New REIT Rule Adds a Much-Needed Layer of Investor Protection

SEC Approves FINRA-Recommended Rule Change to REIT Reporting

The Securities and Exchange Commission (SEC) finally approved a rule change that would give investors far more clarity on the purchasing price of non-traded real estate investment trusts, or REITs. (If you don’t know what a REITs is, click here). This rule change, recommended by securities industry watchdog, the Financial Industry Regulatory Authority (FINRA), has been a long time coming. But now that it’s here, investors should welcome it with open arms.

The REITs Rule Change Adds a Much-Needed Layer of Investor Protection

Until now, it has been common practice among broker-dealers to list non-traded REITs at a per-share price of $10, regardless of what the actual valuation of the shares may be. The new rule however will force broker-dealers to include a per-share estimated value of the shares of any unlisted direct participation program (DPP) or REIT, along with other relevant disclosures, instead of the generic $10 per-share placeholder.

Digging a little deeper, we find that FINRA has proposed two methodologies by which firms may calculate the new per-share estimates: net investment or appraised value. The way these methodologies work would make the average investor’s headspin. But that’s granular information that shouldn’t really concern retail investors interested in REITs anyway. Rather, the key takeaway here is that the rule change offers greater protection to investors who were not historically receiving accurate representations of the value of their investments in REITs.

Broker-Dealers Now Required to Disclose Nature and Risks of REITs

As previously mentioned, the new rule explicitly requires that more information about DPPs and REITs be disclosed to investors, including a provision for specific disclosures stating that DPPs and non-traded REITs are not listed on national securities exchanges, and are generally illiquid investments whose sale value may be less (often far less) than the value of the shares reported on customer statements.

It is worth remarking here that our firm has represented numerous clients whose financial advisors have irresponsibly steered them into REITs without adequately disclosing the nature, risks, and valuation problems associated with these somewhat notorious investments.

If you or anyone you know has been the victim of broker misconduct or investment fraud, or has been unsuitably recommended DPPs or REITs by your financial advisor, please contact our securities attorneys for a free consultation by calling us toll-free at 1-855-462-3330 or via email by clicking here.

FINRA May Leverage Big Data to Catch Broker Misconduct

For the past couple months, the Financial Industry Regulatory Authority (FINRA) has been taking a bruising from investor advocates who support greater oversight over brokers and broker-dealers. Recently, FINRA’s climb-down on obligatory disclosure of incentives and bonuses by brokers changing firms, followed by revelations in the New York Times over the agency’s murky process for expunging broker complaints, have ignited a new round of criticism of FINRA’s supposed “bias” toward the financial industry it is mandated to preside over. But this week, FINRA released new guidelines for a computerized tracking system that appear to be a big step in the right direction.

The system, Comprehensive Automated Risk Data System or “CARDS,” is an attempt by the financial industry watchdog to leverage the power of big data and computer analytics in order to more carefully monitor balances and transactions in brokerage accounts. CARDS would give FINRA a sweeping and unprecedented peek into the activities of brokers and broker-dealers, and alert the agency to any suspect trading or misconduct. This proposal can only be good news for customers, since it would add a new layer of oversight to how their accounts are being handled. Customers themselves are the first line of defense against broker misconduct. By reviewing their statements for illicit trading or investment fraud, customers may be able to ferret out problems before they get out of hand. But most retail investors are investment novices who have trouble interpreting their financial statements; and even if they noticed something fishy going on in their accounts, they are often too intimidated to confront their brokers directly. CARDS would ameliorate this situation by adding FINRA’s automated monitoring of customer brokerage accounts to the mix. It would also put brokers in the mindset of being watched, thus hopefully discouraging misconduct before it begins. Meanwhile, the SEC has been developing a massive computerized system, called the consolidated audit trail, to follow all trades in U.S. stock and options markets.

Broker-dealers have long utilized the vast power of technology to trade at incredible volumes and speeds. It’s about time the regulators caught up, and used that power to clean up the markets.

If you or anyone you know has been the victim of investment fraud or broker misconduct, please contact us immediately for a free consultation at 1-855-462-3330 or via email by clicking here.

FINRA Under Fire - Expungement & Climbdown on Broker Bonuses

When the New York Times runs an article about how “murky” and unfair certain aspects of the arbitration process that decides virtually all disputes between retail investors and broker-dealers, you know things have gotten bad. Just the other day, the Times published a highly critical piece exposing how brokers who have been slapped with complaints by aggrieved investors can and often do get these complaints expunged from all public records.

For those of you who don’t know already, the Financial Industry Regulatory Authority (FINRA) watches over the US securities industry, and adjudicates, after a fashion, disputes between investors and brokers through its idiosyncratic arbitration process. Because nearly all retail investors, wittingly or unwittingly, must sign binding arbitration agreements with broker-dealers before those B-Ds will accept them as clients, when things go bad, investors must turn to FINRA for resolution. In other words, as an investor, if you believe your financial placed you in unsuitable investments or otherwise engaged in fraud or misconduct, you cannot take them to court and have your case decided by a Judge or a jury of your peers. Rather, you must first take them to arbitration. The bias obtaining in FINRA’s process has been the subject of much outrage and hand-wringing by plaintiffs attorneys and investor advocacy groups alike--for many years. In the aftermath of the financial crisis of 2008-9, however, the flaws in this “murky” system seem more intolerable than ever. A unique historical opportunity for reform appears to be evaporating as quickly as it materialized.

In the past few weeks, FINRA has been skewered for its climb-down on forcing brokerages to disclose any bonuses or incentives offered to financial advisors for bringing clients with them during a broker-dealer transfer. Instead of making disclosure obligatory, FINRA has decided that investors should bear the burden of discovering any bonuses or incentives. (For more on this subject, click here). Of course, FINRA has promised to provide these investors with an information packet on what questions to raise and so on, but do we really believe that most retail investors will feel comfortable grilling their financial advisor about fees? Hardly. And now, we have the New York Times registering its bewilderment and consternation at the ease with which brokers may be able to make the complaints blighting their professional records just, well, disappear. Interestingly, the piece also zeroes in on the way in which investors themselves--the ones involved in the complaint--are typically sidelined during expungement hearings. We wish we could say that this lack of regard for the investor is restricted to the expungement process only; but sadly, the problem runs much deeper than that. Overall, the picture painted by the Times for ordinary investors hoping for transparency and resolution is bleak. FINRA’s BrokerCheck database, which stores records of all FINRA-registered brokers, including their complaint history and any negative employment events, like getting fired, is a powerful and admirable tool. But FINRA seems poised to diminish its potency by too easily vanishing the information contained within it. If investors are to trust BrokerCheck and put their faith in FINRA, brokers’ records will have to be complete and transparent, and the arbitration process will have to be unquestionably equitable and transparent. Unfortunately, FINRA has a long way to go to get there. Let’s hope all the negative attention forces some much-needed positive change.

If you or anyone you know has been the victim of investment fraud or broker misconduct, please contact us immediately for a free consultation at 1-855-462-3330 or via email by clicking here.

Demystifying Nontransparent, Actively-Managed ETFs

With the SEC seemingly poised to allow investment management firms to offer nontransparent, actively-managed ETFs (Exchange-Traded Funds), retail investors may be asking themselves two questions: what the heck are nontransparent, actively-managed ETFs and how would SEC approval of these fancy-sounding securities possibly affect me?

Question #1. You might have already heard of ETFs, or Exchange-Traded Funds. For the past ten years or so, ETFs have been the “it” security for many money managers, brokers, and sophisticated investors, with US assets growing ten-fold in 2012 alone to around $1.2 trillion, according to research. Basically, an ETF is an investment fund traded on stock exchanges, much like stocks, with the important distinction that ETFs close to their net asset value (NAV) over the course of the trading day. Most ETFs track an index or market benchmark. Fewer of you, especially if you’re a casual retail investor, have probably heard murmurs about non-traditional or leveraged ETFs, which are supercharged ETFs that offer amplified returns for positions taken pro or contra certain benchmarks on a daily basis. With the increased prospect of reward of course comes some high-risks, along with the absolute obligation to close out these investments each day. Now, nontransparent, actively-managed ETFs are related to traditional and non-traditional ETFs in that they are typically composed of these investments; but they are different in that they refer not just to a type of investment or security, but to the way in which those investments are handled by money managers. Actively-managed ETFs are ETFs that are, just like they sound, actively managed by money managers deploying sophisticated trading strategies that, for obvious reasons, they would rather not share with their competitors and the market generally. Here’s where transparency comes in. Until now, as per SEC rules, ETFs have been forced into full-disclosure of their trading activities. Compare that to mutual funds, which are only required to disclose on a quarterly basis. Recently, however, the SEC has been fielding an array of applications by ETF providers and money managers that would exempt them from full-disclosure obligations. They argue that exemption, or some level of secrecy to their holdings, would not only protect their investment strategies, but it would allow tremendous growth in such ETFs, which currently comprise only about 1% of the ETF market. If those lobbying for secrecy get their way, it could usher in the golden age of the nontransparent, actively-managed ETF.

Question #2. SEC approval of nontransparency among actively-managed ETFs could grow their presence in the marketplace such that retail investors may increasingly see these investments showing up in their portfolios. Several of the biggest investment management firms in the land have thrown their considerable weight behind the movement toward greater secrecy in ETFs, and many experts expect the SEC ulimately to give them what they want. There are two potential problems with this. One is that the providers of nontransparent, actively managed ETFs are as likely to bend or break the rules as any other investment entity, and less transparency generally means more bending and breaking. The recent and timely revelation that the largest provider of actively-managed ETFs, F-Squared, will be subject to disciplinary action by the SEC for exaggerating their returns strikes an ominous note for the industry. Two is that as these complex products trickle down into the hands of brokers and into the accounts of retail investors, there’s potential that like any new (and especially, complex) financial product, they may be used inappropriately or unsuitably by brokers who do not fully understand how they work.

So keep a watchful eye out for ETFs in the news and, eventually, in a portfolio near you.

If you or anyone you know has been the victim of investment fraud or broker misconduct, please contact us immediately for a free consultation at 1-855-462-3330 or via email by clicking here.

Caveat Investor: So Your Broker Is Switching Firms...

Say one day your financial advisor calls you up and says, “Hey there! So I’ve got some great news. I’m switching firms and I’d like to take your account with me.” What do you do?

It’s a question that most investors will face at one point or another during their relationship with a financial advisor. Sometimes, more than once. But if you think that just because your broker and your investments stay the same, that everything regarding your investment account as it transfers over to the new firm will stay the same, think again. All too often, investors incur additional and undisclosed costs as a result of transferring with their broker to a new firm. They may also be unwitting lining the broker’s pockets through undisclosed incentives. Switching firms is one of those potentially tricky situations where your interests and the interests of your broker may not be as aligned as they ought to be as part of the fiduciary duty he or she owes to you as a client. And, according to the Financial Industry Regulatory Authority (FINRA), the securities industry watchdog, it’s entirely up to you to navigate that tricky situation. Ok, FINRA is going to help you out a little--but just a little.

According to the latest announcement from FINRA, the agency proposes to force recruiting broker-dealers to supply transferring investors with “FINRA-created communication” designed to help those investors ask the right questions and avoid the most obvious pitfalls. Basically, it’s a buyer-beware policy that puts the onus on clients rather than on brokers and brokerages to ferret out recruiting incentives and hidden costs. Here is the full text of the announcement:

The Board authorized FINRA to publish a Regulatory Notice soliciting comment on a proposal that would require a recruiting firm to provide a FINRA-created educational communication to former retail customers of a transferring representative who are considering transferring assets to that firm. The FINRA-created communication would highlight the potential implications of transferring assets to the new firm and suggest questions the customer may want to ask to make an informed decision. Among other things, the suggested questions relate to the costs the customer may incur, investments that may not be transferrable, and financial incentives the broker is receiving that could influence his or her recommendation to transfer assets or the products or services that might be suggested to the customer at the new firm.

It’s worth mentioning that this announcement marks a sharp revision from the previous proposal by FINRA, which would have required brokers’ new firms to disclose compensation packages of more than $100,000. The new proposals also fails to require firms to disclose incentive packages offered by the jilted firm to brokers who can retain clients left behind by departing brokers.

Based on the new, diluted proposal, for investors whose financial advisors are striking out for greener pastures, it will be your responsibility to arrive at an informed decision. So after your broker calls you up with the “great news,” read your “FINRA-created communication” and ask for an in-person meeting before you agree the news is as great for you as it is for your broker.

If you or anyone you know has been the victim of investment fraud or broker misconduct, please contact us immediately for a free consultation at 215 462 3330 or via email by clicking here.

Investor Family Awarded $2.6 million from Firm Execs

A stunning major award was recently announced in that has investors, financial professionals, and securities lawyers on both the plaintiff and defendant sides gawking. Last week, a Financial Industry Regulatory Authority arbitration panel awarded an Illinois family a whopping $2.3 million against the three top executives of now-defunct Virginia-based brokerage firm, Allied Beacon Partners, Inc. The award is remarkable not only for its size but because the executives themselves are on the hook for the damages. Trust us, this hardly ever happens.

Typically, aggrieved investors seek restitution through the FINRA arbitration process, and if they win (which they do less than 50% of the time), the award is generally ordered to be paid by the brokers who (mis)managed the investor accounts or by the offending firm. It is rare for investors to seek recovery from executives of a firm, and extremely rare for them to win.

In this case, the Bosco family originally brought their case against Allied Beacon Partners as a firm, for steering the family’s investment funds into two companies that were allegedly running Ponzi schemes (Medical Capital, LLC and Shale Royalties). The Boscos won that arbitration last year, with an award of $1.6 million. Unfortunately for them, however, Allied Beacon Partners closed rather than pay. Fast forward several months, and the Boscos brought a new FINRA claim over the Ponzi schemes, this time against the three principals of Allied Beacon Partners personally. In the new claim, they named Robert Mather, former chief executive of Allied Beacon; Roger Leibowitz, firm treasurer, and Richard Landi, head of operations. Incidentally, these three individuals continue to work in financial investment world.

Evidently, the FINRA arbitration panel reviewing the claim found the execs’ misconduct so egregious that they rendered a decision against them, for an even greater amount in damages and interest: $2.3 million. Attorneys for the three executives were stunned. And, quite frankly, we’re stunned as well. But as plaintiff attorneys we’re stunned in positive way. The panel’s award, as unusual as it is, sends a strong message to brokerage firm principals that they can’t just skip out on injured investors because they pack up their firm and move on. It’s a happy day indeed for the Bosco family, and encouraging news all around for investors.

If you or anyone you know has been the victim of investment fraud or broker misconduct, please contact us immediately for a free consultation at 215 462 3330 or via email by clicking here.

Bankers Become Brokers, Inviting Supervision Concerns

A recent article on WealthManagement.com caught our attention because of the fascinating--and potentially worrying--trend that appears to be sweeping the financial industry. It’s also a trend that’s worth knowing about if you’re looking for a financial advisor or are considering one who works for a bank. That’s right, a bank. As the article points out:

“Banks are expected to increase their wealth management assets overall to $7.5 trillion by 2018 from $5.8 trillion through their bank-affiliated brokerages and other operations.”

Traditionally, banks and brokerages have worked opposites of the financial street. But according to figures from a Boston-based research firm, that is rapidly changing. Banks that downsized after the Financial Crisis of 2008-9 have apparently been swelling their ranks over the past few years by adding brokers instead of bankers to empty desks and branches across the country.

The worrying part of this trend involves supervision--or in industry parlance, “reasonable supervision.” Since brokerages have long been scrutinized and regulated by the SEC and its watchdog wing, the Financial Industry Regulatory Agency (FINRA), they have for the most part internalized the supervisory mentality. Typically, these brokerages employ in-house compliance officers who carefully review and sometimes audit brokers to ensure they comply with federal securities laws. Banks, on the other hand, are relatively new to the brokerage game. Industry cognoscenti and regulators are concerned that banks who aggressively solicit clients for wealth management may not be as savvy or rigorous in their implementation of supervision. Indeed, according to FINRA, there has been a recent spate of disciplinary actions taken against brokers working for banks, specifically at JP Morgan Chase and Citigroup.

What does this mean for investors? Supervision is a vital part of the checks-and-balances of the brokerage system in which investor operate and, hopefully, increase their wealth. Internal compliance officers not only impose company policy and procedure, just as importantly they also protect customers against negligent or rogue brokers. Supervision is far from perfect among traditional brokerages. But whether banks can prove they will supervise their new brokerage arms with at least the same consistency as their competitors remains to be seen.

If you or anyone you know has been the victim of broker misconduct, please contact us immediately at 215 462 3330 or via email at info@greenlegalteam.com

FINRA's Disciplinary Actions Report: August 2014

Each month and again on a quarterly basis, the agency that regulates the financial industry, FINRA (Financial Industry Regulatory Authority), produces a detailed report that runs down all disciplinary actions recently taken against brokerage firms and brokers. This long list of alleged wrongdoing and misconduct reads a lot like a police blotter. We strongly encourage any investor who suspects their broker and/or broker-dealer of having lost them money on dubious terms to at least skim this report to see if you recognize any names, schemes, products, or securities.

For our part, in addition to circulating the entire report to help get the word out about these alleged misdeeds, we like to pick out some of the highlights from each report. Specifically, we’re looking for schemes or abuses that might be more far-reaching than the individual cases brought through the FINRA arbitration process. In other words, we name names here because we hope to raise awareness out there about certain brokers and products that might otherwise go unnoticed except for the case appearing in the report.

HFP Capital Markets LLC (New York, New York) submitted a Letter of Acceptance, Waiver and Consent in which the firm was expelled from FINRA® membership and ordered to pay $2,980,000, plus interest, in restitution to customers. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it caused the fraudulent sale of approximately $3 million worth of senior secured zero-coupon notes. The findings stated that the HFP Capital Markets, LLC sold the private offering of the notes to firm customers. In offering and selling the notes, the firm knowingly misrepresented and omitted to disclose material facts about the offering. While a few customers received money back after lodging complaints with the firm through so-called replacement transactions, the remaining customers lost their entire investment of $2.98 million; and to date, they have not been repaid. The firm failed to conduct adequate due diligence on the offering or individuals involved, and failed to conduct any due diligence on third parties that were put forward as critical strategic partners for the business.

Wunderlich Securities, Inc. (Memphis, Tennessee) and Stephen Joseph Bonnema (Collierville, Tennessee) submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured, fined $108,343, and required to pay $1,657, plus interest, in disgorgement of commissions. Bonnema was fined $5,000 and suspended from association with any FINRA member in any principal capacity for 10 business days. Without admitting or denying the findings, the firm and Bonnema consented to the sanctions and to the entry of findings that the firm sold, on behalf of customers, approximately 271 million unregistered shares of thinly traded low-priced--Stem Cell Innovations (stock symbol: SCLL) and Rx for Africa (stock symbol: RXAF) stocks without first confirming, through a sufficient independent inquiry, that the shares could be sold pursuant to an exemption from registration. The findings stated that because the shares were not covered by a registration statement, the firm could not sell those shares without having confirmed, through a reasonable inquiry, the availability of an exemption from registration. The findings also stated that the firm failed to establish, maintain and enforce a supervisory system, including written procedures, reasonably designed to ensure compliance with Section 5 of the Securities Act of 1933 and prevent illegal resales of restricted securities. The firm failed to provide adequate training to the designated supervisors on how to assess the availability of an exemption from registration.

Advanced Equities, Inc. “AEI” (Chicago, Illinois) submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and fined $250,000. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that while acting as a placement agent for an issuer, it failed to identify material information and correct omissions of material facts made by the issuer in connection with a private placement offering--FA, an American automobile maker that manufactures hybrid electric vehicles. The findings stated that the issuer obtained a “loan facility” in the approximate amount of $529 million, which was overseen by the United States Department of Energy (DOE). The private placement offering documentation used in connection with the offering of shares in the issuer disclosed that the issuer was receiving financial assistance from the DOE, pursuant to the loan facility agreement. The lead banker at the firm became aware that the issuer had decided not to access the loan facility with the DOE. Despite knowing that the issuer had decided not to access the DOE loan facility, the lead banker failed to inform any future investor of such material information, while the firm continued to offer the product for sale. Approximately 90 accredited individuals and/or entities invested approximately $9 million in a particular offering. The firm failed to identify that the loan facility with the DOE would no longer be accessed, pending discussions with the DOE, and failed to correct the omission of such information in the issuer’s offering documents.

Citadel Securities LLC (Chicago, Illinois) submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured, fined a total of $800,000, and required to revise its WSPs and risk-management controls. Of the $800,000 fine, $420,000 will be paid to NASDAQ, $160,000 to New York Stock Exchange (NYSE) Arca, Inc., $100,000 to BATS Exchange, Inc., (BZX), $70,000 to BATS Y-Exchange, Inc. (BYX) and $50,000 to FINRA. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to reasonably prevent the transmission of erroneous orders to NASDAQ, BZX, BYX and NYSE Arca (the exchanges). The findings also stated that the equity market-making desk erroneously sold short, on a proprietary basis, 2.75 million shares of a stock--PC Group, Inc. (stock symbol: PCGR), causing the share price to fall by 77 percent during an 11-minute period.

Knight Capital Americas, L.P. nka KCG Americas LLC (Jersey City, New Jersey) submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and fined $37,500. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it accepted and held customer market orders, traded for its own account at prices that would have satisfied the customer market orders, and failed to immediately thereafter execute the customer market orders at the same price, or up to the size and at the same price, at which it traded for its own account or at a better price. The findings stated that the firm failed to execute customer limit orders after it traded each subject security for its own market-making account at a price that would have satisfied each customer’s limit order. The firm failed to contemporaneously execute customer limit orders after it traded each subject security for its own market-making account, and failed to execute an order at a price that would have satisfied the customer’s limit order.

Brian Harris Brunhaver of LPL Financial, LLC was barred from association with any FINRA member in any capacity. The sanction was based on findings that Brunhaver, in violation of his member firm’s directive, used his personal email account for business purposes. The findings stated that by sending and receiving business-related email communications on his personal email account, Brunhaver frustrated his member firm’s efforts to fulfill its supervisory obligations and its obligation to maintain and preserve business-related communications. The findings also stated that Brunhaver sent email messages to a customer containing false statements about a real estate investment trust (REIT). Brunhaver falsely assured the customer that her invested principal was guaranteed, that the investment did not hold any risk and that she could not lose her money. Relying on Brunhaver’s representations, the customer invested $114,300 in the REIT. Brunhaver also sent a blast email to other customers containing similar false statements, emphasizing that the REIT guaranteed investors’ principal. The messages to these customers did not disclose the substantial risk of investing in the REIT. Brunhaver’s email representations to the customers met all of the elements of fraud. Brunhaver made the misrepresentations either knowing that they were false, or in reckless disregard of their falsity, in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The findings also included that Brunhaver met with customers about investing in the REIT. In those meetings, Brunhaver personally represented, as he had in the emails, that the company guaranteed investments, and that investors could not lose money. These representations were important factors in the customer’s decision to invest in the REIT; and like the representations Brunhaver made in the emails, they were knowingly false, material, and made to induce the customer to

invest in a security.

Sandra Lea Fexer of CM Securities, LLC was assessed a deferred fine of $20,000, suspended from association with any FINRA member in any capacity for 18 months and ordered to pay $539,748, plus interest, in restitution to customers. The sanctions were based on findings that Fexer made unsuitable recommendations to customers to purchase a REIT--Desert Capital REIT (symbol DCR). The findings stated that, despite the customers each having moderate risk tolerances, Fexer nonetheless recommended investments that resulted in the customers holding undue concentrations in a single speculative security that carried a high degree of risk. These concentrated positions exposed the customers to a risk of loss that was not consistent with their risk tolerance levels, lack of additional investable assets, and financial situation and needs. Each of the customers lost their entire investment, due in part to the REIT’s involuntary bankruptcy petition. The findings also stated that Fexer submitted subscription agreements for a customer’s purchases indicating they were unsolicited trades when in fact she had solicited the trades.

Harlan Phillip Kleiman of Shoreline Pacific LLC submitted a Letter of Acceptance, Waiver and Consent in which he was assessed a deferred fine of $10,000 and suspended from association with any FINRA member in any principal capacity for two months. Without admitting or denying the findings, Kleiman consented to the sanctions and to the entry of findings that he executed an engagement agreement on his member firm’s behalf with an oil and gas program sponsor pursuant to which the firm agreed to act as placement agent for up to $2,250,000 in limited and convertible partnership interests in an entity--Amazon Gas Exploration, or Amazon 13-13. Kleiman did not supervise the offering or registered representative in a manner reasonably designed to achieve compliance with applicable rules. Kleiman did not adequately investigate certain red flags associated with the offering, including inadequate “use of proceeds” disclosures and the absence of past performance information related to the program sponsors.

Stephen Samuel Lard of QA3 Financial Corp. submitted an Offer of Settlement in which he was fined $5,000 and suspended from association with any FINRA member in any capacity for 20 business days. Without admitting or denying the allegations, Lard consented to the sanctions and to the entry of findings that he solicited and recommended that customers invest in various speculative, high-risk and illiquid private-placement securities, which resulted in an unsuitable overconcentration of the customers’ financial assets. These securities included DBSI Kings Highway North Units LLC ("DBSI-Kings Highway"); IMH Secured Loan Fund, LLC ("IMH"); ATEL 12, LLC ("ATEL 12"); ATEL Growth Capital Fund IV, LLC ("ATEL Growth"); MountainV 2007-D Drilling Program, LP ("MountainV"); and DBSI 2007 Land Improvement & Development Fund ("DBSI LID Fund"). The findings stated that the customers’ concentrated positions were unsuitable and exposed them to a risk of loss that exceeded their risk tolerancenand investment objectives.

If you or anyone you know has been the victim of broker misconduct or investment fraud, please contact a Green Firm attorney immediately for a free consultation at info@greenlegalteam.com or call 1-855-462-3330.

FINRA Arbitration Process Under Fire

The securities industry watchdog, FINRA (Financial Industry Regulatory Authority), has come under fire again recently, this time for failing to review its roster of potential arbitrators. According to an article in Bloomberg Businessweek, in a 2013 case set in Wichita, KS, two of the arbitrators offered by FINRA to adjudicate the proceedings and make a ruling happened to be...dead. One of the arbitrators had been deceased for 18 months. This news arrived just a few weeks after FINRA dismissed an arbitrator who had allegedly lied about his legal background. Unfortunately, before his dismissal, this individual actually arbitrated around 30 FINRA cases.

Many investors remain unaware that the vast majority of brokerage firms in the United States require them to sign binding arbitration agreements when initially opening their brokerage accounts. These agreements often pass without notice among the stack of other opening documents that financial advisors may ask customers to sign and/or initial. Not only that, but optimistic customers who do pick up on the arbitration agreement generally will not expect the worse. But when the worst does happen, what are customers really up against...?

For one thing, investors should know that unlike the judges and juries in our judicial system, FINRA’s arbitrators are drawn a pool of around 7,000 retired stock brokers, bankers, branch managers, and attorneys. For the most part, these arbitrators come from the plaintiff or “respondent” side of litigation. Accordingly, FINRA has not been immune to accusations of a strong industry bias in its arbitrators and their rulings. In fact, iit would be surprising if there weren’t a bias: the process was created by the industry and is run by the industry. Perhaps more troubling however is the suggestion, due to the recent developments mentioned above, that the arbitrators, who ultimately decide the outcome of securities litigation, including monetary awards, are not being reviewed and evaluated to ensure they are capable of doing their well-paid job.

If you or anyone you know has been the victim of investment fraud or broker misconduct, please contact us immediately at 1-866-462-3330 or via email by clicking here.

Naming Names: FINRA's Disciplinary Action Report, April 2014

Each month and again on a quarterly basis, the agency that regulates the financial industry, FINRA (Financial Industry Regulatory Authority), produces a detailed report that runs down all disciplinary actions recently taken against brokerage firms and brokers. This long and often colorful list of alleged wrongdoing and misconduct reads a lot like a police blotter. We strongly encourage any investor who suspects their broker and/or broker-dealer of having lost them money on dubious terms to at least skim this report to see if you recognize any names.

For our part, in addition to announcing the release of a report to help get the word out about alleged misdeeds, we like to pick out some of the highlights. Specifically, we’re looking for schemes or abuses that might be more far-reaching than the individual cases brought through the FINRA arbitration process. In other words, we name names here because we hope to raise awareness out there about brokers and products that might otherwise go unnoticed except for the case appearing in the report…

Stefani Ann Bennett of USBI (CRD #5890347, Registered Representative, Salmon, Idaho) submitted a Letter of Acceptance, Waiver and Consent in which she was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Bennett consented to the described sanction and to the entry of findings that she, without her customer’s knowledge or consent, withdrew $100,000 in cashier’s checks and cash from the customer’s estate checking account at her member firm’s sister bank affiliate and converted the $100,000 for her own use and benefit. The findings stated that Bennett arranged to have five cashier’s checks issued to her personal creditors in the total amount of $97,592.41, and she retained $2,407.59 in cash. (FINRA Case #2014039668101)

William Bradford Coolidge of Stifel Nicolaus (CRD #1636957, Registered Representative, Cordova, Tennessee) submitted a Letter of Acceptance, Waiver and Consent in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Coolidge consented to the described sanction and to the entry of findings that he effected trades in elderly customers’ accounts without obtaining the customers’ prior written authorization and without his member firm’s acceptance of the accounts as discretionary. The findings stated that Coolidge implemented a trading strategy in elderly customers’ Individual Retirement Accounts (IRAs) and individual accounts to switch mutual funds and unit investment trusts (UITs) to other mutual funds or UITs after holding the investments for a short time period. For one of these customers, in the customer’s IRA account, Coolidge effected mutual fund and UIT purchases and sales in the account after holding the investments for a short time period. Given the customers’ age, investment objectives, and risk profile or annual income, Coolidge’s recommendations were not suitable and were inconsistent with their account objectives. The elderly customers incurred losses totaling $195,127.37 and paid commissions totaling $168,091.21. (FINRA Case #2012032916701)

Richard David Jameison Jr. of Blackrock Investments (CRD #2567029, Registered Principal, Devon, Pennsylvania) was barred from association with any FINRA member in any capacity. The sanction was based on findings that Jameison converted $150,000 from an acquaintance who was not his member firm’s customer. The findings stated that Jameison told the acquaintance about an opportunity to invest, alongside a small group of other investors, in a business enterprise that was being formed. Jameison told the acquaintance that his firm was not involved with raising the money for the enterprise and that any investment in the enterprise would not be made through the firm. Jameison also told the acquaintance that he intended to invest in the enterprise. The acquaintance decided to invest in the enterprise, in part because he understood that Jameison would also be investing. The acquaintance wired $150,000 into a securities account that Jameison owned jointly with his wife. Jameison never invested any of the investor’s funds and converted the bulk of the funds for his own use and benefit. Jameison falsely told the acquaintance that he had realized a profit on his investment. On several occasions, the acquaintance asked Jameison to return the funds along with the earnings on the investment. Jameison wrote checks drawn against joint accounts that he maintained with his wife, each for $198,000, and delivered the checks to the acquaintance. Jameison represented to the acquaintance that the checks represented the return of the $150,000 investment plus the purported return on investment. The checks were drawn against accounts that contained insufficient funds and were dishonored. Jameison’s firm terminated his employment, and the acquaintance and his wife filed a lawsuit against Jameison. Jameison paid the acquaintance and his wife $165,000. The findings also stated that Jameison failed to respond to FINRA’s requests for documents and information relating to his dealings with the acquaintance. Although Jameison, through counsel, represented that the effects of Super Storm Sandy interfered with his ability to respond to the requests, FINRA made four separate requests for the documents and information and gave Jameison several extensions. (FINRA Case #2012033364501)

Richard Martin Ohlhaber of Century Securities Associates and Southwest Securities, Inc., (CRD #2154794, Registered Principal, Keller, Texas) submitted an Offer of Settlement in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the allegations, Ohlhaber consented to the described sanction and to the entry of findings that he participated in the sale of life settlement contracts offered by a company to at least 18 customers without providing written notice of his involvement in the sales of the life settlement contracts to either of his FINRA member firms, and never obtained either firm’s permission to engage in such outside business activity. The findings stated that Ohlhaber received commission checks from the company totaling over $300,000. These checks were addressed to an entity whose sole members were Ohlhaber and his wife. Ohlhaber endorsed these checks and deposited them in the entity’s bank account. Ohlhaber had access to this bank account and withdrew or otherwise used the money contained in this bank account. The company was not an approved product at either of Ohlhaber’s firms. Ohlhaber completed questionnaires at both firms in which he represented that he was not engaged in any outside business activity, and he misrepresented to one of the firms that the entity was a “shell” that was not engaged in any business. The findings also stated Ohlhaber provided false sworn testimony which was material to FINRA’s investigation and as a result, impeded the investigation. The findings also included that Ohlhaber loaned money to customers who were not Ohlhaber’s family members. Ohlhaber never informed his firm about these loans and the firm never pre-approved the loans in writing. The firm’s WSPs only permitted loans between registered representatives and customers who are the registered representative’s immediate family members. (FINRA Case #2012032077901)

Allen Hugo Reichman of Oppenheimer & Co. (CRD #1002285, Registered Representative, Irvington, New York) submitted a Letter of Acceptance, Waiver and Consent in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Reichman consented to the described sanction and to the entry of findings that he failed to appear for FINRA-requested testimony. The findings stated that Reichman’s counsel informed FINRA via telephone that his client would not appear for testimony until after criminal proceedings against him were resolved, and followed up with a letter reiterating his client’s position. Reichman, to date, has not provided the requestedtestimony. Reichman’s failure impeded FINRA’s investigation into a $30 million margin loan issued by his member firm that was used as part of a fraudulent scheme involving an insurance company. (FINRA Case #2010022584502)

Mark Raymond Talley of Fifth Third Securities (CRD #4969783, Registered Representative, Ft. Mitchell, Kentucky) submitted an Offer of Settlement in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the allegations, Talley consented to the described sanction and to the entry of findings that he recommended that his customer replace an existing variable annuity with a new variable annuity. The findings stated that Talley misrepresented orally and in writing that the existing variable annuity was out of the surrender period and could be sold without incurring a surrender fee when in fact, the annuity was still in the surrender period and the customer would incur a $15,000 surrender fee if it was sold. As a result of Talley’s representation, the customer sold the annuity and purchased a new one. On a switch form related to the transaction, Talley falsely stated that he verified that the customer’s existing annuity was out of the surrender period and claimed he had obtained this information by speaking to an individual he claimed was an employee of the insurance company that underwrote and issued the annuity. Talley did not, in fact, contact the insurance company. Therefore, the information he placed on the switch form was false. The customer signed the switch form and Talley submitted it to his member firm. The firm filed a Uniform Termination Notice for Securities Industry Registration (Form U5) in which it disclosed that Talley was permitted to resign after the firm determined that he had provided inaccurate information on a client disclosure document. The findings also stated that in connection with FINRA’s investigation into that disclosure, Talley provided false answers to FINRA in response to a request for information. Talley provided partial testimony in a FINRA on-the-record interview, but failed to appear to complete the testimony. (FINRA Case #2012032650301)

Matthew Alan Trulli of Foothill Securities (CRD #3048416, Registered Representative, Visalia, California) submitted a Letter of Acceptance, Waiver and Consent in which he was suspended from association with any FINRA member in any capacity for one year. In light of Trulli’s financial status, no monetary sanction has been imposed. Without admitting or denying the findings, Trulli consented to the described sanction and to the entry of findings that he borrowed a total of approximately $197,500 from his member firm’s customers. The loans were documented with promissory notes. The loans that have reached their maturity date have not been repaid in full. The findings stated that Trulli’s firm prohibited its representatives from participating in borrowing transactions with customers under any circumstances. Trulli provided false information in response to two firm outside business activity reports regarding receiving loans from customers.

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The Financial Industry Regulatory Authority (FINRA) fined Berthel Fisher & Company Financial Services, Inc. and its affiliate, Securities Management & Research, Inc., of Marion, Iowa, a combined $775,000 for supervisory deficiencies, including Berthel Fisher’s failure to supervise the sale of non-traded real estate investment trusts (REITs), and leveraged and inverse exchange-traded funds (ETFs). As part of the settlement, Berthel Fisher must retain an independent consultant to improve its supervisory procedures relating to its sale of alternative investments.

For the full FINRA Disciplinary Action Report for April 2014, please click here.

If you or anyone you know has been the victim of broker misconduct or investment fraud, please contact a Green Firm attorney immediately for a free consultation at 1-855-462-3330.

LPL Gets Stung by FINRA for $950K over Alternative Investments

News arrived recently that LPL Financial has once again run afoul of the agency that regulates the US securities industry, FINRA (Financial Industry Regulatory Authority). This time, LPL was slapped with a whopping $950,000 fine for allegedly failing adequately to supervise sales of alternative investment products like non-traded REITs (Real Estate Investment Trusts), oil and gas partnerships, business development companies (BDCs), hedge funds, and managed futures. 

Alternative Investments Have Concentration Limits

FINRA found that from January 1, 2008 to July 1, 2012, LPL Financial was deficient in its supervision and review of especially the concentration limits for investors set forth by the alternative investments themselves, as well as limits that LPL internally set for itself. In their offering documents, many alt investments like REITs will describe concentration and suitability recommendations/requirements for investors. Unfortunately, according to FINRA, LPL’s manual process, its automated system, and its supervisory staff all failed to properly take into consideration suitability standards when evaluating alternative investments.

In addition to the $950,000 penalty, FINRA has directed LPL to conduct a complete review of its policies and procedures, oversight, supervision, and training related to alt investments.

As FINRA pointed out it in its press release about the disciplinary action against LPL Financial, broker-dealers who sell alt investments to customers must evolve a supervisory system to ensure that these customers are not exposed to undue risk in their accounts. They must also meet the suitability requirements obtaining in each state, for each product, and for their own company.

Lack of supervision of this kind is a very common form of broker misconduct. If you or anyone you know has suffered losses due to unsupervised alternative investments such as REITs, you may be able to recover through the FINRA arbitration process. Please contact us immediately for a free consultation at 1-877-462-3330 or via email by clicking here and sending us a note.

REITs Are Booming, But What Do We Really Know About Them?

This week, we saw yet another large brokerage get hit with an enormous fine for alleged misconduct related to the alternative investments known as non-traded REITS (real estate investment trusts). This time, it was LPL Financial. The firm was ordered by FINRA (the Financial Industry Regulatory Authority) to pay around $950,000 in fines for allegedly failing to adequately supervise sales of non-traded REITs and other alternative investment products.

In the past few years, non-traded REITs have become increasingly popular. Last year, around $20 billion of these complex financial products were sold to investors, up from just over $10 billion in 2012. That’s a huge jump. And more REIT shares than ever before are expected to be sold this year.

The problem is, while the popularity of REITs has obviously grown very rapidly, we have not seen a corresponding increase in the level of knowledge and familiarity with these products on behalf of both brokers and investors. In other words, people are selling and buying more and more of a product they still don’t know much about. That’s a recipe for investing disaster.

Non-traded REITs have more in common with private placements and other more exotic investment products than they do with traditional investments like stocks, bonds, and mutual funds. As the name itself suggests, non-traded REITs are not publicly traded and are, therefore, notoriously illiquid. In many cases, the money you invest in a REIT may not be available for a three-to-five year period. Plus, the value of your investment in a REIT may actually at times be lower than reflected on your account statements. Brokers need to be aware of these features of non-traded REITs, and of course they absolutely must have a candid discussion with their customers about them, too. Too often, as we’ve seen in cases of our own, brokers eager to collect the elevated fees or commissions associated with alternative investments like REITs fail to communicate with customers about clear illiquidity issues, a common form of negligence.

Fortunately, FINRA has caught on to the trend and has issued a number of warnings and guidelines for investors interested in better understanding these REITs. Click here for more info.

If you or anyone you know has been the victim of broker misconduct or investment fraud involving REITS, alternative investments, or traditional financial products, please contact us immediately for a free consultation at 1-877-462-3330 or via email by clicking here.

O Canada... Broker Misconduct Crosses the Border

Human nature transcends national boundaries. At least, that’s what a recent and very disturbing investigative report suggests about financial advisors in our genial neighbor to the north, Canada. While Canada may not have anywhere near the United States’ problems with violent crime or even crime in general, it appears to be equally burdened by financial fraud and broker misconduct.

The CBC or Canadian Broadcasting Corporation is the country’s oldest and most venerable broadcasting network. And its Marketplace division covers the financial markets for the network. Given that about a third of all Canadians use investment advisors to manage their money, CBC’s Marketplace reporters thought it would be interesting to find out just what kind of advice these advisors were dispensing to ordinary folks like us. So they sent journalists posing as customers into five large banks and five popular and investment firms wearing a hidden camera.

Well, guess what…?

The hidden camera revealed that the advice these so-called “advisors” were giving was nothing short of “atrocious.” For more, check out the entire mind-boggling, stomach-turning piece here.

If you think it’s just a Canada thing, think again. As the media and FINRA’s own monthly disciplinary action reports suggest, negligent investment advice, broker misconduct, and outright fraud and theft are closer to the rule than the exception in our great country. And while regulators at the SEC and FINRA are working hard to fight and rectify all forms of misconduct, the best means of prevention still lies with the individual investor: us. Check out the CBC’s helpful tips on how to check out your broker, and then check out our own tips for financial self-defense here.

If you or anyone you know has been the victim of broker misconduct or investment fraud, please contact us immediately for a free consultation at 1-855-462-3330 or via email by clicking here.

Naming Names: FINRA's Disciplinary Action Report, February 2014

Each month and again on a quarterly basis, the agency that regulates the financial industry, FINRA (Financial Industry Regulatory Authority), produces a detailed report that runs down all disciplinary actions recently taken against brokerage firms and brokers. This long list of alleged wrongdoing and misconduct reads a lot like a police blotter. We strongly encourage any investor who suspects their broker and/or broker-dealer of having lost them money on dubious terms to at least skim this report to see if you recognize any names.

For our part, we like to highlight certain actions from each report. Specifically, we’re looking for schemes or abuses that might be more far-reaching than the individual cases processed by FINRA. In other words, we name names here because we hope to raise awareness out there about certain brokers and products that might otherwise go unnoticed except for the case appearing in the report.

For example, if you peruse this month’s list of offenses, you’ll find one particularly tricky security popping up repeatedly: the non-traditional ETF. For more information on non-traditional ETFs, please visit our webpage dedicated to the subject here.

Here are the latest disciplinary actions related to non-traditional ETFs as announced by FINRA:

PNC Investments LLC (CRD #129052, Pittsburgh, Pennsylvania) submitted a Letter of

Acceptance, Waiver and Consent in which the firm was censured, fined $275,000 and

ordered to pay $33,183.72, plus interest, in restitution to customers. Without admitting

or denying the findings, the firm consented to the described sanctions and to the entry of

findings that it failed to establish and maintain a supervisory system, including written

procedures, reasonably designed to achieve compliance with applicable NASD and/or FINRA

rules in connection with the sale of leveraged, inverse and inverse-leveraged ETFs (nontraditional ETFs). The findings stated that non-traditional ETFs have certain risks that are

not found in traditional ETFs, such as the risks associated with a daily reset, leverage and

compounding. The performance of non-traditional ETFs over longer periods of time can

differ significantly from the performance of their underlying index or benchmark, especially

in volatile markets. Nonetheless, the firm supervised non-traditional ETFs the same way

it supervised traditional ETFs. The firm relied on its general supervisory procedures to

supervise transactions in non-traditional ETFs. However, the general supervisory system

the firm had in place was not sufficiently tailored to address the unique features and

risks involved with these products. The findings also stated that the firm failed to provide

adequate formal training to registered representatives and supervisors regarding the

features, risks and characteristics of non-traditional ETFs. The firm allowed certain of its

registered representatives to recommend to customers a non-traditional ETF without

performing reasonable diligence to understand the risks and features associated with it.

(FINRA Case #2011028232801)

Silver Oak Securities, Incorporated (CRD #46947, Jackson, Tennessee) submitted a Letter

of Acceptance, Waiver and Consent in which the firm was censured and fined $10,000.

Without admitting or denying the findings, the firm consented to the described sanctions

and to the entry of findings that it permitted a registered representative to recommend and

sell non-traditional ETFs to some of the firm’s customers. The findings stated that the firm

did not investigate the characteristics and risk factors of such products before allowing its

representative to recommend them to customers or provide its representatives any training

or other guidance specific to whether and when non-traditional ETFs might be appropriate

for their customers. The firm did not implement any procedures for supervising the firm’s

purchase and trading of non-traditional ETFs. Instead, it relied on supervisory systems

that were already in place. The findings also stated that as a result of the firm’s failure to

implement a supervisory system tailored to non-traditional ETFs, the firm did not monitor

transactions involving non-traditional ETFs, which would include tracking the volume of

customers’ holdings in non-traditional ETFs, as well as tracking the length of time open

positions were maintained in non-traditional ETFs, and any resulting unrealized losses. The

firm did not impose any limitations on trading or holding non-traditional ETFs. (FINRA Case

#2011026214301)

Stuart Alan Epley (CRD #3104478, Registered Representative, Rogers, Arkansas) submitted

a Letter of Acceptance, Waiver and Consent in which he was suspended from association

with any FINRA member in any capacity for three months. In light of Epley’s financial

status, no monetary sanction has been imposed. Without admitting or denying the

findings, Epley consented to the described sanction and to the entry of findings that he

exercised discretion without written authorization by effecting transactions in customers’

accounts without obtaining the customers’ prior written authorization and without having

his member firm’s acceptance of the accounts as discretionary. The firm did not permit

discretionary trading with the exception of very limited use of time and price discretion.

The findings stated that Epley solicited unapproved securities in customers’ accounts. Epley

mismarked order tickets in order to purchase leveraged ETFs in the customers’ accounts.

The ETF transactions were all listed as unsolicited even though Epley had solicited them. Epley mismarked the leveraged ETF transactions as unsolicited because the firm prohibited

registered representatives from recommending leveraged ETFs. Epley’s mismarking of the

order tickets caused the firm’s books and records to be inaccurate regarding these trades.

The suspension is in effect from January 6, 2014, through April 5, 2014. (FINRA Case

#2012032504801)

FINRA Orders J.P. Turner to Pay More Than $700,000 in Restitution for Unsuitable Sales o fLeveraged and Inverse ETFs and for Excessive Mutual Fund Switching

The Financial Industry Regulatory Authority (FINRA) has ordered Atlanta-based brokerdealer

J.P. Turner & Company, L.L.C. to pay $707,559 in restitution to 84 customers for sales

of unsuitable leveraged and inverse exchange-traded funds (ETFs) and for excessive mutual

fund switches.

Brad Bennett, FINRA Executive Vice President and Chief of Enforcement, said, “Securities

firms and their registered reps must understand the complex products they are selling and

the risks inherent to the products, and be able to determine if they are suitable for investors

before recommending them to retail customers. Firms also have a fundamental obligation

to monitor conservative investments such as mutual funds to ensure that investors are not

abused by excessive trading.”

Leverged and inverse ETFs “reset” daily, meaning that they are designed to achieve

their stated objectives on a daily basis so their performance can quickly diverge from the

performance of the underlying index or benchmark. It is possible that investors could suffer

significant losses even if the long-term performance of the index showed a gain. This effect

can be magnified in volatile markets.

FINRA found that J.P. Turner failed to establish and maintain a reasonable supervisory

system and instead, supervised leveraged and inverse ETFs in the same manner that it

supervised traditional ETFs. The firm also failed to provide adequate training regarding

these ETFs. In addition, J.P. Turner allowed its registered representatives to recommend

these complex ETFs without performing reasonable diligence to understand the risks

and features associated with the products. As a result, many J.P. Turner customers held

leveraged and inverse ETFs for several months. J.P. Turner also failed to determine whether

the ETFs were suitable for at least 27 customers, including retirees and conservative

customers, who sustained collective net losses of more than $200,000.

FINRA’s investigation was conducted by the departments of Enforcement and Member Regulation

For the full February report by FINRA, please visit their website: www.finra.org

Investors Unable to Sell Shares in PVCT Biopharm Stock

According to numerous investors using several different brokerage firms, including but not limited to TD Ameritrade, Wells Fargo, Fidelity, and ShareBuilder, on January 23, 2014, they found themselves unable to sell shares they held in a biopharmaceutical company, Provectus (symbol PVCT) for varying periods of time stretching up to five full hours in some cases. During this alleged sell "lockout" by the brokerages, investors could only watch helplessly as the stock price of PVCT rose to an all-time high before crashing again to deep lows, all during a day that witnessed enormous trading volume (30 million shares on the day). 

Our firm has now brought its first 3 cases against TD Ameritrade on behalf of investors who were allegedly "locked out" of selling their shares of PVCT for much of the day on 1/23/14. We are also pursuing multiple other actions against TD Ameritrade and other brokerages for the same issue.

If you or anyone you know was subject to this alleged "lockout" or "freeze" on selling PVCT on 1/23/14, please contact us immediately for a free consultation at 1 855 462 3330 or via email

Securities Fraud Is A "Whole 'Nother Ballgame" For Pro Athletes

Professional athletes are among the most common targets of unscrupulous brokers and money managers. Many of these athletes, while wealthy, are also often young and inexperienced when it comes to finance and investment. Just because pro football, basketball, and hockey players have achieved an elite status in their profession does not make them any more sophisticated when it comes to investment products and strategies than the average American. However, since they do have such a high profile, they tend to attract fraudsters in much higher numbers than the rest of us. Our firm’s experience with professional athletes makes us uniquely sensitive to this situation and the struggle they face trying to recover losses when they’ve been swindled.

Accordingly, we were saddened but unfortunately not very surprised when, once again, we came across this article in the media describing how a dozen pro football players based in Florida were allegedly majorly defrauded. According to the Sun Sentinel, a group of at least twelve former or current NFL players filed claims through FINRA’s arbitration process against two Broward County financial advisors. Allegations made by the players and their attorneys include “unsuitable recommendations to invest in "illiquid, high-risk securities” in a now bankrupt Alabama casino and promissory notes offered by the parent company of Success Trade Securities.

In another case, also based in Florida and involving NFL players but this time filed in federal court, another group of players filed a lawsuit back in October alleging that a bank allowed about $53 million to be taken from players’ accounts for “illegitimate” purposes by the firm of a recently banned advisor named Jeffrey Rubin.

And that’s just recently, just in Florida. Cases like this sprout up all over the country, all the time. Pro athletes who may be unbeatable on the gridiron or on the ice need to be as careful as any other novice investor when it comes to the complex game of securities. As the saying goes, out there it’s “whole ‘nother ballgame.”

If you or anyone you know has been the victim of broker misconduct or securities fraud, please contact us immediately at 1-855-462-3330 or via email by clicking here.