Category Archives: Failure to Supervise

FINRA Orders Merrill to Pay $2 Million on Unsuitable Investments

On June 4, 2013, the Financial Industry Regulatory Authority (FINRA) fined Merrill Lynch Pierce Fenner & Smith (successor
for Banc of America Investment Services, Inc.) $900,000  and ordered them to reimburse $1.1 million in losses to 214 customers for losses incurred from unsuitable sales of floating-rate bank loan funds. Here is a link to the FINRA news release.

Floating-rate bank loan funds are investments in a portfolio of secured senior loans to companies with below investment-grade credit ratings and are illiquid and subject to various risks. FINRA found that Merrill Lynch suggested investment in these products to customers whose risk tolerance, investment objectives and financial conditions were inconsistent the risks associated therewith.

If you have losses on investments that you believe were unsuitable for you or which you purchased based on the misrepresentations of the broker who made the sale, you may be able to recover all or a part of those losses through FINRA arbitration.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

Commonwealth Income & Growth Funds Losses ?

Rex Securities Law (RSL) is investigating the sale of the Commonwealth Income & Growth Funds by brokerage firm Commonwealth Capital Securities Corp to determine if there was adequate due diligence performed prior to recommending the purchase of this investment.

These investments may be considered risky and inappropriate for certain investors, especially those who are elderly, retired and living on fixed income.

If you have losses as a result of purchasing Commonwealth Income & Growth Funds, call us for a no charge consultation to discuss your legal rights.

Rex Securities Law , with offices in Boca Raton, FL,  and  Austin, TX,   provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.

Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Nationwide Representation

Rex Securities Law

TollFree: 877-224-3199

Florida-561 391 1900 

Texas-512-329-2870

Mariner Access & Mariner 2X Access Investment Losses?

Rex Securities Law is investigating the sale by Merrill Lynch Pierce Fenner & Smith of Mariner Access and Mariner 2X Access hedge funds. Merrill Lynch brokers raised hundreds of millions of dollars selling these alternative investments.

These funds have lost significant value, in some cases over 70%. Hedge fund investments are considered generally to be risky investments which may not be suitable for the average investor. If you have losses as a result of purchasing Mariner Access or Mariner 2X Access funds you may be able to recover some or all of your losses through arbitration with the Financial Industry Regulatory Authority (FINRA).

Contact our law office for more details regarding your legal rights.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

ProEquities, Inc. Hit with FINRA Award on Tenant in Common Investments

May 2013–In FINRA Case # 12-1167, Suzy Asad and Suzy Asad Trust v Mamdoh Abas and ProEquities, Inc.,  a Los Angeles panel awarded compensatory damages of $379,424, plus accrued interest, costs of $68,838 and session fees of $25,875, jointly and severally against ProEquities, Inc. and broker Mamdoh Aziz Abas. The Claimant alleged elder abuse, securities fraud , negligence and misrepresentation in connection with the sale of tenant in common investments (TICs).

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

Former LPL Financial Broker Brian Brunhaver Sanctioned Over REIT Sales

Washington State Securities regulators have issued a Findings of Fact and Order to Cease and Desist against former LPL Financial broker Brian Brunhaver, his wife Stacey Brunhaver and his investment advisory firm Brunhaver Financial Services. Regulators have ordered Brunhaver to cease and desist violating various Washington State securities laws, have denied his personal and his company’s securities registrations and have imposed fines of $60,000.

The primary issue raised by the regulators relates to the sale of non-traded real estate investment trusts (REITs) and the fact that he misrepresented the risks associated with these investments and made unsuitable recommendations that clients invest in the REITs.

The order, which may be accessed here, makes many interesting and significant factual findings, including:

  • Brunhaver sold non-traded REITs to over 200 clients during the last few years he worked for LPL (2007-May 2011) and collected more than $548,000 in commissions on those sales
  •  Non-traded REITs are illiquid investments which have no ready market, have less share value transparency than traded REITs, are difficult to value and often fund distributions by borrowing or from the capital raised from new investors.
  • Non-traded REITs present conflicts of interest, have higher up-front fees than traded REITs and have on going management fees.
  • Brunhaver was terminated by LPL in May 2011, ostensibly for communicating with clients through an unapproved email account
  • Brunhaver represented to certain clients that the REITs were safe and/or conservative investments, that no risk was involved and that the investment would be safe and sound, comparing them to the safety of bonds. He told one client that there was no way should could lose money investing in REITs.
  • Some clients were told that their principal investment was guaranteed by the REIT and others were told that the government would guarantee their principal investments in REITs. Some clients were told that the liquidity of the REITs was guaranteed.
  • He told some clients he would waive his commision as an inducement for the clients to make the investment in the REITs, but in fact he did not actually waive his commission.
  • Brunhaver made unsuitable recommendations of the REITs to clients. One client was told to invest 100% of his net worth in REITs. Another was sold an 80% concentration of REITs.
  • Brunhaver submitted forms to LPL that misstated their net worth, income and investment objectives in order to gain approval of these unsuitable investment recommendations. In some cases clients were told to sign forms in blank and Brunhaver completed the forms with inaccurate information. In other cases, Brunhaver altered the account forms to accommodate his scheme.
  • During the investigation Brunhaver and his wife interfered by contacting clients and offering to help them complete the investigatory questionaires from the securities division of Washington.
  • When contacted by the regulators during the investigation, Brunhaver made false and misleading statements by denying that he had been communicating with his clients about the investigation.

According to FINRA records, he has several pending customer arbitrations, including one involving Inland American REIT.

See the sidebar of this blog “REITs” for the 60+ posts we have made on the topic of non-traded REITs, including:

  • Behringer Harvard
  • CNL Lifestyles
  • Cole Credit
  • Columbia Property Trust
  • Cornerstone Core
  • Corporate Property Associates
  • Dividend Capital
  • Healthcare Trust of America
  • Hines
  • Inland American
  • Inland Diversified
  • KBS
  • Landmark
  • Lightstone Value
  • Retail Properties of America
  • TNP Strategic
  • United Development Fund
  • Wells
  • Wells Timberland

We have represented a number of individuals seeking losses on non-traded REITs against LPL as well as several other broker dealers. If you have suffered losses on non traded REITs, call us for information on your legal rights to recover all or a part of your loss.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

FINRA Arbitrators Award Couple $1.1M For Sale of Unsuitable REITs

A Financial Industry Regulatory Authority (FINRA) arbitration panel in Minneapolis, MN, recently awarded over $1.1 million to a couple who alleged that the following investments were unsuitable:

  • Medical Capital Holdings
  • DBSI
  • ICON
  • IMH
  • Behringer Harvard REIT

Claimants stated that the broker misrepresented their investment objective as growth and income as opposed to their stated objectives of preservation of capital and low-risk tolerance. The panel found that these investments in speculative private placements, limited partnerships and real estate investment trusts (REITs) were unsuitable for them. The damages included $500,000 in punitive damages.

FINRA Case # 11-03704-Eugene Opatz and Ruth Opatz v David Alan Theis, Dougherty Financial Services, Inc. and Securities Monitoring Group, LLC. Theis did not appear and the panel awarded the $1.1M damages against him. The other Respondents reached a confidential settlement with claimants.

If you believe you have been sold investments that are not suitable or contrary to your stated investment objectives, you may be able to recover losses through FINRA arbitration.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

More Trouble for LPL Financial-Ex Broker Blake Richards Charged with $2M Theft

Buford, Georgia

UPDATE June 11,2013– an order of preliminary injunction against Blake Richards was entered by the Honorable Julie E. Carnes of the Northern District of Georgia enjoining Richards from further violations of the securities laws.
__________________________________________________

In a civil complaint filed in the U.S. District  Court for the Northern District of Georgia, former LPL Financial adviser Blake Richards of Buford, Georgia, was charged the the Securities & Exchange Commission with defrauding investors and misappropriating $2 million dollars from six or more clients.

According to the complaint, the SEC alleges that between 2009-2013, Richards directed clients to write checks to his outside  business instead of LPL and that many of the purported investments were frauds. Most of the invested funds came from client’s retirement savings or life insurance proceeds. The SEC also alleges that Richards gave fake financial statements to at least one client.

Richards registration history in the industry according to FINRA records is as follows:

  • LPL Financial                                      05/2009-05/2013
  • Ameriprise Advisor Services               02/2007-05/2009
  • A.G. Edwards & Sons, Inc.                  08/2004-02/2007
  • Edward Jones                                       04/2000-08/2004

This is the third major issue this week for LPL, the nation’s fourth largest broker dealer.

On May 21, 2013, FINRA hit LPL with a $9 million dollar fine for significant issues related to their email system and for making misstatements to regulators during the investigation. More on that here.

The next day, Massachusetts regulators announced that LPL would have to pay nearly twice the amount , $5 million, to resolve the investigation of their sales practices related nontraded real estate investment trusts (REITs) . See this for more details.

Investors who have suffered losses with LPL or other broker dealers may be able to recover those losses through FINRA arbitration. Contact us for a no charge consultation.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 190