Investors Would Be Wise to Listen to Warnings from Retiring Goldman Sachs Broker

In what is probably being described today by members of the financial services industry as a leak of insider information, retiring Goldman Sachs director Greg Smith provided a rare glimpse into the dark corners of Wall Street where those in control make decisions affecting the financial futures of investors planet wide.

Smith’s op-ed article in the New York Times today indicates that the financial industry problems leading up to the 2008 crash are far from over. While I suggest you read the article yourself, here are some of his observations after his 12 years with Goldman:

  • “I can honestly say that the environment now is as toxic and destructive as I have ever seen it”
  • “the interests of the client continue to be sidelined in the way the firm operates and thinks about making money”
  • “The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.”
  • “Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.”
  • “…get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman.”

Considering his position as head of Goldman’s US equity derivatives business in Europe, the Middle East and Africa, investors who have purchased any Goldman derivative products are probably having a little trouble sleeping right now.

Smith goes  on to say:

  • “It makes me ill how callously people talk about ripping their clients off.”
  • “will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.”

Thank you Mr. Smith for the insight. Thanks even more for the warning.

Investors take heed.

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 , 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

Securities Regulator Awards $2.1 million For Sale of Tenant in Common Investments (TICs)

A FINRA arbitration panel found that TIC investments were unsuitable and ordered Pacific West Securities to pay $2.1 million in damages to a couple that had been clients.

TICs are real estate securities also known as tenant-in-common exchanges and have been very popular over recent years.

Unfortunately the investor may see little or none of the money since Pacific West’s CEO announced that the firm would be forced to close down. This danger, entrusting your nest egg to a firm that may have limited resources, is one we have warned investors about in the past. See this link (bottom of page “A Word to the Wise…”) for more on the dangers of dealing with a thinly capitalized broker-dealer.

The arbitration panel found that the TICs were not suitable for the couple “given their age, financial condition, cash flow needs, risk tolerance, over concentration in real estate and for other reasons”. The panel also awarded $200,000 in attorney fees and interest and was particularly concerned about the lack of a suitability analysis, saying in their order:

“Among other evidence of a violation of a standard of care under the Securities Act of Washington was the disavowal by [Pacific West and its broker, William Swayne II] of any obligation to conduct a suitability analysis for the sale of TICs in the circumstances of a Section 1031 — like-kind-assets exchange for tax deferral purposes,” according to the award. The arbitrators “determined that the sale of these securities to (the couple) violated the duty of reasonable care.”

Broker dealers that sold TIC investments include:

Alternative Wealth Strategies
American Wealth Management
Berthel Fisher & Co
Cambridge Investment Research
CapWest Securities Inc.
DBSI Securities
DeWaay Financial Network, Inc.
Equity Services Inc.
FINTEGRA LLC
F.A. Repple & Co.
Grubb & Ellis
INVEST Financial Corp.
Investment Security Corporation
Investors Capital
J.P. Turner Co. LLC
LaSalle St. Securities
KMS Financial Services, Inc.
LPL Financial
MCL Financial Group Inc.
Meridian Capital Partners
Next Financial Group
NPV/Direct Invest
Omni Brokerage Inc.
Orchid Securities
Pacific West Securities
QA3 Financial Corp.
Quest Securities
Questar Capital Corp.
Regent Financial Group
Sanders Morris Harris
Sagepoint Financial
Securities Network LLC
Sigma Financial
U. S. Advisors LLC
U. S. Commercial
WFP Securities

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

Florida Dept. of Elder Affairs Announces Investment Fraud Information Website for Seniors

A recent article in the Palm Beach Post addressed the fact that scams and fraud against the elderly are a major problem in Florida.

According to Florida Department of Elder Affairs:

  • Seniors 85 and older are the State’s fastest growing age group
  • Florida ranks first in percentage of residents 60 or older
  • Florida has more than 1.7 million residents who are 75 and older

This group is the most susceptible to investment fraud and the group that needs to be the most wary given the fact that there is little hope of replacing capital that is lost during the retirement years.

Jeff Atwater, Florida’s Chief Financial Officer announced the launching of On Guard for Seniors, a new website designed to educate consumers about financial and insurance issues, annuities, reverse mortgages, long-term care insurance and identity theft.If you or one of your loved ones fall within the age group described above you may find the site of interest.

Since seniors living on fixed income are constantly concerned about making their savings last, they are prone to the temptation of fraudulent or misleading sales pitches. Obviously the unscrupulous members of the financial services community are aware of this vulnerability and ready to take advantage, as we read everyday as the newest fraud emerges.

Florida’s attorney general has a fraud hotline at 866-966-7266. Additional valuable consumer information related to credit cards, identity theft, eyeglasses and contacts and foreign lotteries is available at My Florida Legal.

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

Felix Investments & SharesPost Scrutinized By Securities & Exchange Commission

Investment News reports that the US Securities and Exchange Commission and FINRA served Felix Investments LLC a Wells notice, signifying that the regulators intend to institute
sanctions for violating securities laws in connection with sales activities in 2010.

The article attributes the information to “two people with knowledge of the matter” and goes on to say that regulators have been investigating the trading in equity of closely held startup companies for over a year and that SharesPost Inc. is another potential target.  

The regulators are apparently concerned that because the closely held companies are not required to make the same financial disclosure as public companies, investors are more susceptible to fraud.

Felix creates and sells pools of investments through which investors can purchase shares of non-public stock, like the recent offerings of Facebook and Twitter.

SharesPost acts as middleman lining up sellers with buyers. Trading of this type is for accredited investors, those with at least $1 million in assets and income of $200,000 or more.

Last year Goldman Sachs pulled their plan to offer $1.5 billion of Facebook equity to US investors citing “immense media attention” which might lead to a violation of SEC rules limiting the sale of private securities. Instead  Goldman offered it only to non-US investors.

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

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

Investment Loss Recovery-Information on recovery of investment losses due to the negligence or fraud of stockbrokers. Nationwide representation.

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