Update on John Thomas Financial/Tommy Belesis

Following up on our recent post regarding the investigation of John Thomas Financial and its CEO Tommy Belesis for stock manipulation,  Belesis  was recently served with a Wells Notice.

FINRA’s BrokerCheck website indicates that on January 11, 2013 he was served a Wells Notice from FINRA stating that he:

 “willfully or recklessly sold a substantial portion of a firm
proprietary position while failing to execute customer orders to sell
shares of the same stock, at prices that would have satisfied the
unexecuted orders,”  and that he “failed
to follow instructions by the customers to sell the shares.”

A Wells Notice is a letter sent by regulators to people or  firms when it is planning on bringing an enforcement action. If you would like to review the profile of Belesis or John Thomas Financial on FINRA’s website, see here for more information.

We have been helping investors nationwide recover stock market losses for 25 years.

Free consultation.

Rex Securities Law

561 391 1900

Thinking of Pursuing Claim for REIT or TIC Losses? Waiting May Be a Bad Idea.

Purchase a REIT or a TIC ?

If you purchased a non traded real estate investment trust (REIT) or a tenant in common (TIC) investment that has dropped in value, ceased distributions or otherwise performed in a manner that differs from the sales pitch that convinced you to buy  it in the first place, and have been putting off taking action to recover your losses, you would be wise to reconsider further delay.

Many investors we have spoken to were unaware of these important factors prior to making their purchases of a non-traded REIT or TIC investment:

  • Distributions are not certain. For many of these investments distributions have ceased
  • The investments are illiquid and are difficult or impossible to sell. Company buybacks have ceased for many.
  • The commissions paid at the time of purchase may have been as high as 7-12%.

FINRA Rule May Prohibit Your Claim if You Wait Too Long

The Financial Industry Regulatory Authority (FINRA) has what is known as the eligibility rule (Rule 12206) which provides that no claim shall be eligible for submission to arbitration where six years have elapsed from the occurrence or event giving rise to the claim.

While the ultimate determination of whether this rule is to be applied and if so as of what date it is to be run from is the decision of each arbitration panel, in most cases the date of purchase, not the date of discovery that your claim exists, is the day when the six years starts running.

Today is February 13, 2013. Six years ago is February 13, 2007. When did you make your purchase?

While there are factual situations and arguments which may convince an arbitration panel to hear claims on purchases prior to the 2007 date, investors with actionable losses would be wise to act before the six year time period has run.

Did You Qualify for Purchase of The Investment Initially?

Most TICs and non traded REITs are not registered with the SEC and are sold under the SEC’s Regulation D (private placements). According to those rules investors must meet certain criteria in order to invest in these private placement offerings. In general, those rules require that the investor have at least $1 million net worth (exclusive of primary residence) and income exceeding $200,000 in each of the two preceding years.

We have seen a number of cases where the investor did not meet this SEC criteria but the suitability documents were falsely completed by the selling broker.

Did you qualify for purchase?

Popular NonTraded REITs and TIC Investments

Partial list of popular REITs
Behringer Harvard
CNL Lifestyle
Dividend Capital
Inland American
Inland Western
Wells Timberland

Partial List-Popular Tenant In Common Investments(TICs)
American Investment Exchange
Argus Realty
BNI Equities, Notes, TICs
Canyon Creek Financial
Core Tenancy
Evergreen Realty Group
First Guardian Group
FOR 1031
Grubb & Ellis
Medical Capital Holdings
Provident Asset Management
Provident Royalties
Ridgewood Energy (oil & gas TIC)
Striker Petroleum (oil & gas TIC)
Tax Strategies
Triple Net Properties (NNN)
US Advisors

We are a securities fraud, stock market loss recovery law firm located in Boca Raton, FL and have been helping investors nationwide recover investment losses.

Free consultation

Rex Securities Law

561 391 1900

Sun Life Annuities Can Be A Problem for Investors

Especially if the annuities subaccounts are investing in hedge funds.

FINRA recently investigated the following  firms in connection with  variable annuities( Foresee Strategies Insurance Funds and Sala Multi Series Fund) issued by Sun Life Financial, Inc. that contained sub-accounts with hedge fund investments:

  • Geneos Wealth Management
  • Lincoln Financial Network
  • National Planning Corp.
  • SagePoint Financial, Inc.
  • FSC Securities 

The strategy of the subaccount manager was to invest in options in the S&P 500, using both put and call options. This strategy is known as a strangle and counts on the hope that the market doesn’t move very hard up or down. In a period of high volatility, as happened in Septmeber 2008, this strategy does not work. In this case the subject annuities were nearly wiped out completely. 

There are lots and lots of annuities out there and investors need to be very wary when purchasing one. Variable annuities tend to be riskier because they are dependent upon the ups and downs of the stock market. Principal is not generally guaranteed in variable annuities so when the markets go down, the variable annuity will lose money. This may not be suitable for those on fixed incomes who are dependent upon their nest egg to survive and who cannot afford to lose capital.

If you have questions about your stock brokerage account, please give us a call. We have been helping investors recover stock market losses for 25 years.

Nationwide representation

Free consultation.

Rex Securities Law

561 391 1900

Reef Oil & Gas Investment Subject of FINRA Claim

Rex Securities Law filed a FINRA arbitration claim on behalf of an elderly widow who was sold a number of unsuitable and risky limited partnerships and non exchange traded real estate investment trusts (REITs).

One of the limited partnerships is Reef Oil & Gas Income and Development Fund III LP.  According to the offering documents, this investment ,which went to the market in late 2007, was to be sold only to “accredited investors”. The offering was closed in 2008 with nearly $90 million raised. Units were $100,000 each with a minimum purchase of 1/4 unit ($25,000) .

The SEC defines an accredited investor to include a person with a net worth , not counting the value of the primary residence, of $1 million or more or a person within income exceeding $200,000 in each of the two most recent years or joint income of over $300,000 a year. In addition, there must be a reasonable expectation of the same income in the current year.

In order to make sales, brokers are tempted to stretch the rules and as in this case, exaggerate income, net worth or both in order to get the sale approved. Limited partnerships and other alternative investments tend to have much higher commissions than conventional investments, hence the temptation.

Reef Oil and Gas sold a number of other investments in the oil patch, including these:

  • Reef 2007-2009 Drilling Program
  • Reef 2010 Drilling Fund
  • Reef 2012-2013 Drilling Fund
  • Reef 2011 Private Drilling Fund
  • Reef 2012-A Private Drilling Fund
  • Reef Global Energy I through IX
  • Reef Income Funds, various years

Brokers have a duty to make suitable recommendations. If you were sold an investment and were not apprised of its risks or did not fully understand it, you may be able to recover damages. Likewise if the investment was only qualified for sale to accredited investors and you don’t meet the financial criteria, you may have a claim for damages.

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

Broker Arthur Apostol Caught Pasting Signatures on Account Transfer Forms

To settle a recent FINRA enforcement action , In the Matter of Arthur Apostol, Respondent, (AWC 2012032570701, February 5, 2013, the subject broker, Mr. Apostol submitted a letter of Acceptance, Waiver and Consent. The action brought by FINRA was for a rules violations for an abuse that we see all too many times in the course of our practice representing clients seeking recovery of stock market losses.

The abuse we are talking about is when a broker decides it is much easier to sign his client’s signature than it is to have the client sign the necessary documents.

In the instant case Mr. Apostol, who worked for NewAlliance Investments, was transferring to a new position at LPL Financial during the summer of 2011. As is generally the case, he desired to take as many of his old clients with him to his new job at LPL as possible. In order to transfer an account from one firm to another there are certain transfer documents that must be signed by the customer authorizing and acknowledging the transfer.

FINRA  alleges that he submitted new account forms in connection with the transfer of the accounts on which he had affixed customer signatures by cutting and pasting signatures from other documents that contained authentic signatures. In addition, FINRA alleged that in several instances he had clients sign blank forms which he intended to complete in the future.

FINRA suspended Apostol for three months and fined him $5,000.According to the FINRA BrokerCheck site, Apostol is not currently registered with FINRA.

If you purchased an annuity, a limited partnership, a private placement or other alternative investment, in most instances there are documents that should have been presented to you for signature.

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

John Thomas Financial Subject of Investigation

John Thomas Financial, a broker/dealer owned and run by Tommy Belesis (Anastasios P Belesis) , who appeared in Oliver Stone’s “Wall Street: Money Never Sleeps”, is the subject of an investigation involving the FBI, FINRA & the SEC according to a story that appeared in the New York Post on February 7, 2013.

According to the story, the inquiry is focused on whether John Thomas Financial had received information in advance of Bristol-Myers Squibb deal to buy drugmaker Inhibitex.

Mr. Belesis FINRA records, available here, indicate he has a number of issues with customers and a former employer. One customer was awarded about $259,000 on a claim of churning, breach of contract and breach of fiduciary duty. He was discharged from S.W. Bach & Company because of “an inaccurate representation of identity to customer”.

The day after this story broke, the Investment News announced that John Thomas Financial has withdrawn from a suit it filed against five ex-brokers alleging they used stolen proprietary information to lure customers away. According to that article, affidavits filed in response to the suit say that John Thomas, through Belesis, promoted a pump and dump stock scheme.

One example cited is Liberty Silver Corp., a company promoted by John Thomas. Liberty Silver traded at $1.55 in October before the SEC suspended trading. It is currently trading for about 39 cents.

In January 2009, John Thomas Financial was lead underwriter on a private placement offering for America West Resources (AWSR) that raised over $5 million. That stock was trading at over $2.75 in early January 2009. It currently trades a one penny.

We have been helping investors recover investment losses for 25 years. If you have  questions about losses in your stock brokerage account please contact us.

Nationwide representation.

Free consultation.

Rex Securities Law

561 391 1900

LPL Financial REIT Lawsuit Settled With Massachusetts Regulators

UPDATE May 2013In May 2013, Massachusetts regulators announced that the amount of reimbursement to investors was more than doubled to $4.8 million. Original post that follows was published on February 7th 2013.

The suit filed by Massachusetts securities regulators against LPL Financial in December 2012 was settled February 6, 2013. LPL Financial will pay a fine of $500,000 and is required to permit Massachusetts residents to return their nontraded REITs to LPL at the original purchase price, which was $10 a share for most of the REITs involved. There is a cap of $2 million (see above, actual amount is $4.8 million)  on the amount of purchases LPL Financial is required to make.

The December 2012 complaint, which alleged that LPL failed to adequately supervise their brokers and sold the REITs in violation of state limits, as well as their own internal policies,  named the following seven real estate investment trusts (REITs):

  • Inland American
  • Cole Credit Property Trust II
  • Cole Credit Property Trust III
  • Cole Credit Property 1031 Exchange
  • Wells REIT II
  • W.P. Carey Corporate Property Assoc. 17
  • Dividend Capital Total Realty

LPL Financial and Ameriprise are the two biggest sellers of nontraded REITs. According to industry sources, of the $10 billion worth of these products sold, 20% of that total was sold by LPL  and Ameriprise.

REITs invest in commercial real estate, such as hotels and
strip malls. They are sold to investors with the pitch that property will increase in value, that investors will receive a steady flow of cash distributions and with little or no warning about the fact it may not be possible to sell them if cash is needed. Many nontraded REITs ceased distributions long ago leaving retirees wondering how they will pay their bills. 

Nontraded REITs do not trade on securities
exchanges making them illiquid or difficult to sell in secondary
markets. Nontraded REITs have higher fees for
investors than publicly traded REITs which may answer the question why so many of these illiquid investments were sold to retirees.

For more on nontraded REITs, including the other dozen or so problem ones, follow the link on the left , 3/4 of the way down this page to the link “REITs”. There are over 50 posts on this topic discussing the other  nontraded REITs , like KBS, Behringer Harvard, Inland, Wells, Hines, Dividend Capital, est. , as well as discussions about the secondary market where these products generally sell at a steep discount to the “estimated value”  the company sends you from time to time.

For example, KBS I recently announced to investors that the estimated value had risen 2 cents to $5.18. In a recent survey made to the secondary market makers, I received price bids of $2.25-$2.50.

Time May Be Running Out

Most of these REITs were sold from 2006 forward. You should know that the FINRA arbitration rules make it difficult to pursue claims on purchases made more than six years ago, so if you have been considering taking action to recover your losses, you would be wise to take action now.

We have been helping investors recover stock market losses for 25 years. Contact us for a no charge consultation.

Nationwide representation.

Rex Securities Law

561 391 1900

Nationwide representation of victims of stockbroker fraud and the malpractice of investment professionals.

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