collaterialized by the credit of the issuer, which in the case of TVIX is Credit Suisse. 

On February 21, 2012, Credit Suisse announced that it had temporarily suspended the VelocityShares Daily 2x VIX Short-Term ETNs (TVIX) ETNs from further issuance due to interal limits on the size of the ETNs.  According to Credit Suisse, this suspension of new TVIX shares triggered an imbalance in the market, which resulted in VelocityShares Daily 2x VIX Short-Term ETNs (TVIX) trading at a significant premium to its intrinsic value (the VIX index that it was designed to track).

On March 22, 2012, Credit Suisse announced that it would issue more shares of the TVIX leveraged exchange-traded note following a month suspension. However, the damage to investors may be done.  Investors, who bought the Credit Suisse VelocityShares Daily 2x VIX Short-Term ETNs (TVIX) to profit from rising volatility, are believed to have lost about $340 million when it dropped more than 50 percent. The plunge began even before Credit Suisse announced on the evening of March 22, 2012 that it would resume issuing shares.

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

If you are an investor that has suffered substantial losses investing in a leveraged exchange-traded note such as the Credit Suisse VelocityShares Daily 2x VIX Short-Term ETNs (TVIX) that was recommended by a broker or financial adviser, your losses may be recoverable through securities arbitration. Please contact one of the attorneys at Eccleston Law Offices at 312-332-0000 to discuss your recovery options.

TVIX Loss Recovery Attorneys

If you have suffered losses in Credit Suisse's VelocityShares Daily 2x VIX Short-Term ETN ("TVIX") that were recommended by a broker or financial adviser, you may be able to recover your losses through FINRA arbitration.

The TVIX is an exchange traded note ("ETN") that was designed to track an an index that is linked to the the Chicago Board Options Exchange Volatility Index (also known as the "VIX").  This ETN was designed to deliver returns that are double (2x) the daily direction of the VIX.  Investors use the TVIX to hedge stock portfolios.

Since 2009, various VIX ETNs have become available to retail traders, expanding a space that was previously reserved for more sophisticated and insitutional traders. 

Like stocks or other exchange-traded funds, the TVIX ETNs trade on the open market. However, these are actually debt-backed securities collaterialized by the credit of the issuer, which in the case of TVIX is Credit Suisse. 

On February 21, 2012, Credit Suisse announced that it had temporarily suspended the VelocityShares Daily 2x VIX Short-Term ETNs (TVIX) ETNs from further issuance due to interal limits on the size of the ETNs.  According to Credit Suisse, this suspension of new TVIX shares triggered an imbalance in the market, which resulted in VelocityShares Daily 2x VIX Short-Term ETNs (TVIX) trading at a significant premium to its intrinsic value (the VIX index that it was designed to track).

On March 22, 2012, Credit Suisse announced that it would issue more shares of the TVIX leveraged exchange-traded note following a month suspension. However, the damage to investors may be done.  Investors, who bought the Credit Suisse VelocityShares Daily 2x VIX Short-Term ETNs (TVIX) to profit from rising volatility, are believed to have lost about $340 million when it dropped more than 50 percent. The plunge began even before Credit Suisse announced on the evening of March 22, 2012 that it would resume issuing shares.

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

If you are an investor that has suffered substantial losses investing in a leveraged exchange-traded note such as the Credit Suisse VelocityShares Daily 2x VIX Short-Term ETNs (TVIX) that was recommended by a broker or financial adviser, your losses may be recoverable through securities arbitration. Please contact one of the attorneys at Eccleston Law Offices at 312-332-0000 to discuss your recovery options.

Woodbury Financial Services Broker Transition Attorneys

Registered representatives of Woodbury Financial Services who are transitioning to a new firm should contact our attorneys for a free, no obligation consultation of their transition options. 

The Hartford Financial Services Group Inc.'s recently announced its intent to sell independent broker-dealer Woodbury Financial Services Inc., which marks its move to exit the independent broker-dealer market. 

Eccleston Law represents financial advisers nationwide in regulatory, compliance, disciplinary and employment matters in arbitration, litigation, and before regulatory bodies such as the SEC, FINRA and state securities regulators.  If you are a Woodbury Financial represenative who is seeking a transition, please contact one of our attorneys at 312-332-0000 to discuss your move.

Puda Coal Investment Loss Recovery Options

Investors who have suffered losses investing in Puda Coal, Inc. may be able to recover their losses through securities arbitration or litigation.  Our attorneys are currently seeking to discuss with investors their recovery options following the recent SEC allegations and subsequent devaluation of Puda Coal stock.

On February 22, 2012, the SEC filed an injunction charging that the Chairman of Puda Coal, Ming Zhao, and the former CEO of Puda Coal, Liping Zhu, perpetrated a massive fraud on Puda Coal’s shareholders by stealing and selling an operating subsidiary of the company.  According to the SEC, just weeks before Puda Coal announced that Shanxi Coal had received a lucrative mandate from Chinese goverment authorities to be come the consoldiator of smaller mining companies, Zhao transferred Puda Coal’s stake in Shanxi to himself without approval from the Puda Coal board of directors or its shareholders.  Moreover, Puda Coal conducted two public offerings in 2010 without disclosing that it no longer had ownership stake in the coal company, which was Puda’s primary source of revenue.  At the same time, Zhao and Zhu were telling U.S. investors that Puda that it still owned its stake in Shanxi Coal.

Puda Coal was traded on the NYSE Amex stock exchange.  Puda Coal had gone public in the United States through a reverse merger with a publicly traded shell corporation in 2005.  In February of 2010, Puda coal raised over $12 million from U.S investors, in an offering underwritten by Brean Murray, Carret & Company of New York and Newbridge Securities of Fort Lauderdale, Fla.  In December of 2010 , another $100 million of shares were underwritten by Macquarie Capital, a Canadian firm, and Brean Murray.

Investors paid upwards of $12 a share for stock in those offerings.  Puda Coal now trades for about 25 cents per share on the OTC market, representing almost a complete loss for investors.

If you are an investor that has suffered losses investing in Puda Coal, you may be able to recover your losses through securities arbitration or litigation.  Please contact one of our attorneys at 312-332-0000 for a FREE, NO OBLIGATION CONSULTATION to discuss your recovery options.

www.pudacoallosses.com

Brenda Eschbach Investor Loss Recovery Options

Investors who suffered losses with California investment advisor Brenda Eschbach may be able to recover their losses through FINRA arbitration.  If you are an investor that suffered losses investing with Brenda Eschbach, please contact Eccleston Law Offices at 312-332-0000 to discuss your recovery options.

The Securities and Exchange Commission (SEC) recently charged Brenda A. Eschbach with defrauding four clients out of an estimated $3 million that she allegedy used to pay for her own personal expenses such as luxury cars and credit card bills.

In its complaint, the SEC alleged that between 2003 and 2009 Brenda Eschbach misappropriated over $3 million in client funds. She started misappropriating those funds while operating a franchise of a large unidentified investment advisor and broker-dealer.  The SEC alleged that Eschbach concealed her misappropriations by issuing false account statements to those clients whom she had defrauded.

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

If you are an investor that has suffered substantial losses investing with Brenda Eschbach, your losses may be recoverable through securities arbitration. Please contact Eccleston Law Offices at 312-332-0000 to discuss your recovery options.

Broker Suspended by FINRA over Misrepresenting Guaranteed Return Rate on Variable Annuity

FINRA recently fined and suspended Lloyd Thomas Mincy, Jr. (who was registered with Centaurus Financial) for allegedly misreprensting the guaranteed return on a variable annuity.  According to FINRA records, on or about October 2004, Mincy solicited a several prospective customers to purchase a variable annuity with a 5% gauranteed death benefit option, which provided the beneficiaries of the investment no less than a 5% rate of return. However, when soliciting the purchase of the variable annuity, Mincy allegedly falsely represented that the annuity had a 5% guaranteed rate of return.  Based on these misrepresntations, the investors purchased the variable annuities.  

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

If you are an investor that has suffered substantial losses investing in a variable annuity, your losses may be recoverable through securities arbitration. Please contact Eccleston Law Offices at 312-332-0000 to discuss your recovery options.

LPL Loses $1.4 Million in FINRA Arbitration involving TICs

LPL Financial recently was ordered to pay $1.4 million to an elderly California couple who alleged that the firm defrauded them when it sold them tenant in common investments. 

The couple was sold private placement investments in Direct Invest, LLC, which allegedly contained material misreprensentations about the financial projections of the real estate market and the actual properties.  These investments were allegedly sold to the couple as investments that offered steady distribution rates. 

Two other firms, Orchard Securities, LLC and Meridian Capital Partners, LLC, were also named in the arbitration action.

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

If you are an investor that has suffered substantial losses investing TICs or other real estate investments with LPL Financial, Orchard Securities, or Meridian Capital Partners, your losses may be recoverable through securities arbitration. Please contact Jim Eccleston at the Eccleston Law Offices at 312-332-0000 to discuss your recovery options.

Deal Terms for Morgan Keegan Reps Moving to Raymond James

Investment News is reporting that Morgan Keegan producers may find the deal terms “disappointing”.  They certainly aren’t as generous as what can be negotiated on the street.

For the largest producers, those with production more than $1 million, Raymond James will pay 70% of the trailing 12.  50% of trailing 12 month production will be paid to those producing between $500,000 and $1 million. The percentages fall from there for those with lower production.

Morgan Keegan reps certainly should retain legal counsel either to weigh the options for and negotiate a deal to move their books elsewhere, or even to negotiate a better deal with Raymond James.  That seems to be an option that is in the cards, according to recruiters cited in the Investment News article.

CIP Leveraged Fund Advisors Investment Loss Recovery Options

Investors who suffered losses in the the CIP Leverage Fund Advsior (also known as "Cornerstone Industrial Properties Leveraged Fund Advisors")may be able to recover their losses through FINRA arbitration. 

Upon information and belief, the CIP Leveraged Fund may have been sold to investors without full disclosure of the risks involved in the investment.  Moreover, brokers or financial advisors recommending that their clients the CIP Leverage Fund Advisor may, in some cases, made an unsuitable recommendation. 

The Cornerstone Industrial Properties Leveraged Fund Advisors is believed to be a California-based real estate investment fund for leveraged real estate investments.  CIP is also believed to have marketed certain illiquid REITs, including the Cornerstone REIT and the Meadowbrook REIT. The performance CIP Leveraged Fund and associated REITs may have caused investors to suffer significant losses.

If you are an investor in the CIP Leveraged Fund or in non-traded REITs like the Cornerstone REIT or Meadowbrook REIT, you may be able to recover your losses through securities arbitration.

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

If you are an investor that has suffered losses investing in CIP Leveraged Fund, please contact Jim Eccleston at the Eccleston Law Offices at 312-332-0000 to discuss you recovery options.

FINRA Amends Enforcement Action Against David Lerner Associates Naming David Lerner Personally

FINRA has amended their enforcement action against David Lerner Associates to add David Lerner personally for allegedly misleading investors about the risks involved in investing in the Apple REITs (for which David Lerner Associates is the sole distributor) and also about the valuations of the REITs.  This is the second enforcement action filed by FINRA against the firm in the past year.

According to the recent complaint, FINRA is taking issue with David Lerner's response to FINRA's first enforcement action, which resulted in the firm sending out more than 50,000 letters to investors to counter the negative press the firm received in the wake of the first enforcement action. The letter also allegedly contains statements made to investors about a possible consolidation of the Apple REITs for listing on a national exchange to dispose of the illiquid shares that they held.  FINRA is arguing that the statements about a possible consolidation and listing of the non-traded REITs were made in order to induce new and existing customers to purchase shares in the Apple REITs.

To many investors, this development may come as a surprise. Many investors were not fully informed of the risks involved in purchasing an Apple REIT and believed that this investment was suitable for their investment objectives, age, and risk tolerance.

If you have invested in any of the Apple REITs upon the recommendation of David Lerner Associates, please contact one of our attorneys at 312-332-0000.  Our attorneys are representing investors who have suffered losses investing in the Apple REITs along with those who are seeking to rescind (get out of) their investment in these products.

FINRA Files Second Enforcement Action Against David Lerner Associates

FINRA has recently filed a second enforcement action against David Lerner Asosicates for allegedly misleading investors about the risks involved in investing in the Apple REITs (for which David Lerner Associates is the sole distributor) and also about the valuations of the REITs.  This is the second enforcement action filed by FINRA against the firm in the past year.

According to the recent complaint, FINRA is taking issue with David Lerner Associates' response to FINRA's first enforcement action, which resulted in the firm sending out more than 50,000 letters to investors to courter the negative press the firm received in the wake of the first enforcement action. The letter also allegedly contains statements made to investors about a possible consolidation of the Apple REITs for listing on a national exchange to dispose of the illiquid shares that they held.  FINRA is arguing that the statements about a possible consolidation and listing of the non-traded REITs were made in order to induce new and existing customers to purchase shares in the Apple REITs.

To many investors, this development may come as a surprise. Many investors were not fully informed of the risks involved in purchasing an Apple REIT and believed that this investment was suitable for their investment objectives, age, and risk tolerance. 

If you have invested in any of the Apple REITs upon the recommendation of David Lerner Associates, please contact one of our attorneys at 312-332-0000.  Our attorneys are representing investors who have suffered losses investing in the Apple REITs along with those who are seeking to rescind (get out of) their investment in these products.

 

Behringer Harvard Short Term Opportunity Fund I Investor Loss Recovery Options

Investors who suffered losses in the the Behringer Harvard Short Term Opportunity Fund may be able to recover their losses through FINRA arbitration.  Following a drop in price from $6.48 to $.40 a share between December 2010 and December 2011, clients may be seeking answers to why this fund dropped so signifcantly.

If you are an investor in a non-traded REIT or in the Behringer Harvard Short Term Opportunity Fund, you may be able to recover your losses through securities arbitration.

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

If you are an investor that has suffered losses investing in Behringer Harvard Short Term Opportunity Fund I, please contact Jim Eccleston at the Eccleston Law Offices at 312-332-0000 to discuss you recovery options.

Leo T. Buggy Investor Loss Recovery Options

According to an SEC release, AXA Advisors was cited for failing to reasonably to supervise Leo T. Buggy (“Buggy”) with a view to preventing and detecting his violations of the federal securities laws during the period December 2005 through December 2008. During this time period, Leo Buggy fraudulently induced customers to redeem securities held at AXA Advisors, including variable annuities and mutual funds, under the false representation that the proceeds from such redemptions would be invested in other securities through AXA Advisors. Instead, Leo Buggy caused customers to place those funds in a bank account controlled by Buggy, from which he misappropriated the funds.

Leo Buggy was a registered representative with AXA Advisors from 1982 through January 2009, when he was terminated in connection with the matters discussed herein. From 2005 forward, Leo Buggy operated out of an AXA Advisors’ office in Rock Springs, Wyoming, where he was the sole registered representative, or from his home in Green River, Wyoming, and was supervised by an AXA Advisors’ branch office in Salt Lake City, Utah.

On July 10, 2009, in the United States District Court for the District of Wyoming, Leo Buggy was charged with three counts of mail fraud, wire fraud, and money laundering. Leo Buggy entered a plea of guilty, and on October 16, 2009, Leo Buggy was sentenced to forty-six months in prison to be followed by three years supervised probation upon his release.

Leo Buggy fraudulently induced investors, who were customers for whom he acted as registered representative, to redeem securities, including variable annuities and, to a much lesser extent, mutual funds, under the false representation that he would invest the proceeds for them in other securities products. Based on these representations, customers authorized the redemptions of variable annuity and the proceeds were sent to them at their home address or wired directly into their personal bank accounts. Leo Buggy then misappropriated the proceeds by causing the customers either to write checks payable to “Equitable Life” that Leo Buggy deposited into an account at a local bank that Leo Buggy controlled for his personal benefit, or to wire funds directly into that account. Buggy gave his personal account the name “Leo T. Buggy - Equitable Life Agency,” a name similar to an AXA Advisors affiliate, which enabled him to deposit checks that appeared to be made out to legitimate AXA Advisors entities and further misled customers into believing that their funds were being invested in AXA Advisors securities. Altogether, Leo Buggy fraudulently misappropriated approximately $1.2 million from seven customers (three individuals and two couples) in approximately 32 transactions.

AXA Advisors was cited for failing to implement adequate procedures regarding the review of redemptions by customers of variable annuities. During the relevant period, AXA Advisors had procedures in place requiring supervisory review of securities transactions but did not have in place adequate procedures for the review of redemptions of variable annuities which occurred in the accounts of Leo Buggy’s customers. Leo Buggy had customers partially redeem their variable annuities and then reinvest the funds in his “Leo T. Buggy - Equitable Life Agency” personal account. Had Respondent implemented adequate procedures for supervisory review of redemptions from the variable annuities of Leo Buggy’s customers, Leo Buggy’s conduct likely would have been detected and prevented.

If you are an investor that has suffered losses investing with Leo Buggy or Leo T. Buggy - Equitable Life Agency, you may be able to recover your losses through FINRA arbitration.  Please contact one of our attorneys for a FREE, NO OBLIGATION CONSULTATION to discuss your recovery options.

2011 Returns Show Why Apple REIT Investments Are So Unsuitable For Most Investors

Forget that David Lerner Associates has thrown out the window any semblance to commonly accepted investment norms, by failing to asset allocate among stocks, bonds and cash, for example (read: imprudent). Then forget about the fact that the Apple REITs concentrate in real estate (read: reckless and dangerous).  What’s left is a complete concentration in real estate, and real estate that is limited to just one sector – the hotel industry (with a large concentration there still in the extended stay hotel industry) (read: certifiably crazy).

And now the numbers.  While the headlines discuss how well “real estate investments” performed in 2011, drilling down one finds an alarming disparity between the performance winners and the losers.  Unfortunately for Apple REIT investors, the lodging and resort segment of the real estate market were the Biggest Losers of the Year!  Down 14.31%!  Compare that to self-storage (up 35%) and event apartments (up 15%) and you get the picture.

David Lerner and its Apple REITs have a lot of problems, and investors are taking note by retaining law firms like ours to file claims to recover their investment losses and rescind (get out of) their investments.  Bad performance – indeed the worst sub-sector performance in the real estate investment area -- is another straw breaking the camel’s back!

Eccleston Law is Actively Seeking Investors Who Suffered Losses with Burton Douglas Morris

Based on a recent SEC enforcement action, from approximately 2005 through 2011, the Burton Douglas Morriss, through several private equity funds and fund management companies he controlled, allegedly fraudulently transferred approximately $9.1 million dollars of investor funds to himself. Burton Douglas Morriss’ companies are believed to have disguised the transfers as loans without the knowledge or consent of investors.

In addition, Morriss and the management company he controlled allegedly came up with a scheme to recruit new investors to purchase membership interests in one of the private equity funds, MIC VII, LLC. Effectively, Morriss is believed to have used the $2.5 Million in investor funds to satisfy a portion of a personal loan.

Unbeknownst to investors, Morriss allegedly misappropriated more than $9 Million from the investment entities for his personal use. As early as 2005 Morriss was taking funds from Acartha Group, while at the same time lending money to it. By the summer of 2009, Morriss is believed to have borrowed more money than he had advanced to Acartha Group and other investment entities. By the end of 2009 Morriss and Morriss Holdings allegedly owed Acartha Group, MIC VII, ATP, and Gryphon Investments approximately $2 million dollars.

The SEC has alleged that Burton Morriss, Acartha Group, MIC VII, ATP, and Gryphon Investments have defrauded investors by failing to disclose that Morriss would or could use investor proceeds for personal use.

Eccleston law represents individual and institutional investors nationwide to recover their investment losses caused by unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

If you are an investor that has suffered losses with Burton Douglas Morriss or any of  his associated entities, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

 

BEHRINGER HARVARD ATTRIBUTES DECLINE IN VALUE OF SHARES TO “ECONOMIC CONDITIONS”

Behringer Harvard Opportunity REIT I has plummeted in value since 2009. The Behringer REIT was formerly valued at $7.66 per share and has experienced a 46% drop bringing it down to $4.12 per share. This is typically not common for non-traded REIT’s since their primary goal is to provide investors with a substantial return from the principal. The return usually ranges anywhere between 6 to 7 percent.

The valuation of the REIT has drop due to a decline in the trusts assets and in the real estate properties in the portfolio. A decline in September to the trust’s  real estate properties was noted—with a loss of $83 million dollar--and a stark decline was also reported in December with the REIT possessing only $697.6 million dollars in assets.

Additionally, Behringer Harvard Opportunity Advisors LLC have cut fees for advisors but remain on the decline and are slowly relinquishing their power as the fourth-largest non-listed REIT (based on assets).  Though Behringer Harvard REIT I and Behringer Harvard Opportunity REIT I, Inc. differ in style, both have depreciated in value.

Estimates have been made that the value of the non-traded REIT will eventually rise. Although there is speculation and the company anticipates the shares valuation will increase when market conditions stabilize, the current state of the REIT is looking fairly bleak and the overall value remains low with little to know benefit from investment.

Leavitt Capital Management and William S. Leavitt Investor Loss Recovery Options

The attorneys at Eccleston Law have launched an investigation into the business practices and investment recommendations of William S. Leavitt and his firm, Leavitt Capital Management, following a lawsuit alleging that William Leavitt recommended that a former professional baseball player put nearly all of their assets in illiquid, risky investments.

Leavitt Capital Management is located in Northbrook, Illinois and William Leavitt is believed to be from Glencoe, Illinois.  The lawsuit alleges that, without the clients knowledge, that Leavitt invested the majority of their money into speculative investments such as hedge funds, private equity funds, and other unregistered investment vehicles to generate fees from the transactions. As a result of these unsuitable recommendations, the investors have suffered substantial losses in these alternative investments and cannot access their principal.  

If you are an investor and have suffered losses investing in illiquid, risky securities such as hedge funds, private equity funds, or private placements that were recommended by William Leavitt and/or Leavitt Capital Management, please call our attorneys at 312-332-0000 to discuss your recovery options.

Eccleston Law Actively Seeking Investors Who Suffered Losses by Investing in Life Settlements Sold by or through Life Partners Holdings, Inc.

The attorneys at Eccleston Law are investigating Life Partners Holding, Inc. for their role in raising $2.9 billion in life settlements from at least 27,000 investors. Life Partners Holdings, Inc. is a company that is believed to have sold 6,400 policies since its 1999 founding. Our attorneys are actively seeking to speak with investors who may have suffered losses.

The SEC reportedly alleges that Brian Pardo, Chief Executive Officer of Life Partners Holdings, Inc., Scott Peden, General Counsel of Life Partners Holdings, Inc., and David Martin, Chief Financial Officer of Life Partners Holdings, Inc. closed approximately $2.9 billion in life insurance policy investments compiled from over 6,400 polices purchased by approximately 28,000 investors. Pardo, Peden, and Martin of Life Partners Holdings, Inc. are believed to have falsified life expectancy estimations.

In order to induce investors to invest in the viatical settlements, Pardo, Peden, and Martin of Life Partners Holdings, Inc. allegedly shortened the life expectancy estimations on policies, making the investments appear more lucrative. The shorter the life expectancy of an insured individual, the higher the payout for investors proves to be. From 2002 to 2005 it is believed that 90% of insured individuals outlived Life Partners Holdings, Inc.’s life expectancy estimations.

Furthermore, the SEC alleges that from 2007 to 2011 Life Partners Holdings, Inc. materially misstated net income by recognizing revenues prematurely and understating impairment expense related to its investments in life settlements.

Life settlements prove to be faulty investments in many cases due to the uncertain nature of life expectancy estimates. These estimates are never certain and can easily be falsified. Falsifying life expectancy estimates to be shorter makes the life insurance policies of individuals more attractive to potential investors. As the life expectancy for individuals is lowered, the investment return for investors proves to be higher; this in turn increases the revenue for stockbrokers and investment professionals. 

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars or investors.

If you are an investor that has suffered losses investing in settlements sold by Life Partners Holdings, Inc., please contact Jim Eccleston at the Eccleston Law Offices at 312-330-0000 to discuss your recovery options.

Reality Check: Has Edward Jones Done What It Promised?

It simply is not good enough to make promises you cannot keep.  If you are an investor who has suffered investment losses at Edward Jones, read the Edward Jones website material below, and ask yourself, did Edward Jones do what it promised?  If not, call us today for a free consultation.

Step 1: Where Am I Today?
Before you can set realistic goals, you must determine your current needs. When you share information, including a list of monthly expenses, last year's tax return, retirement plan statements and brokerage, bank or other financial statements, it will help provide an overview of your current situation.

Step 2: Where Would I Like to Be?
After determining where you are today, the next step is to set specific goals that can be related to:
•    Preparing for Retirement
•    Education Funding
•    Living in Retirement
•    Planning Your Estate & Inheritances

Step 3: Can I Get There?
Based on your current situation, future income requirements and comfort level with risk, you can work with your financial advisor to create and implement strategies that can help you achieve your goals.
 
Step 4: How Do I Get There?
Our investment philosophy centers on buying diversified,* quality investments and holding them for the long term. You will be introduced to a variety of asset allocation models, and your financial advisor can help you select the appropriate mix of investments in each category.
 
Step 5: How Can I Stay on Track?
Meeting annually can help ensure that you stay on track. If any of your goals or circumstances have changed, we can make appropriate updates that address your evolving needs.

Edward Jones Needs To Improve Its Back Office Procedures To Properly Service The Investors Whom It Seeks

Today, Edward Jones promotes itself as a firm that investors, including retirees, can trust. Edward Jones touts on its website:

We know we can't be all things to all investors. And we're OK with that. Edward Jones has a distinct set of guiding principles and investment philosophy. For decades, we've believed in the same basic strategy of buying quality investments that have proved themselves over time. Our financial advisors also meet with you and talk with you regularly to make sure we’re best able to meet your financial needs.
If you want to trade options and commodities online, there are plenty of firms and websites that can help you do that. For us, it's about getting to know you and what you want to achieve. Then we'll work together to build a strategy to help you get you there. This is our approach, and we're sticking with it. Most of our clients share some common investing preferences. See if any of these sound like you.
•    You have long-term goals and are willing to follow a disciplined strategy to get there.
•    You want to work with a financial advisor who works with individual investors.
•    You want to have a conversation about retirement or saving for education, not just push a "BUY" button.
•    You value the relationship that can be developed with your local financial advisor.
•   
Yet, in 2009, FINRA fined Edward Jones for significant back office problems.  Below is the relevant text of the FINRA press release:

FINRA Fines Edward Jones $900,000 for Failing to Timely Deliver Official Statements to Customers in Municipal Bond Sales

Washington, D.C. — The Financial Industry Regulatory Authority (FINRA) announced today that it has fined Edward D. Jones & Co., L.P. of St. Louis $900,000 for its failure to timely deliver official statements to customers who purchased new-issue municipal securities and related supervisory and recordkeeping failures.
 
With limited exceptions, broker-dealers selling a new-issue municipal securities are required under the rules of the Municipal Securities Rulemaking Board (MSRB) — which are enforced by FINRA — to deliver a copy of the official statement to the customer on or before settlement date. New-issue securities are those sold during the initial distribution of bonds to the public.
 
"Official statements contain important financial information for investors about the issuing municipality and the bonds they are purchasing," said Susan L. Merrill, FINRA Executive Vice President and Chief of Enforcement. "This firm was consistently late in delivering those statements even though it was repeatedly on notice about its delivery failures."
 
FINRA found that Edward Jones's late deliveries occurred when the firm was conducting retail transactions but was not a member of the underwriting syndicate for a new issue.
 
FINRA further found that the firm's failures from 2002 through 2006 were systemic. During that time period, Edward Jones engaged in approximately 100,000 new-issue municipal bond transactions in which it was not an underwriter. For a significant number of those transactions, the firm was late in delivering official statements to its customers. The firm's systemic late deliveries had multiple causes, including lack of training for employees, incorrect instructions to employees, limited photocopying capacity and errors by employees of the firm, including trading supervisors.
 
The late deliveries continued. In September 2008 alone, the firm was late in mailing official statements to customers in over 6,200 transactions, which represented 19 percent of the firm's municipal bond transactions covered by the applicable MSRB rule.
 
FINRA further found that Edward Jones's own internal communications repeatedly referenced that it was not timely delivering official statements. Nevertheless, the firm failed to take reasonable and sufficient steps to comply with its delivery obligations.
 
FINRA also found that Edward Jones failed to keep required records, did not have written supervisory procedures addressing the requirements for delivery of official statements until May 2006, and that those procedures contained incorrect guidance. As part of the settlement, an officer of Edward Jones will certify that it has adopted and implemented systems and procedures reasonably designed to ensure compliance with MSRB rules, including systems and procedures to provide adequate oversight if third party vendors are utilized.

Will The Real Edward Jones Please Stand Up!

Edward Jones portrays itself as a full service brokerage firm that offers not just mutual funds and annuity investments but also stocks, exchange-traded funds, bonds, CDs, preferred stock, and unit trusts.  It tells investors that it has their best interests at heart.

That would be good news for investors.  Unfortunately, far too many investors over the years have lost millions of dollars in investment losses at Edward Jones.

Indeed, Edward Jones, not long ago, was the subject of a stinging $75 million FINRA settlement after FINRA had alleged significant conflicts of interest.  The relevant text of the FINRA press release is contained below:

Edward Jones to Pay $75 Million to Settle Revenue Sharing Charges

 Washington, D.C., Dec. 22, 2004 -The Securities and Exchange Commission, NASD and the New York Stock Exchange announced settled enforcement proceedings against Edward D. Jones & Co., L.P., a registered broker-dealer headquartered in St. Louis, Missouri, related to allegations that Edward Jones failed to adequately disclose revenue sharing payments that it received from a select group of mutual fund families that Edward Jones recommended to its customers. 

As part of the settlement of all three proceedings, Edward Jones will pay $75 million in disgorgement and civil penalties.  All of that money will be placed in a Fair Fund for distribution to Edward Jones customers.  Edward Jones also agreed to disclose on its public Web site information regarding revenue sharing payments and hire an independent consultant to review and make recommendations about the adequacy of Edward Jones’ disclosures.

According to an Order issued by the SEC, Edward Jones entered into revenue sharing arrangements with seven mutual fund families, which Edward Jones designated as “Preferred Mutual Fund Families.”  

Edward Jones told the public and its clients that it was promoting the sale of the Preferred Families’ mutual funds because of the funds’ long-term investment objectives and performance.  At the same time, Edward Jones failed to disclose that it received tens of millions of dollars from the Preferred Families each year, on top of commissions and other fees, for selling their mutual funds.  Edward Jones also failed to disclose that such payments were a material factor, among others, in becoming and remaining an Edward Jones Preferred Family.  Edward Jones provided the Preferred Families with certain benefits not otherwise available to non-preferred families including, among other things, exclusive shelf space for the sale and marketing of their funds and exclusive access to Edward Jones’ investment representatives (IRs) and customer base.  Edward Jones also exclusively promoted the 529 college savings plans offered by its Preferred Families over all other 529 plans that it had available to sell.

Linda Chatman Thomsen, Deputy Director of the Commission’s Division of Enforcement, said, “Edward Jones’ undisclosed receipt of revenue sharing payments from a select group of mutual fund families created a conflict of interest.  When customers purchase mutual funds, they should be told about the full nature and extent of any conflict of interest that may affect the transaction.  Edward Jones failed to do that."

Merri Jo Gillette, Regional Director of the Commission’s Midwest Regional Office, added, “Edward Jones made affirmative representations to investors regarding its purported reasons for recommending the mutual funds offered by the seven Preferred Families, but failed to inform investors of one important factor:  that it was being paid undisclosed compensation by those fund families.  By not telling investors the whole story, Edward Jones violated the federal securities laws.”

“Beyond its disclosure failures, Edward Jones engaged in other activities that violate NASD rules aimed at precluding conflicts of interest – including accepting directed brokerage payments and staging a sales contest to promote the Preferred Funds,” said Barry Goldsmith, NASD Executive Vice President and Head of Enforcement. “These kinds of activities increase the potential for investors to be steered into investments that serve the financial interests of the firm and its representatives instead of the best interest of the customers.”

“Firms have a responsibility to supervise all their business activities,” said Susan Light, Vice President of Enforcement, NYSE Regulation.  “Edward Jones’s supervisory lapses are especially troubling in this case because of the direct conflict between the firm and its customers.” 

According to the Commission’s Order, Edward Jones had entered into selling agreements with approximately 240 mutual fund families, but only the seven Preferred Families made these payments to Edward Jones.  Edward Jones, its general and limited partners, and its IRs received financial benefits from the Preferred Families’ payments.  Edward Jones exclusively promoted the Preferred Families’ funds over all other mutual funds.  Historically, over 95% of Edward Jones’ sales of mutual fund shares have been sales of the seven Preferred Families.

In NASD’s separate settlement, in addition to the receipt of direct revenue sharing payments, NASD found that the firm gave preferential treatment to the Preferred Funds in exchange for millions of dollars in directed brokerage from three of the Preferred Fund families.   This violates NASD’s “Anti-Reciprocal Rule,” Conduct Rule 2830(k), which prohibits regulated firms from favoring the distribution of shares of particular mutual funds on the basis of brokerage commissions to be paid by the fund companies. 

NASD also charged Edward Jones with holding an unlawful sales contest in the fall of 2002.  Winning brokers could choose a trip from among a list of 35 “world class” vacation destinations, such as Singapore, St. Martin, Davos, Biarritz and Tortola.  These sales contests, which were held every six months, rewarded the winners with airfare, five-star accommodations, and treats attendees to activities such as skiing, golfing, fine dining and tours.  During October 2002, Edward Jones changed the contest rules and only credited sales of funds that were on the Preferred Funds list.  This violates NASD rules that prohibit product-specific sales contests that credit the sale of certain, but not all, fund sales.  Indeed, some brokers complained that “doing the right thing for the client” (by recommending non-preferred funds and variable annuities) penalized their chance to earn a sales contest trip.

NASD also found that the firm failed to retain emails, failed to supervise the late trading of mutual funds, and failed to supervise the activities relating to the Preferred Funds and revenue sharing, directed brokerage, and sales contests.
New York Stock Exchange Regulation found that Edward D. Jones & Co.’s conduct was inconsistent with just and equitable principles of trade and failed to adhere to good business practices in violation of NYSE Rules 476 and 401.  In violation of Rule 342, the firm failed to supervise its business with respect to revenue sharing agreements, late trading of mutual funds and email retention.

In addition to the $75 million payment, Edward Jones has agreed to be censured and to cease and desist from committing or causing violations of Section 17(a)(2) of the Securities Act of 1933, Section 15B(c)(1) of the Securities Exchange Act of 1934 and Rule 10b-10 promulgated thereunder and Municipal Securities Rulemaking Board Rule G-15.  The Commission’s Order further requires Edward Jones to comply with certain undertakings, including hiring an independent consultant to review and make recommendations about the adequacy of Edward Jones’ disclosures.  Edward Jones has consented to the issuance of the Commission’s Order, without admitting or denying the findings contained therein.

Robert Van Zandt and Van Zandt Ponzi Scheme Loss Recovery - FINRA Arbitration for Investors

Investors who have suffered losses investing with Robert Van Zandt, Kimmarie Van Zandt, and Van Zandt Agency may be able to recover their losses through FINRA arbitration. 

According to the New York Attorney General, Robert Van Zandt was allegedly running a Ponzi scheme through the Van Zandt Agency that defrauded more than 100 investors. Through the Van Zandt Agency, Robert H. Van Zandt is believed to have sold unregistered promissory notes that appeared to be a secured real estate investment.  Van Zandt allegedly lured investors into the Ponzi scheme by guaranteeing returns of up to 12% on these promissory notes.  Through a series of shell corporations such as Burke and Grace Avenue Corporation, Van Zandt allegedly operating this Ponzi scheme targeting residents of Bronx, New York.  Robert H. Van Sandt is believed to have targeted the investors who had their tax returns prepared at the Van Sandt Agency.

On September 6, 2011, while under investigation by the New York Attorney General’s office since April, along with his father Robert Henry Van Zandt and wife Kimmarie Gervasi Van Zandt, Robert Van Sandt was found dead in his home as a result of a gunshot wound to the head.

The New York Attorney General believes that the Ponzi scheme began when the real estate market collapsed around 2008, which left Robert Van Zandt unable to pay investors the returns they had promised.  As a result, Robert Van Zandt decided to raise money from investors, using the funds of the new investors to repay the old investors.  However, during the course of running the Ponzi scheme the Attorney General believes that the Robert Van Zandt may have misappropriated investors funds to pay personal expenses and gambling debts, including trips to Las Vegas.

Investors are believed to have lost most, if not all of their money in the Van Zandt Ponzi scheme.  However, such investors may be able to recover their losses through securities arbitration. 

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by securities fraud, unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

If you are an investor that has suffered losses investing with Robert Van Zandt, Kimmarie Gervasi Van Zandt, or with the Van Zandt agency, please contact one of our attorneys at 312-332-0000 for a FREE, NO OBLIGATION to discuss your recovery options.

UPDATE: SEC Files Civil Injunctive Action Against Arthur Lin, Marcin Malarz, and Jacek Sienkiewicz for Selling Unregisered Securities; Eccleston Law Continues Investigation of $6.3 Million Scheme in Illinois

Following the filing of an SEC civil action for injunctive relief, Eccleston Law is continuing its investigation of Marcin Malarz, Arthur Lin, and Jacek Sienkiewicz and their companies Malarz Equity Investments, LLC and Malarz Equity Investment, Inc. and Invision Investment, LLC in connection with an alleged $6.3 million Ponzi scheme that was conducted starting in 2008.

Investors who have suffered losses are encouraged to contact our attorneys to discuss their recovery options.

Malarz and Lin (who was at the time a registered representative at LPL Financial Corporation), allegedly solicited investors to invest in Malarz Equity Investments, LLC and Malarz Equity Investment, Inc., which were purportedly in the business of converting apartments to condominiums, and then selling condominium units to purchasers.   Malarz and Lin represented to investors that the proceeds of the offering were to fund their business.

Malarz and Lin sold promissory notes to investors promised to pay returns of between 12-15%.  Malarz personally guaranteed the principal and interest payments to investors.  Malarz and Lin also represented to investors that the offering was also to be capped at $3,000,000, that there was no pending litigation against the company, and that Malarz was to receive no compensation for his services. 

Contrary to these representations, Malarz and Lin failed to disclose that Malarz was in fact named as a defendant in multiple civil cases at the time the notes were sold.  Malarz and Lin also exceeded the $3,000,000, selling collectively $6.3 million in notes to investors. 

And to do the detriment on the investors, Malarz converted some the money raised in the offering for his own personal use.  For example, Malarz used funds to pay for a trip to Poland, a Las Vegas excursion where he spent $3,221.84 at Caesar’s Palace and $1,332.67 for an evening out at “Pure” nightclub.  Malarz also spent over $2,700 per month to pay for his personal BMW and made payments to Aurthur’s wife in excess of $381,000.

Malarz and Lin did not disclose that the funds would be used to pay back previous investors promissory notes.  At least one investor never received any principal or interest payments, even though Malarz personally guaranteed that payments would be made.  

As for Malarz and Sienkiewicz, the pair allegedly solicited investors to invest in Invision, LLC, which was also which were purportedly in the business of converting apartments to condominiums, and then selling condominium units to purchasers. 

The promissory notes sold by Malarz and Sienkiewicz promised to pay returns of 50% on principal, with Malarz and Sienkiewicz personally guaranteeing the principal and interest payments to investors.  Malarz and Sienkiewicz also represented to investors that there was no pending litigation against the company.

These representations were false.   Malarz and Sienkiewicz failed to disclose to investors that Malarz was named as a defendant in multiple civil cases at the time the notes were sold. 

Malarz and Sienkiewicz did not disclose that the funds would be used to pay back previous investors promissory notes.  At least one investor never received any principal or interest payments, even though Malarz and Sienkiewicz personally guaranteed that payments would be made.  

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by securities fraud, unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

If you are an investor that has suffered substantial losses investing in with any of the , your losses may be recoverable through securities arbitration.  Please contact Jim Eccleston at the Eccleston Law Offices at 312-332-0000 to discuss your recovery options.  

Eccleston Law Investigates Robert Van Zandt and the Van Zandt Agency Following Ponzi Scheme Allegations

The attorneys at Eccleston Law have launched an investigation of Robert Van Zandt, Kimmarie Van Zandt, and Van Zandt Agency following recent allegations that the Robert H. Van Zandt, through the Blondell Avenue-based Van Zandt Agency, was running a Ponzi scheme that defrauded more than 100 investors.

Through the Van Zandt Agency, Robert H. Van Zandt is believed to have sold unregistered promissory notes that appeared to be a secured real estate investment.  Van Zandt allegedly lured investors into the Ponzi scheme by guaranteeing returns of up to 12% on these promissory notes.  Through a series of shell corporations such as Burke and Grace Avenue Corporation, Van Zandt allegedly operating this Ponzi scheme targeting residents of Bronx, New York.  Robert H. Van Sandt is believed to have targeted the investors who had their tax returns prepared at the Van Sandt Agency.

Investors are believed to have lost most, if not all of their money in the Van Zandt Ponzi scheme.  However, such investors may be able to recover their losses through securities arbitration. 

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by securities fraud, unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

If you are an investor that has suffered losses investing with Robert Van Zandt, Kimmarie Gervasi Van Zandt, or with the Van Zandt agency, please contact one of our attorneys at 312-332-0000 for a FREE, NO OBLIGATION to discuss your recovery options.

Robert Van Zandt and Van Zandt Agency Investor Recovery Options

The attorneys at Eccleston Law have launched an investigation of Robert Van Zandt, Kimmarie Van Zandt, and Van Zandt Agency following recent allegations that the Robert H. Van Zandt, through the Blondell Avenue-based Van Zandt Agency, was running a Ponzi scheme that defrauded more than 100 investors.

Through the Van Zandt Agency, Robert H. Van Zandt is believed to have sold unregistered promissory notes that appeared to be a secured real estate investment.  Van Zandt allegedly lured investors into the Ponzi scheme by guaranteeing returns of up to 12% on these promissory notes.  Through a series of shell corporations such as Burke and Grace Avenue Corporation, Van Zandt allegedly operating this Ponzi scheme targeting residents of Bronx, New York.  Robert H. Van Sandt is believed to have targeted the investors who had their tax returns prepared at the Van Sandt Agency.

On September 6, 2011, while under investigation by the New York Attorney General’s office since April, along with his father Robert Henry Van Zandt and wife Kimmarie Gervasi Van Zandt, Robert Van Sandt was found dead in his home as a result of a gunshot wound to the head.

The New York Attorney General believes that the Ponzi scheme began when the real estate market collapsed around 2008, which left Robert Van Zandt unable to pay investors the returns they had promised.  As a result, Robert Van Zandt decided to raise money from investors, using the funds of the new investors to repay the old investors.  However, during the course of running the Ponzi scheme the Attorney General believes that the Robert Van Zandt may have misappropriated investors funds to pay personal expenses and gambling debts, including trips to Las Vegas.

Investors are believed to have lost most, if not all of their money in the Van Zandt Ponzi scheme.  However, such investors may be able to recover their losses through securities arbitration. 

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by securities fraud, unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

If you are an investor that has suffered losses investing with Robert Van Zandt, Kimmarie Gervasi Van Zandt, or with the Van Zandt agency, please contact one of our attorneys at 312-332-0000 for a FREE, NO OBLIGATION to discuss your recovery options.

FINRA Sanctions Eight Firms and 10 Individuals Over Private Placement Losses

FINRA recently announced that it sanctioned eight firms and ten individuals, and ordered $3.2 million in restitution to investors for selling interests in private placement securities offering without conducting a “reasonable basis” suitability analysis for such recommendations.  The firms and individuals involved sold, among other products, interests in DBSI, Provident Royalties, and Medical Capital Holdings, all of which collapsed causing almost a complete loss for investors.

According to the FINRA press release, the following firms and individuals sanctioned by the regulator include:

• NEXT Financial Group, Inc. of Houston, TX, was ordered to pay $2 million in restitution to affected customers and fined $50,000; Steven Lynn Nelson, the firm's Vice President for Investment Products and Services, was suspended in any principal capacity for six months and fined $10,000 in connection with the sale of three Provident Royalties private placements.
• Investors Capital Corporation of Lynnfield, MA, was ordered to pay roughly $400,000 in restitution to affected customers in connection with the sale of two Provident Royalties private placements and was also sanctioned in connection with an additional offering issued by CIP Leveraged Fund Advisors.
• Garden State Securities, Inc. of Red Bank, NJ, and Kevin John DeRosa, a co-owner of the firm, were ordered to pay $300,000 in restitution on a joint-and-several basis to affected customers in connection with the sale of a Medical Capital private placement. DeRosa was also suspended for 20 business days in any capacity and for an additional two months in any principal capacity, and fined $25,000. Vincent Michael Bruno, the firm's Chief Compliance Officer at the time, was suspended for one month in a principal capacity and fined $10,000.
• Capital Financial Services of Minot, ND, was ordered to pay $200,000 in restitution to affected customers, and Brian W. Boppre, a former principal, was suspended in any principal capacity for six months and fined $10,000 in connection with the sale of three Provident Royalties private placements and a Medical Capital private placement.
• National Securities Corporation of Seattle, WA, was ordered to pay $175,000 in restitution to affected customers, and Matthew G. Portes, Director of Alternative Investments/Director of Syndications, was suspended in any principal capacity for six months and fined $10,000 in connection with the sale of three Provident Royalties private placements and a Medical Capital private placement.
• Equity Services, Inc. of Montpelier, VT, was censured, fined $50,000 and ordered to pay nearly $164,000 in restitution in connection with the sale of a private placement DBSI, Inc. issued; Stephen Anthony Englese, Senior Vice President for Securities Operations, was suspended from association with any FINRA-regulated firm in any capacity for 30 business days and fined $10,000; and Anthony Paul Campagna, a registered representative, was suspended from association with any FINRA-regulated firm in any capacity for 30 business days and fined $25,000.
• Securities America, Inc. of La Vista, NE, was censured and fined $250,000 in connection with the sale of two Provident Royalties private placements.
• Newbridge Securities Corporation of Fort Lauderdale, FL, was fined $25,000; Robin Fran Bush, the former Chief Compliance Officer of Newbridge, was suspended in any principal capacity for six months and fined $15,000 in connection with the sale of four DBSI private placements and a Medical Capital private placement.
• Leroy H. Paris II, former President and Chief Executive Officer for the now-defunct Meadowbrook Securities, LLC (fka Investlinc Securities, LLC), of Jackson, MS, was suspended for six months in any principal capacity and fined $10,000 in connection with the sale of two Provident Royalties private placements and a Medical Capital private placement.
• Michael D. Shaw, formerly associated with VSR Financial Services, Inc. of Baton Rouge, LA, was barred from the industry in connection with the sale of a private placement offered by DBSI, Inc. and several additional private placements offered by other issuers. In addition, Shaw falsified customer account documents.

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by securities fraud, unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

If you are an investor that has suffered losses investing in DBSI, Medical Capital Holdings, or Provident Shale Royalties , please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

 

Solaris Opportunity Fund Loss Recovery Options

The attorneys at Eccleston Law have launched an investigation of the Solaris Opportunity Fund, its investmetn advsior Solaris Management, LLC, and Patrick G. Rooney for the alleged misuse of the Solaris Fund's assets and other illegal conduct alleged in an SEC civil injunction action.

On November 22, 2011, the SEC filed a complaint alleging that the Solaris Fund, which is purported to be a non-diretional hedge fund with approximately 30 investors, made a radical change in direction in the fund's investment strategy by becoming wholly invested in Positron Corporation, a troubled microcap company which Patrick Rooney has been Chairman of since 2004.  According to the SEC, Patrick Rooney allegedly misued the Solaris Fund investor moeny by investing over $3.6 million in Positron.  The SEC further alleged that the investmetns benefited Positron and Patrick Rooney, while providing the Solaris Fund with a concentrated, undiversified, and illiquid position in a cash-poor company with a lengthy track record of losses.  

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by securities fraud, unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

If you are an investor that has suffered losses investing with Solaris Opportunity Fund, Solaris Management, or Patrick G. Rooney, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

 

Praetorian Global Fund Loss Recovery Attorneys

The attorneys at Eccleston Law are actively seeking to represent investors who have suffered losses in the pre-IPO fraud allegedly involving the Praetorian Global Fund and Florida resident John A. Mattera. 

The SEC recently filed a lawsuit alleging that various individuals and entities carried out the scam using a newly-minted hedge fund named The Praetorian Global Fund. They are believed to have falsely claimed that the fund and affiliated Praetorian entities owned shares worth tens of millions of dollars in privately-held companies that were expected to soon hold an initial public offering (IPO) including Facebook, Groupon, and others.Taking advantage of investor interest in pre-IPO shares that are virtually impossible for company outsiders to obtain, John A. Mattera and others allegedly solicited funds and gave investors a false sense of comfort that their money was protected by telling them that an escrow service was receiving their funds.

In reality, according to the SEC’s complaint, John A. Mattera and his cohorts never owned the promised pre-IPO shares in these companies. The SEC sought an emergency court order to freeze the assets of John A. Mattera, John R. Arnold, Joseph Almazon of Hicksville, N.Y., David E. Howard II of New York City, Bradford Van Siclen of Montclair, N.J., and eight different entities. The SEC’s complaints charge Mattera, Van Siclen, the Praetorian Fund, Praetorian G Power I LLC, Praetorian G Power II LLC, Praetorian G IV, Praetorian G Power V LLC, and Praetorian G Power VI LLC, Arnold, Spartan Capital Partners and First American Service Transmittals Inc. with various violations of Federal securities laws.

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by securities fraud, unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

If you are an investor that has suffered losses investing with John A. Mattera, The Praetorian Global Fund, John R. Arnold, Joseph Almazon, David E. Howard II,  Bradford Van Siclen, the Praetorian Fund, Praetorian G Power I LLC, Praetorian G Power II LLC, Praetorian G IV, Praetorian G Power V LLC, and Praetorian G Power VI LLC, Spartan Capital Partners or First American Service Transmittals, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

Solomon Keegan Group/WTS Proprietary Trading Group Loss Recovery Attorneys

The attorneys at Eccleston law have launched an investigation of the Los Angeles-based Solomon Keegan Group and WTS Proprietary Trading Group following reports of investor trading losses.

According to its website, the Solomon Keegan Group "operates a premier equity trading firm consulting clients on profitable methods to trade their personal investment capital. The firm offers opportunities for select clients to trade capital in addition to their own capital to generate greater returns.  Our proven system and methodology was developed over more than10 years by licensed  professional traders."

 

The WTS Proprietary Trading Group's website states that "traders trade the firm's capital on several stock markets. We train new recruits our proprietary intraday trading methodology, with no financial risk. Our leading edge, direct access electronic trading platform provides traders with live market data, volume price discounts, rapid order execution, and software stability, giving our traders the necessary advantages to succeed."

 

Upon information and belief, both traders and investors may have suffered losses investing and/or trading with either the Solomon Keegan Group and/or the WTS Proprietary Trading Group.  If you are a trader or investor who has suffered such losses, your losses may be recoverable through securities arbitration or litigation.

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by securities fraud, unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

If you are an investor that has suffered losses investing with Solomon Keegan Group or WTS Proprietary Trading Group, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

 

Eccleston Law Investigates Eric T. Burns Following Emergency Suspension by Kansas Securities Commissioner

The attorneys at Eccleston Law have launched an investigation of former Morgan Stanley Smith Barney and Dimensions Financial Group representative Eric T. Burns following his failure to provide information about allegations of misappropriation of client funds by Eric Burns while he 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. 

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by securities fraud, unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

If you are an investor that has suffered losses investing with Eric T. Burns while he was employed with Dimensions Financial Group or Morgan Stanley Smith Barney, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

MF Global Investor Loss Recovery Options

The attorneys at Eccleston Law have expanded their investigation of MF Global following allegations that there may be as much as $700 million in customer funds missing from MF Global accounts.  This revelation was uncovered after a deal with Interactive Brokers collapsed.  Interactive Brokers later disclosed to the SEC and the CFTC that the funds were missing.  Investors or traders may be able to recover their losses through securities arbitration or litigation.

Leading up to MF Global's collapse and Chapter 11 bankruptcy filing, MF Global was searching for an acquiring firm following multiple downgrades by various credit rating agencies.  These downgrades caused the share price to plummet more than 80%, which caused the NYSE to suspend trading and move to delist the company.  MF Global Holdings, Ltd. and its finance subsidiary, MF Global FInance USA, Inc., also filed for Chapter 11 Bankruptcy. The FBI is also expected to investigate whether MF Global's activities were violated criminal laws.

According to its website, "MF Global is a leading broker-dealer with a deep involvement in financial markets around the world. We work closely with clients to create customized trading and hedging solutions in the world’s markets for commodities, listed futures and options, equities, fixed income securities and foreign exchange.MF Global is a member of more than 70 financial exchanges around the world, and we are a leader by trading volume on a number of these exchanges."

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by securities fraud, unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

If you are an investor that has suffered losses investing with MF Global, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

Eccleston Law Investigates Charles Copeland and Copeland Wealth Management Following SEC Fraud Charges

The Securities and Exchange Commission recently filed a complaint in United States District Court in Riverside, California against Copeland Wealth Management, Copeland Realty,  and Charles P. Copeland for fraud and breach of fiduciary duty. The SEC alleged that as an investment adviser registered with the SEC, Copeland Wealth Management managed approximately $125 million in assets under management. The assets under management are primarily mutual funds and real estate funds. Copeland Realty, an unregistered investment adviser, allegedly acted as the general partner for 21 limited partnerships primarily invested in real estate. Charles Copeland, who is a certified public accountant, is the founder, co-owner and officer of both Copeland Wealth Management and Copeland Realty.

The SEC alleged that from 2003 through May 31, 2011, Charles Copeland, Copeland Wealth Management, and Copeland Realty raised over $62 million from over 100 investors, including many of Charles Copeland’s accounting clients, by selling interests in limited partnerships operated by Copeland Wealth Management and Copeland Realty. According to the SEC’s complaint, throughout the offer and sale of the limited partnerships, Charles Copeland, Copeland Wealth Management, and Copeland Realty made material misrepresentations and omissions regarding: (1) the use of investor funds, (2) conflicts of interest, (3) guaranteed returns, (4) the unauthorized trading of put options, and (5) the payment of undisclosed real estate commissions and other related compensation.

As of May 31, 2011, Copeland Wealth Management had approximately $144 million in assets under management comprised of $123 million invested primarily in mutual funds and $21 million invested primarily in real estate and real estate related loans through partnerships managed by Copeland Realty. Copeland Wealth Management is believed to have approximately 770 advisory accounts. Copeland Realty is believed to have acted as the general partner for 21 partnerships with 191 limited partners that have invested in real estate and real estate related loans. 

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by securities fraud, unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

If you are an investor that has suffered losses investing with Copeland Wealth Management, Copeland Copeland Realty, and/or Charles Copeland, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

Eccleston Law Actively Seeks Investors Suffering Losses with Steven Dolott of Delott & Associates

The attorneys at Eccleston Law are actively seeking investors who suffered losses investing with Long Grove, Illinois financial advisor Steven Delott of Delott & Associates, Inc.  According to the Illinois Securities Department, Steven Howard Delott was a registered representative of NFP Securities, which he disclosed Delott & Associates as an outside business activity.

According to the Illinois Securities Department, FINRA was investigated Steven Delott's Workshops and Annuity Training Classes that he conducted while a representative with NFP Securities, which resulted in a FINRA enforcement action against Delott for allegedly violating FINRA rules.  On February 17, 2010, Steve Delott entered into an AWC with FINRA which details the numerous alleged violations of NASD rules. 

Specifically, the AWC describes Delott as conducting seminars directed at senior citizens that focused almost exclusively on inducing seniors to purchase high commission equity indexed annuities ("EIAs"), as well as sales of single premium life insurance policies.  Delott also allegedly promoted reverse mortgage strategies to obtain more money from seniors to place in the annuities.  Steven Delott is also believed to have conducted annuity training classes to instruct attendees in the use of high-pressure and allegedly improepr sales techniques.  The marketing materials used during these seminars was not approved by NFP securites. 

Steven Delott was subsequently prohibited from associating with any FINRA member firm and assessed a deferred fine of $35,000.  On August 10, 2011, Steven Delott was also prohibited from offering or selling any securities in the State of Illinois.

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by securities fraud, unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

If you are an investor that has suffered losses investing with Steven Delott or Delott & Associates , please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

 

Former FBI Agent John Robert Graves Indicted on Fraud Charges for Allegedly Defrauding Virginia Investors

A 10 count federal indictment was issued against former FBI agent John Robert Graves and Sara Turberville Graves of Fredericksburg, Virginia for allegedly defrauding at least 11 Virginia residents out of $1.3 million.

Authorities say that John Graves, who was an investmetn adviser and financial planner, founded his firm Brook Point Management to focus on selling insurance products, estate planning services, as well as investment advisory services. 

The indictment alleges that starting in June 2008 through July 2011, John Graves and Sara Graves devised a plan to raise money from investors to (among other things) fund a startup company, purchase shares in Brook Point Management, and fund a real estate investment.  In reality, the money was allegedly used to pay back earlier investors and for personal expenses such as credit card bills.  At least 11 investors were defrauded out of $1.3 million.

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by securities fraud, unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

If you are an investor that has suffered losses investing with John Graves, Sara Graves, or Brook Point Management, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

 

 

Eccleston Law Investigates Former LPL Financial Representative Jeffery Ogle Following FINRA Arbitration Claim

The attorneys at Eccleston Law have launched an investigation of former LPL Financial representative Jeffery Dean Ogle following FINRA reports that Littleton, Colorado-based Jeffery Ogle was terminated from LPL Financial for allegedly violating firm policies regarding customer loans and check writing authority.

In addition, according to FINRA records, Jeffery Ogle is already facing at least one securities arbitration claim alleging that, among other things, he sold unsuitable investments in Masterbuilt Estate Homes, Inc., a real estate development company which is purportedly owned by Jeffery Ogle's father.

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by securities fraud, unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

If you are an investor that has suffered losses investing with Jeffery Dean Ogle or in Masterbuilt Estate Homes, Inc., please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

 

Former A.G. Edwards / Wachovia / Wells Fargo Adviser Sanctioned For Misleading Sales of Fannie Mae and Freddie Mac Securities

Tom D. Hamsher agreed to be barred from the industry in a recent Acceptance, Waiver and Consent (“AWC”) with FINRA. Hamsher first became registered as a General Securities Representative in July 1987. During the relevant time of June 1994 until his resignation in March 2009, Hamsher was a producing manager for A.G. Edwards & Sons, Inc. and its successor firms, Wachovia Securities, LLC and Wells Fargo Advisors, LLC. (collectively, the “Firm”) at a small branch office in Chillicothe, OH. Hamsher had no prior regulatory history.

The AWC alleged that from at least January 2006 to August 2008, Hamsher made misrepresentations and omitted to state material facts in conversations and correspondence with dozens of customers who purchased on his recommendation the preferred securities of financial institutions, including the Federal National Mortgage Association a/k/a “Fannie Mae” (“FNMA”) and the Federal Home Loan Mortgage corporation a/k/a “Freddie Mac” (“FMCC”).  Following Hamsher’s March 2009 resignation, his Firm subsequently settled about $8.9 million in customer claims.

Pointedly, the AWC alleged that Hamsher misrepresented that preferred securities issued by FNMA and FMCC were bonds, thus fostering the false impression among customers that these investments were less risky than stocks. Hamsher further misstated that a preferred security’s call date was the date customers would get their initial investment back at par value.  Similarly, Hamsher’s misrepresented that the securities were backed by the federal government, which misled investors into believing that their principal was guaranteed against loss.

The AWC alleged that Hamsher failed to adequately explain the characteristics of and the risks associated with the preferred securities of financial institutions. For example, he failed to disclose that any decision on the part of FNMA to redeem its preferred stock on the call date was optional and not a certainty.  Further, Hamsher failed to disclose that on or about:

• July 11, 2008, his Firm had removed FNMA and FMCC preferred stock from its recommended Fixed Income Priority List because of extreme price volatility;
• July 16, 2008, the Firm changed its ratings for financial companies’ preferred securities to unsuitable for new investment for conservative income investors; and
• July 17,2008, the Firm recommended that investors who could not tolerate extreme price volatility consider reducing their exposure to the preferred stocks of FNMA and FMCC when market opportunities arose.

The AWC alleged that Hamsher had misrepresented and omitted to state material facts to numerous customers in connection with the purchase or sale of securities, in violation of NASD Conduct Rules 2120 and 2110, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder.  Accordingly, FINRA imposed upon Hamsher a permanent Bar from association with any member firm in all capacities.

FINRA Issues Investor Alert About the Dangers of Non-Traded REITs

FINRA recently issued an investor alert aimed at highlighting the dangers of non-traded REITs and the potential pitfalls of such investments, such as the illiquidity and high fee structures. 

This second investor alert by FINRA is a sign that the securities regulator has intensified its scrutiny of these products.  Non-traded REITs are typically sold through independent broker-dealers, due to their high commission structures.  Financial advisors may be tempted to recommend these products in unsuitably high concentrations.

FINRA also recently issued a new rule proposal that would change how the value of non-traded REITs was reflected on account statements.  Previously, many broker-dealers showed an "estimated par value", which was typically what the investor purchased the securities for. However, using an "estimated par value" created the illusion of stability, which was often misleading when the book value of the underlying REIT investment declined.

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by securities fraud, unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

If you are an investor that has suffered losses investing in a non-traded REIT, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

 

SEC and FINRA Alert Investors to Risks and Unsuitability of Structured Securities Products

Securities regulators SEC (the Securities and Exchange Commission) and FINRA (the Financial Industry Regulatory Authority) have issued warnings to investors and to financial services firms that sales of structured securities products have hurt investors. Taken together, the SEC and FINRA publications raise significant sales practice and risk disclosure issues. Let's examine the key findings of each publication.

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Eccleston Law Investigates Gibraltar Partners and Rahfco Funds Following Allegations that Former Edward Jones Brokers Were “Selling Away” Into These Investments

The attorneys at Eccleston Law have launched an investigation following the FBI investigation of two former Edward Jones brokers in South Dakota accused of raising money from clients who invested in what appears to be a Ponzi scheme.  Investors with more information are encouraged to contact our attorneys.

According to Edward Jones, a client brought the firm’s attention to Gibraltar Partners, Inc., which the firm later learned was in the middle of an FBI investigation.  Although Edward Jones fired the brokers involved, some of the firm’s clients invested money in this Ponzi scheme. 

In June, a group of investors sued Gibraltar Partners in Federal Court in New York, alleging that Gibraltar Partners, he Rahfco Funds LP, and other defendants were involved in running an alleged Ponzi scheme. Investors are believed to be seeking $100 million in damages in that suit.

Other defendants in the investor lawsuit include the following: Rahfco Funds LP, Rahfco Select, Rahfco Management Group, Rahfco Investment Funds LP, Gibraltar Partners dba Gibraltar Partners Inc., Gibraltar Funds dba Gibraltar Funds Inc., Anthony Johnson, Robert Johnson, Christine Johnson, individually and dba Arc Ventures, Allison Johnson, Robert Johnson Sr., Annette Johnson, Randal K. Hansen aka Randy K. Hansen, Glenn Griffin, Vincent Puma, Kevin Nugent, Ward Onsa, Hudson Partners NYC, Spicer Jeffries LLP, SFG Accounting PLLC, Man Financial Inc., Permapave USA Corp., Verigreen, Steller Corporation Services, Capstone Investment Funds LLP, Meidinger & Associates CPA'S Prof LLC, Susan Meidinger, CPA, and Entrust Group dba Entrust Retirement Services.

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by securities fraud, unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

If you are an investor that has suffered losses investing in Gibraltar Partners, Rahfco Funds, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

FINRA Disciplinary Action Against David Lerner Associates Prompts Other Firms to Offer Less Risky and Misleading REITs

Financial services firms have taken notice of FINRA’s action related to Apple REITs, which charged that there have been misleading and  “outsized distributions of 7% to 8% by leveraging the REITs through borrowing and returning capital to investors.”  According to Investment News, several firms have taken steps to eliminate riskier REIT offerings.  In particular, the firms now are focusing on the REITs’ expenses and how the REITs pay for their dividend, or “distribution”.

Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by securities fraud, unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

If you are an investor that has suffered losses investing in a non-traded REIT, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.