Category Archives: North American Securities Administrators Association

Securities Regulators Issue Warning- Oil & Gas Investment Fraud

The North American Securities Administrators Association (NASAA) was formed in 1919 and is comprised of  the state securities regulators.

NASAA has issued a warning to investors regarding oil & gas scams. Here is a link to the entire article.

The SEC has also issued a warning to investors: Oil and Gas Scams: Common Red Flags and Steps You Can Take to Protect Yourself. You should read it if thinking of investing in oil and gas.

Every investor contemplating an
investment in an oil and gas limited partnership, private placement
offering, Reg D offering or other form of entity should take the time to
read the articles.

From the NASAA article, here are some of the misrepresentations investors should be aware of in the high pressured sales pitch that many promoters use when cold calling or sending unsolicited emails:

  • you will have an interest in a well that cannot miss
  • the risks are minimal
  • a geologist has given the sales person a tip
  • the salesperson has personally invested in the venture
  • the promoter has a “hit” on every well drilled so far
  • there has been a tremendous “discovery” in adjacent field
  • a large, reputable oil company is operating or planning to operate in the area
  • only a few interests remain to be sold and you should immediately send in your money in order to assure the purchase of an interest
  • this is a special private deal open only to a lucky chosen few investors

Oil & Gas private placements are extremely speculative in nature. The
risk associated with these investments is only suitable for those
individuals who understand and are financially capable of taking the
risk inherent to these products. If you were sold an oil & gas
investment based upon misrepresentations, such as the inaccurate
representation of the production of wells in the target area, or if this
type of investment is unsuitable for a person your age and profile, you
may be able to recover all or a part of your losses through FINRA
arbitration.

Please read the SEC & NASAA warnings linked above before parting with your hard earned dollars.

If you have questions about losses on oil & gas investments or other stock market losses call to speak with an experienced securities attorney.

Nationwide representation.

Rex Securities Law

561 391 1900

LPL Financial-Growth Causing Growing Pains-Trouble With Securities Regulators

The New York Times today reported that LPL Financial, an independent broker/dealer with over 13,000 brokers, 6,500 offices and 4.3 million customers is having more and more problems with securities regulators as the company grows.

LPL is now the fourth-largest brokerage firm after Wells Fargo, Morgan Stanley and Merrill Lynch.

According the the NY Times article, LPL’s “low cost model that has aided LPL’s explosive growth has brought with it shortcomings that point to the difficulties regulators face in overseeing far-flung financial advisers.”

It reports that in the last two years state regulators from Illinois, Massachusetts, Montana, Oregon and Pennsylvania have fined LPL for failing to properly supervise the actions of their brokers. We recently reported on LPL’s issues in Massachusetts over non traded REITs.

LPL keeps its overhead low by its franchise like arrangements with brokers, who are independent contractors, rather than employees. The commission split to the broker at LPL is higher leaving less money for compliance per the article.

If you have questions or complaints about losses in your brokerage account, call 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 1900

LPL Financial REIT Problem Triggers Compliance Changes

Update 2/7/2013: LPL settled the case over the improper sale of REITs for a $500,000 fine and restitution of $2 million. More details on that settlement here.

As we previously reported, in December 2012, Massachusetts securities regulators sued LPL Financial over charges that LPL failed to supervise its brokers who sold nontraded real estate investment trusts and permitted the brokers to make sales that violate company rules and state rules.

Here is the complaint, see page 7 for the various allegations.

NonTraded REITs that have declined in value substantially since their issue date include:

  • Cole Credit Property Trust II & III
  • Cole Credit Property 1031 Exchange
  • CNL Lifestyle Properties
  • Behringer Harvard
  • Dividend Capital Total Realty
  • Hines
  • Inland American
  • KBS REIT
  • Retail Properties of America
  • Wells REIT
  • W.P. Carey Corporate Property Assoc. 17

In their complaint, the Massachusetts regulators charge LPL with dishonest and unethical business practices in connection with the sale of $28 million in these illiquid REITs to 600 citizens of that state  between 2006 and 2009. Massachusetts has a rule, as do other states, setting a maximum concentration limit for investments like nontraded REITs.

According to to a recent article in the Investment News, LPL recently told its 13,000 brokers and advisers that it is cracking down on the sale of risky and problematic products.

Is this crackdown by LPL a mere coincidence ? Probably not, more likely it’s related to the Massachusetts regulator action and what is likely to be fall out with other states as well as investors who are learning that their investments may not be as safe as they were led to believe.

Leveraged and inverse mutual funds are two  products LPL has warned its  brokers about. Both NASAA (the North American Securities Administrators Association) & the SEC included leveraged exchange-traded funds on it top 10 investor trap list several years ago.

If you have losses as a result of investing in nontraded REITs, ETFs, leveraged and inverse mutual funds, you may be able to recover all or a part of those losses through FINRA arbitration. Contact us to discuss your legal rights.

Free consultation

Nationwide representation.

Rex Securities Law

561 391 1900

E*Trade Establishes Hotline for Auction Rate Securities Investors

 The North American Securities Administrators Association (NASAA) announced establishment of  a toll-free hotline and website  to assist investors who purchased auction rate securities (ARS) through E*TRADE Securities LLC.

Regulators and E*TRADE reached a settlement in October 2011 with E*Trade agreeing to $ fine of $5 million and   the return of approximately $100 million to its clients who have had their funds frozen in the ARS market since 2008. 

The firm is required to maintain a dedicated toll-free telephone assistance line, website and an email address to provide information to investors.

The toll-free hotline can be reached at 1-888-296-0880, Monday through Friday between 8:30 a.m. and 5 p.m. Pacific time. The website for information is www.ETradeARSBuyIn.com.

E*Trade is one of the last of the brokerage firms to resolve its auction rate securities cases.

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