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

FBI – Investment Fraud Big Business in South Florida

FBI Special Agent David Nanz recently offered some observations and advice about scams and frauds, based upon his time in the Miami field office.

“If it seems too good to be true, it probably is”, words we have all heard but all too often fail to heed.

According to Nanz, the most commonly seen schemes are:

  • Ponzi and Pyramid schemes promising high rates of return with little or no risk. There is no legitimate underlying investment. The fraudster uses money from new investors to pay “profits” to later investors.
  • Market Manipulation-Pump and Dumps as they are often called use deceptive practices to manipulate the price of a targeted security, usually an unknown penny stock, which is sold off by the fraudster after he has convinced others to run up the stock price. Beware of the broker who ‘cold calls’.
  • Commodities Fraud-with gold at a recent high, it is no surprise we have seen so many frauds uncovered where business purport to be in the commodity business when they actually soliciting funds for a transaction that never occurs.

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

Allen Stanford Guilty – Ponzi Scheme

Texas financier Allen Stanford was convicted on 13 of the 14 counts for bilking investors out of $7 billion plus in one of the largest Ponzi schemes on record. The jury deliberated 4 days before finding him guilty of all charges but a single count of wire fraud.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  in Texas and 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

FINRA Claims Lerner Tried to Coverup Apple REIT Results

On June 20, 2011, two class action suits were filed against David Lerner & Associates over its sales of Apple REITs, a family of real
estate-based securities. This follows a recently filed complaint by the Financial Industry Regulatory Authority (FINRA) alleging that David Lerner Associates, Inc. has been misleading investors about the value of the Apple REIT Ten shares. Here is a link to the  FINRA Press Release about the first regulatory action against Lerner.

Lerner’s company sold $6.8 billion of the securities into some 122,600 customer accounts. His company is a prominent advertiser on New York City radio, famous for its tagline, “Take a Tip from Poppy”, and in recent years has hosted seminars drawing hundreds of investors in the Boca Raton, FL area.

In December 2011, FINRA sued Lerner again, this time amending the prior complaint against Lerner’s company and this time naming him individually, for statements he made in an attempt to quell
anxious customers who had reason to be concerned about their investments since two class actions and a regulatory action were filed questioning the value of the investment. This second action claiming that Lerner misled investors about risk and valuation when marketing $2 billion in non-traded REITs also takes issue with Lerner’s attempt to continue to mislead investors. Here are some
of the highlights of the FINRA complaint against Lerner individually:

WHAT FINRA HAS TO SAY ABOUT LERNER’S RECENT CLAIMS ABOUT APPLE REITS:

  • Since Jan 2011, Lerner has sold $442 million of Apple REIT Ten, “without performing adequate due diligence in violation of its suitability obligations”
  • Earlier Apple REITs inappropriately valued REIT shares at a constant artificial price or $11, not withstanding years of performance declines, increased leverage and excessive return of capital to investors
  • Lerner continues to solicit thousands of customers to purchase Apple REIT  Ten without performing due diligence
  • The performance results for Apple REIT Six, Seven, Eight and Nine were misleading because they did not reflect reduction in distribution rates and did not disclose that income was insufficient to support the promised 7-8% returns and that distributions were partially funded by debt.
  • Between 4/28/2011 and 11/17/2011 Lerner made false, exaggerated and misleading claims regarding investment returns, market values, performance and prospects of the Apple REITs to over 1,000 customers during at least four investment seminars
  • Lerner made untrue and misleading statements regarding the prospects of Apple REIT Ten, calling it a cash cow
  • Lerner slide presentations to sell Apple REIT Ten violate FINRA’s advertising rules
  • On June 6 and July 27, 2011, to counter negative press following FINRA’s initial complaint against Lerner Associates, Lerner signed and sent out letters to over 50,000 Lerner customers that contained exaggerated, false, or misleading statements regarding the valuations, performance, prospects, risks, liquidity, and practices of the Apple REIT programs
  • Since July 13, 2011, Lerner continued to make unsupported claims regarding the merger of the Apple REITs into a company that will be publicly traded.
  • Although REITs Six through Nine are all illiquid and worth less than their $11 per share offering price, Lerner has led customers to believe the purported public offering will reap a windfall for investors

SO WHO DO YOU BELIEVE? FINRA OR LERNER?

Do you believe the regulators, who have no ax to grind other  than to
protect the investing public or do you believe the promoter, who
continues to promote?

Apparently Lerner’s PR campaign is succeeding because investors appear to have been swayed by his promises, notwithstanding the not so subtle warning that is coming from FINRA. We have yet to detect that investors are concerned by the FINRA allegations.

READ THE AMENDED FINRA COMPLAINT FOR YOURSELF AND DECIDE
The text of the complaint  filed by FINRA Department of Enforcement v David Lerner Associates, Inc. and David Lerner (CRD No. 307120) on December 13, 2011 can be accessed here.

Read it and make your own decision regarding what amount of concern to have if you own any of the Apple REITs.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  in Texas and 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

Behringer Harvard-Want to Sell Your Shares?

Cheap?
I mean really cheap.
According to the Investment News, there have recently been a couple of unsolicited tender offers for Behringer Harvard Short-Term Opportunity Fund I, a limited partnership and Behringer Harvard REIT I, Inc. a nontraded real estate investment trust.

Investors purchased most of the shares and units at $10.

In one minitender, Peachtree Partners is offering twelve, yes $.12, cents per share for the Short-Term Opportunity Fund I. In another, CMG Legacy Income Fund LLC is offering $1.80 per share for Behringer Harvard REIT I. Both of these offers are only a fraction of the fund’s most recently report valuations.

Behringer Harvard suspended their redemption program some time ago and investors needing liquidity have few options, if any, if they need to dispose of the investment to raise cash. A websearch for “REIT secondary market” will yield a number of companies who help investors dispose of illiquid investments not traded on exchanges.

Many investors purchased nontraded REITs with the belief that distributions would be consistent and unaware of the fact that no market existed should they need to dispose of the investment to raise cash. Stockbrokers have a duty to warn investors of risks and to make recommendations that are suitable.

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

 

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