H. Beck Ordered to Repay $1 Million to Elderly Widow

 On May 17, 2012,  the Securities  Division of Massachusetts ordered H. Beck to guarantee the recovery of $1 million for an 82 year old  woman, with early stage Alzheimer, who was convinced to cash in CDs and buy annuities by one of their brokers. In addition H. Beck was fined $90,000. A copy of the order can be viewed here.

The broker, Paul Dumouchel, who earned over $63,000 in commissions for his acts, convinced the elderly lady to purchase annuities which could not be accessed without a penalty for ten years. In addition, over $5,000 in penalties was incurred for cashing in the CDs.

In his testimony Dumouchel acknowledged that:

“at the investors age, it was not the easiest thing in the world to find suitable investments because many companies would not sell an annuity to someone over 80 years of age…”

We have warned in the past that there are unscrupulous brokers who will take advantage of the elderly. All firms, including H.Beck have a duty to oversee and supervise their brokers to prevent such abuse.

The investigation found that H. Beck failed to supervise its broker allowing the broker to shift her nest egg to wholly inappropriate investments. In addition to a cease and desist order, the administrative fine and the compensation of the elderly lady victim, the order requires H. Beck to:

  • Retain an independent consultant review and monitor their supervisory policies and procedures, including their inspection procedures for a period of two years
  • H. Beck shall not have authority to terminate the consultant with approval of the Massachusetts Division of Securities
  • Contact all of Dumochel’s clients to determine if there are other victims and to compensate any other victims

H. Beck, Inc.
is the securities arm of The Capital Financial Group and is an
independently operating subsidiary of Securian Financial Group, Inc.

Brokers have a duty to make recommendations that are suitable for the investor. If you have suffered losses on investments that you feel are unsuitable for you or that you do not understand, you may be able to recover those losses through FINRA arbitration. We have been helping investors recover stock market losses for more than 20 years. Call us at 561 391 1900.

Free consultation.
Nationwide representation.

Rex Securities Law


 

Rex Securities Law Files KBS REIT Claim vs. Ameriprise

Rex Securities Law is in the process of filing a FINRA arbitration claim against Ameriprise Financial for losses suffered by a retiree from Florida’s west coast who has suffered significant losses as a result of investing in KBS Real Estate Investment Trust upon his retirement in 2007.

The arbitration claim alleges that Ameriprise’s broker touted KBS REIT by claiming that the investment was very similar to an investment in a bond, that the value would not fall below the $10 per share purchase price, that the investment could be liquidated if necessary and that the monthly distributions were guaranteed.

Shortly after the purchase, KBS cancelled their share redemption program and ceased the monthly distributions. After recent regulatory pressure, KBS was forced to let investors know that the shares are worth far less than the $10 purchase price. For more on the decline of KBS REIT value, see our prior post. As we have previously discussed, time will soon be running out for investors who were misled to pursue claims related to the purchase of KBS.

If you have losses in KBS and were misled as to the nature of the investment, you may be able to recover those losses. Contact us at 561 391 1900.

Free consultation.
Nationwide representation.

Rex Securities Law

FINRA Warns Investors to Be Wary of Nutraceutical Stock Scams

On May 26, 2012, the Financial Industry Regulatory Authority (FINRA) warned investors about potential scams related to natural medicines, fortified foods and other products claiming to improve potency, extend your life or to fight the common cold. Here is a link to FINRA’s Investor Alert.

FINRA warns that the solicitations for these potential scams can arrive by phone, fax, emails, text messages, tweets, blogs or message board posts. Scam signals include:

  • Predictions of swift of exponential growth
  • Unsolicited communications promoting the opportunity

You should read the entire FINRA alert if you are tempted to respond to one of these solicitations and remember:

If it looks too good to be true, it probably is.


If you have questions about how your brokerage acccount is being handled or have stock market losses that are unexplained, contact us at 561 391 1900. We have been helping investors recover investment losses for more than 20 years.

Free consultation


Rex Securities Law


SEC Charges Quantek Asset Management for Deceiving Investors

On May 29, 2012, the Securities & Exchange Commission charged a hedge fund adviser from Miami for deceiving investors by leading them to believe that Quantek executives had made personal investments in a Latin-American focused hedge fund. Here is a link to the SEC release.

Think about it, what is more  convincing to a prospective investor than to hear from the selling broker that the broker (or his mother, father, etc) has personally invested in the investment he is pitching? It is a time worn technique that no doubt will continue to be used by unscrupulous brokers. In this case, investors were told that fund managers had “skin in the game”.

The SEC found that Quantek lead executive Javier Guerra, operations director Ralph Patino and former parent company Bulltick Capital Markets Holdings LP misled investors about the investment process as well as certain related-party transactions.

They agreed to pay more than $3.1 million in disgorement and penalties to settle the charges. Guerra and Patino agreed to securities industry bars. 

“When making an investment decision, private fund investors are entitled
to the unvarnished truth about material information such as
management’s skin in the game or the adviser’s handling of related-party
transactions,” said Bruce Karpati, Co-Chief of the SEC Enforcement
Division’s Asset Management Unit. “Quantek’s investors deserved better
than the misleading information they received in marketing materials,
side letters, and other fund documents.”

Brokers owe a duty to investors to tell the whole truth about potential investments they are recommending and to make only suggestions that are suitable for the particular investor. Age, health and financial sophistication, or lack thereof, are all to be taken into consideration by the broker.

If you have questions about losses in your brokerage account, do not hesitate to contact us. You may be able to recover your losses through FINRA arbitration.

Free consultation.
Nationwide representation.
561 391 1900

Rex Securities Law

FINRA Rules Against Lerner in First Apple Non-Exchange Traded REIT Case

The first of what may be potentially hundreds of arbitration cases relating to the sale of Apple REITs by David Lerner & Associates Inc. was recently decided in favor of the claimants. A single FINRA arbitrator ordered Lerner Associates to give the customers their money back in exchange for their Apple REIT nine shares.

As we have previously reported here, here and here, David Lerner and his company have been in the regulatory spotlight for the past year in connection with the sale of almost $7 billion worth of the Apple REITs. According to industry sources, Lerner’s company has collected $600 million in commissions for the sales which comprise over half of the firm’s business.

In June 2011, class action suits were filed against David Lerner & Associates over misrepresentations in connection with sales of Apple REITs. Later during the year FINRA filed actions against Lerner’s company , then against  Lerner himself for  misleading investors about the Apple REITs.

If you purchased Apple REITs and have suffered losses, you may be able to recover those losses. Brokers have a duty to make suitable recommendations to investors. Please do not hesitate to contact us to discuss your legal rights.

Nationwide representation.
Free consultation.
561 391 1900

Rex Securities Law