Category Archives: Stockbroker Malpractice

FINRA Working Hard-Fines and Sanctions On the Rise

Judging from the sharp increase in enforcement actions and fines (up to $68 million in 2011 vs. $45 million in 2010) FINRA, the chief regulator of stockbrokers and broker dealers in the US,  is taking their job more seriously.

According to the Investment News, FINRA disciplinary actions in 2011 were up to 1,488 from 1,310 in 2010. This is the third year in a row the trend has been on the upswing and no doubt it is related to the embarrassment caused by the discovery of the Madoff & Stanford Ponzi schemes that had eluded regulators for years.

The biggest area of concern apparently focused on advertising where fines increased to $21 milllion vs $4.75  million in 2010. Living in the sunbelt it is easy to understand how the regulators could easily find as many advertising violations as they choose to pursue. Just look at the local papers any given week and one can find numerous questionable advertisements.

FINRA is also taking aim at complex investments being marketed and their suitability for the individual investor. Brokers have always had a duty to make suitable recommendations to their clients, and FINRA seems more concerned about this than in the past. Given the number of baby boomers with underfunded retirement accounts, regulators need to provide more protection.

If you don’t understand an investment, perhaps it is not for you.

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

 

Exchange Traded Funds-Trillion Dollar Problem?

Exchange traded funds may be the next big problem for investors. Recently a large trade in a popular ETF was delayed for a period of time resulting in an inquiry by the SEC, who is taking a look at connections between hedge funds (that often “short ETFs)  and high frequency traders that trade in and out of ETFs as well as ETF trades that don’t settle on time.

US regulators are not the only ones concerned. United Kingdom regulators are conducting their own investigations. These regulators are concerned that delayed trades , trades that don’t settle within the normal time period, could cause volatility and a systemic risk in financial markets.

ETFs are like mutual funds, in that they contain baskets of securities and are designed to give investors exposure to a pool of assets. ETFs, unlike mutual funds trade throughout the day. Originally created to track benchmark indicies like the Standard & Poors 500, the variety and amount of ETFs has grown exponentially to well over a trillion dollars. In contrast to ETFs designed to track well known indexes,  there are many types and some are not so safe, like those designed to provide exposure to commodities and high yield bonds.

Ultimately it is not presently known what effect the ETF trading being investigated has on the typical retail investor, but there is speculation that it could have caused recent turbulence in the market.

One investing guru, John Bogle founder of Vanguard Group recently pointed out that are 2,000 ETFs to pick from making it difficult for investors to pick the right one.  While he thinks they are ok for trading, he does not think they are so great for investors.

If you have questions about the way your brokerage account is being handled or investment losses you have suffered, please do not hesitate to contact us.

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

Rex Investigates Behringer Harvard Opportunity REIT I, Inc.

Have you or your loved ones suffered losses as a result of purchasing Behringer Harvard Opportunity REIT I, Inc ?

We may be able to help you recover some or all of your losses.

Behringer Harvard Opportunity REIT I, Inc. , which originally was sold for $10 per share, has seen its value drop from $7.66 to $4.12 during 2011.

Investors are typically sold non-publicly traded REITs with the promise of a steady stream of income, however, in many cases the distributions do not represent profits, but rather are funded from loans to the entity or worse yet, are distributions of the investor’s original capital.

This goes on as long as the REIT can come up with the cash for distributions, then distributions cease and fair market value plummets.

Unlike stocks that are traded daily on an exchange, REIT’s are not regularly traded on any exchange making valuation difficult. While secondary markets exist, they generally result in a selling price that is discounted, sometimes as much as 20% or more, from the company’s recently published estimated value.

These investments may not be suitable for you if you are retired, on fixed income and in need of liquidity. If you purchased the investment with the understanding that risk was limited or nonexistent and that regular distributions would continue, you may have a case against the broker or brokerage firm that sold you the investment.

If you were misled about the nature of REIT investments, you may be able to recover your losses. 

If you have suffered losses in Behringer Harvard Opportunity REIT I, Incplease do not hesitate to contact us .

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

Rex Investigates Behringer Harvard Short Term Opportunity Fund I LP

Have you or your loved ones suffered losses as a result of purchasing Behringer Harvard Short Term Opportunity Fund I LP?

We may be able to help you recover some or all of your losses.

The Investment News recently reported that as of December 2011, investors in the Behringer Harvard Short Term Opportunity  I LP  (which originally sold for $10 per share) have seen the value of shares drop to just  $.40 from the $6.48 value  a year earlier.

According to the Investment News article, one elderly investor who had invested nearly $50,000 in this rapidly plummeting REIT from Capital Financial Services, Inc. , was inspired to contact FINRA and the Texas State Securities Board for an explanation why she had lost 96% of her investment. She complained that there was no warning of the upcoming losses or explanation therefore. According
to this investor, an elderly widow, Behringer Harvard “keeps sending me stuff that shows my money is gone.”

Interesting to note, according to article, is that the broker who sold the investment is helping this lady pursue her inquiry with the regulators. It is possible that brokers were misled by the wholesalers of these funds who convinced them to sell these products to their clients.

Many investors were convinced to purchase these investments with promises that distributions would be steady and dependable. Now distributions have ceased, net asset values are plummeting and converting the asset to cash is difficult.

If you were misled about the nature of REIT investments, you may be able to recover your losses.

If you have suffered losses in Behringer Harvard Short Term Opportunity Fund I LP, please do not hesitate to contact us .

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

Rex Investigates Behringer Harvard Short Term Opportunity Fund I LP

Have you or your loved ones suffered losses as a result of purchasing Behringer Harvard Short Term Opportunity Fund I LP?

We may be able to help you recover some or all of your losses.

The Investment News recently reported that as of December 2011, investors in the Behringer Harvard Short Term Opportunity  I LP had seen the value of shares drop to just  $.40 from the $6.48 value  a
year earlier.

According to the Investment News article, one elderly investor who had invested nearly $50,000 in this rapidly plummeting REIT from Capital Financial Services, Inc. , was inspired to contact FINRA and the Texas State Securities Board for an explanation why she had lost 96% of her investment. She complained that there was no warning of the upcoming losses or explanation therefore. According
to this investor, an elderly widow, Behringer Harvard “keeps sending me stuff that shows my money is gone.”

Interesting to note, according to article, is that the broker who sold the investment is helping this lady pursue her inquiry with the regulators. It is possible that brokers were misled by the wholesalers of these funds who convinced them to sell these products to their clients.

Many investors were convinced to purchase these investments with promises that distributions would be steady and dependable. Now distributions have ceased, net asset values are plummeting and converting the asset to cash is difficult.

If you were misled about the nature of REIT investments, you may be able to recover your losses.

If you have suffered losses in Behringer Harvard Short Term Opportunity Fund I LP, please do not hesitate to contact us at 561 391 1900.

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

 

Rex Investigates CIP Leveraged Fund Advisors, LLC

Cornerstone Ventures, Inc. is the managing partner of CIP Leveraged Fund Advisors, LLC. The firms that solicited sales of this investment, according to SEC records are:

Pacific Cornerstone Capital, Inc.
Investors Capital Corp.
Private Consulting Group, Inc.
Cullum & Burks Securities, Inc.
Sammons Securities Company, LLC
USAllianz Securities, Inc.
American Investors Company
Equity Services, Inc.
Sigma Financial Corporation
Intervest International Equities Corporation
Cascade Financial Management Inc.
Investment Management Corporation
Royal Securities Company
Financial West Group
RBC Dain Rauscher Inc.
Harvest Capital LLC
Northland Securities, Inc.
Ameritas Investment Corp.
Advisory Group Equity Services, Ltd.
Capital Financial Services, Inc.

It may be possible that other firms not included in the list sold this
investment whose performance was tied to the performance of three other Cornerstone funds:

  • Cornerstone Healthcare Plus REIT (CHP)
  • Cornerstone Healthcare Real Estate Funds (CHREF)
  • Meadowbrook Healthcare Properties (MHP)

The company recently reported that CLFA units have no value, only slim hopes for the future. In February 2010, Pacific Cornerstone Capital Inc. and its former CEO Terry Roussel were fined a total of $750,000 for failing to include full and complete information in private placement offerings of CIP Leveraged Fund Advisors, LLC. Investors were promised 18% rate of return and maturity of the investment in two to four years. Roussel was also suspended.

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

Harbinger & Falcone-Trouble With Investors & SEC

Philip Falcone and the hedge fund he manages Harbinger Capital received Wells Notices from the Securities and Exchange Commission in December 2011. A Wells Notice from the SEC is notice to the recipients that the government is considering filing civil fraud charges for manipulative trading during the period from 2006 to 2008.

Wells Notice is a recommendation from the enforcement division and while the SEC can decline to follow it, in practice the SEC generally does follow the action suggested by enforcement.

Falcone borrowed over $100 million from Harbinger in October 2009, and although it has been repaid, news sources indicate that the SEC may be investigating whether investors were apprised in a timely manner about the loan.

This fund, which once oversaw $26 billion in assets has experienced large losses and client withdrawals and now manages about $5 billion.  Of that amount nearly half is invested in LightSquared, a controversial company thatis making plans to build a wireless network using new technology that opponents claim interferes with current global positioning systems.

Earlier in February 2011, a disgruntled investor filed a class action against Falcone and Harbinger. Falcone had made big investments in LightSquared Inc., whose conditional license was revoked in February.

Harbinger Capital Partners LLC lost 47% as a result. Most of this loss was in Harbinger Capital Partners Offshore Fund I following a reduction of 59% in the value of the fund’s stake in LightSquared.

Harbinger had invested $3 billion of the $4 billion in LightSquared, according to recent Bloomberg news.

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