Archive for the ‘Stock Loss’ Category
Oregon’s Division of Financial and Corporate Securities (DFCS) found LPL Financial liable for failure to supervise. Specifically, the firm failed to adequately oversee one of its financial analysts, an unscrupulous broker who committed financial elder abuse, pushing high-risk investments to elderly clients (and those mentally incompetent to make investment choices).
WASHINGTON, DC - MARCH 02: Mickey Rooney testifies during the Justice For All: Ending Elder Abuse, Neglect & Financial Exploitation hearing at the Senate Dirksen Building on March 2, 2011 in Washington, DC. (Image credit: Getty Images via @daylife)
Elder Financial Abuse
Jack Kleck, formerly a branch manager for LPL Financial’s La Grande, Oregon office, was found guilty of selling risky gas and oil partnerships to 30+ clients, the majority of them over 70 and in poor health. The investments were inappropriate to the clients’ financial goals—definitely not the safe investments Kleck characterized them as.
Charges & Penalties
For not adequately overseeing the actions of Kleck, for failing to implement its own oversight procedures and company policies, and for other violations of securities laws, LPL was fined $100,000 by the Oregon DFCS.
The penalty for Kleck? A fine of $30,000—and he can no longer practice as a stockbroker in Oregon.
LPL & Stockbroker Malpractice
Since the investigation, LPL Financial claims it has beefed up its oversight policies and procedures, is increasing the number of employees who review sales transactions, has administered tougher exams at their branch offices, and is implementing other practices to improve compliance with the law.
Help for Victims of Elder Financial Abuse
Elderly investors are often the victims of financial elder abuse similar to what happened at LPL. Specific laws exist to protect the elderly from this type of abuse, and those laws provide for treble or multiple damages as well as attorney fees. States throughout the nation are examining financial firms and their brokers to ensure that they are dealing with elderly clients in an appropriate manner. Meanwhile, it is imperative that elderly investors be extremely careful when they do business with financial advisors, brokers and brokerage firms.
If you think that you’ve been the victim of financial elder abuse, contact a securities fraud lawyer at Carlson Law immediately for a free consultation 619-544-9300.
Tags: breach of fiduciary duty, Elder abuse, Fiduciary Duty Breach, Financial adviser, Investment, LPL Financial, Securities Fraud Attorney San Diego, Stock broker, Stock Fraud Attorney, stockbroker malpractice
Posted in Broker Fraud, Fiduciary Duty Breach, Investment Fraud, Negligent Misrepresentation, Securities Arbitration, Securities Law, Stock Loss | Comments (0)
In a recent New York Times editorial, Goldman Sachs exec Greg Smith voiced his opinion on the real impetus behind stockbroker malpractice: the avarice of brokerage firms. According to Smith, the greed of investment banking firms is so great that it impels them to put extreme pressure on stockbrokers to sell with the best interest of the firm in mind — without regard for the financial wellbeing of clients. As stated by Mr. Smith:
“My clients have a total asset base of more than a trillion dollars. I have always taken a lot of pride in advising my clients to do what I believe is right for them, even if it means less money for the firm. This view is becoming increasingly
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unpopular at Goldman Sachs. Another sign that it was time to leave.”
Smith is not alone in his opinion, which is seconded by others in the world of finance, including Rall Capital Management’s Bob Rall, a fee-only advisor, and Russell G. Thornton, a VP at Wealthcare Capital. According to Rall, wirehouse firms do not focus on yield to the client (YTC). Instead, they focus on selling their proprietary investment products. And when a broker focuses on his or her own interests and the interests of brokerage firms rather than on client interests, the result is often a breach of fiduciary duty and stockbroker malpractice.
What Is a Wirehouse Broker?
A wirehouse broker works for a wirehouse brokerage firm (a national firm that has numerous branches). Ordinarily, wirehouse brokers are full-service stockbrokers who offer clients an array of services, from researching investment opportunities to buying and selling products. They are supposed to function as fiduciaries, not as sales reps for their firms.
Because wirehouse brokers have access to the numerous resources of the major brokerage house for which they work, including the house’s own investment products, they have long been considered superior to independent brokers—that is, until the financial debacle of 2007-08, which was precipitated by stockbroker fraud and the unethical practices of firms in pushing their proprietary investment products above more suitable client options.
Does Your Broker Put Your Financial Wellbeing First?
Today more than ever, investors must carefully examine the performance of their financial advisors in order to avoid investment loss.
Is your broker behaving more like a sales rep for a brokerage house than a fiduciary who is committed to your financial wellbeing? Is your broker aggressively pushing a firm’s proprietary products? Or is he or she offering sound investment advice based upon research and your unique needs and financial situation?
If you believe you have suffered investment loss due to a breach of fiduciary duty on the part of your broker, contact a stockbroker fraud lawyer today at Carlson Law, (619) 544-9300.
Tags: breach of fiduciary duty, Broker, Brokerage firm, Fiduciary, Finance, Goldman Sachs, Investment, investment loss, investment recovery, New York Times, Sales, Securities Fraud Attorney San Diego, stockbroker fraud, stockbroker fraud lawyer, stockbroker malpractice, Wall Street
Posted in Broker Fraud, Fiduciary Duty Breach, Investment Fraud, Negligent Misrepresentation, Securities Arbitration, Securities Fraud, Securities Law, Securities Litigation, Stock Fraud, Stock Loss | Comments (0)
In October 2011, a former Agent for Hartford and Nationwide Life Insurance companies pled guilty to charges of theft and received a 10-year prison sentence. By Matthew J. Ryan’s own admission, he exploited weaknesses in the insurance companies’ practices and procedures in order to steal from the variable annuity contracts Hartford and Nationwide issued to his clients.
Ryan created fake companies and bogus “transfer forms” which he had his clients sign. The bogus forms gave Ryan the ability to divert funds from his customers’ variable annuities and, ultimately, into his own accounts. Hartford and Nationwide honored thousands of Ryan’s transfer requests, despite the fact that the fraudulent documents were obviously illegitimate. The fraudulent documentation was not detected until 2010. By that time, however, the former
agent had diverted an excess of $3M over a period of five years.
Two additional insurance companies have settled claims made by Ryan’s fixed variable annuity customers. Currently, combined suits of more than $3M against Nationwide and Hartford are pending.
Are you a former client of Mathew J. Ryan? Do you believe that your variable annuity contract assets have been or are being illegally diverted or invested unsuitably? If the answer to any of
these questions is yes, contact investment fraud lawyer Daniel Carlson at Carlson Law in San Diego for a free consultation. As an experienced investment recovery attorney, Mr. Carlson may be able to help you recoup all or part of financial loss.
Tags: Annuity (US financial products), Business, Contract, financial loss, Financial services, fraud, Insurance, investment fraud lawyer, investment recovery attorney, Life annuity, Matthew J. Ryan, San Diego, variable annuities, variable annuity, variable annuity contracts
Posted in Broker Fraud, Fiduciary Duty Breach, Investment Fraud, Securities Arbitration, Securities Fraud, Securities Litigation, Stock Loss | Comments (0)
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According to the Wall Street Journal, in May 2011 the Securities and Exchange Commission (SEC) acknowledged that credit-rating agencies, desirous of pleasing the companies they rate, are sometimes less than objective in their evaluations. To mitigate this problem, the SEC has proposed that credit-rating firms operate under stricter guidelines.
This month, the Journal reports that the SEC is currently contemplating civil fraud charges against some of these credit-reporting firms for their part in the development of mortgage-bond deals that precipitated the recent financial crisis.
During its investigation, the SEC is examining the research done by Standard & Poor, Moody’s Investors Services, and other ratings agencies into the subprime mortgages (and additional loans) that underpinned recent ill-fated mortgage-bond deals. Was the research adequate? Or was it so slipshod as to constitute negligence or fraud?
Although a Standard & Poor spokesperson declined knowledge of any SEC investigation, she maintained that the ratings firm would cooperate with any request made by the SEC.
The SEC’s inquiry into ratings firms is part of its larger investigation into Wall Street’s culpability in the recent financial crisis. The investigation may or may not result in investment fraud charges being brought against the companies under scrutiny.
Tags: civil fraud, Credit rating agency, financial crisis, Investment Fraud, Moody's, Mortgage bond, Securities Fraud, Standard & Poor, U.S. Securities and Exchange Commission, Wall Street, Wall Street Journal
Posted in Fiduciary Duty Breach, Investment Fraud, Negligent Misrepresentation, Securities Arbitration, Securities Fraud, Securities Law, Securities Litigation, Stock Loss | Comments (0)
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A recent class action suit against Lehman Brothers as well as an enforcement proceeding against UBS Financial Services by New Hampshire has encouraged investors to hire investment recovery litigators and pursue claims against firms selling Lehman Brothers principal protected notes in an attempt to recoup their financial losses. According to New Hampshire’s claim, UBS engaged in broker malpractice by failing to disclose the risky nature of principal protected notes (PPNs). As a result, New Hampshire investors lost 2.5 million.
Principal Protected Notes
Principal protected notes (PPNs) are structured investments that have been around for years. Like all structured investments, PPNs connect CDs and fixed income notes to the performance of currencies, commodities, equities and/or other assets. Structures investment products are legitimate investments, and principal protected notes are a legitimate form of them.
Structured investments may have partial or full principal protection. Some pay a variable sum at their maturity. Others pay by coupons that are connected to a particular index or security. Given their risk and return reports, structured investments in general are appropriate for the portfolios of many investors.
In short, they are unsecured promissory notes connect to referenced securities, and as such they are not without risks. Unfortunately, according to claimants, investment firms committed broker malpractice by marketing these products to customers as safe investment alternatives.
Marketing of PPNs to Retail Investors
Beginning in 2005, PPNs became a particularly popular type of structured investment for retail customers. Noting their increased sales to non-institutional customers, the Financial Industry Regulatory Authority (FINRA) expressed concern that brokers were committing a breach of fiduciary duty by marketing principal protected notes to retail customers as “conservative” investments with “predictable current income.” In fact, the agency issued a notice to brokerage firms in September of 2005 that clear guidance regarding the risks involved in these financial products should be given to retail customers.
PPNs, Lehman Brothers & Bankruptcy
When PPNs mature, investors typically receive a return on the principal from the borrower. In this case, the borrower was Lehman Brothers. Unfortunately for investors, when Lehman Brothers filed for bankruptcy, even the principal on these notes became unprotected. Lehman’s PPN obligations on the notes were unsecured–and behind secured notes in the creditor bankruptcy line up.
The Case Against Lehman Brothers
Unsurprisingly, investors are now seeking to recover their financial losses. Although the specific allegations of claimants vary, all assert that Lehman Brothers, selling brokerages like UBS Financial Services and others, committed broker malpractice by falsely marketing PPNs as conservative investment product alternatives.
Specifically, claimants allege, these PPN products were depicted as 100 percent principal protected if investors held them to maturity.
Brokers also presented the PPNs as principal protected if the indices underlying them held their value. Furthermore, firms and brokers did not warn customers of the risks involved in investing in PPNs, nor did they warn them about what would happen if the underlying backer of the notes, Lehman Brothers, defaulted. Customers were also not made aware of the Lehman Brothers’ decline and that its fall could affect their investment’s value, making it in effect worthless.
It’s also been alleged that firms continued to push PPNs after Bear Stearns collapse, a failure which should have been a clear indicator or “red flag” of the risks involved in investing in banks that hold large numbers of subprime mortgages. It’s also been alleged that firms pushed PPNs on retail customers at a time when they themselves were reducing their PPN holdings. The accuracy or falsity of these claims has yet to be determined. But if firms did indeed recommend PPNs while reducing their own holdings, litigators are likely to claim broker fraud rather than simply failure to disclose.
Did your financial advisor mislead you into investing in PPNs, causing you to suffer financial loss as a result? If so, you need the advice of an investment recovery counsel. Contact Carlson Law in San Diego at 619-544-9300 today for a free consultation.
Tags: Bear Stearns, breach of fiduciary duty, Broker Fraud, broker malpractice, Business, Class action, failure to disclose, Financial Industry Regulatory Authority, financial losses, Financial services, FINRA, Investing, investment recovery litigators, Investor, Lehman Brothers, Negligent Misrepresentation, PPNs, principal protected notes, Securities Fraud Attorney San Diego, Stock Fraud Attorney, structured investments, UBS, UBS Financial Services
Posted in Broker Fraud, Fiduciary Duty Breach, Investment Fraud, Negligent Misrepresentation, Securities Arbitration, Securities Fraud, Securities Law, Securities Litigation, Stock Fraud, Stock Loss | Comments (0)
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According to a June 6, 2011 article by James Vicini for Reuters (“Halliburton securities fraud lawsuit reinstated”) the U.S. Supreme Court has reinstated a securities fraud class-action lawsuit filed against Halliburton in 2001 by pension and mutual fund investors on behalf of all buyers of Halliburton stock between June 1999 and December 2001.
Claimants in the case charge that Halliburton fraudulently overstated its engineering and construction revenues as well as the positive impact its merger with Dresser Industries would have on the company. At the same time, claimants allege, Halliburton misled investors regarding the company’s liabilities due to asbestos.
Because of these misrepresentations, claimants argue, Halliburton stock was artificially inflated and, when the company revealed the true state of its affairs, its stock fell dramatically, causing financial loss to investors.
The lawsuit had formerly been thrown out of court by a Texas federal judge who ruled that evidence of loss causation, a link between the claimants’ losses and the company’s actions, was insufficient. And an appeals court upheld that decision.
Their rulings created confusion among appeals courts regarding the necessity of claimants to prove loss causation early in the litigation process.
The Supreme Court disagreed with the judge and the appeals court, ruling that stock fraud plaintiffs do not have to prove loss causation simply in order to pursue a class-action lawsuit. That’s good news not only for claimants in the Erica P. John Fund v. Halliburton case, but also for injured investors throughout the nation who’ve had their suits quickly dismissed due to insufficient initial proof of loss causation.
Tags: Class action, class action securities fraud, financial loss, Halliburton, Lawsuit, loss causation, Reuters, Securities Fraud, Stock Fraud, Supreme Court of the United States
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Often, investment advisors, stockbrokers and brokerages who unsuitably push Reg. D Private Placements on investors claim that any financial losses investors subsequently experience occur despite their due diligence. However, these private investments pay high fees that can induce some financial professionals to look the other way, focusing on the fifteen percent fee rather than the best interests of their clients in recommending these high-risk investments without the required due diligence having been performed. With the smell of large commissions and enormous fees in the air, it’s probably easy for brokers to rationalize away all of the drawbacks, risks, and any lack of appropriate due diligence for private placement investments.
Luckily for investors the Financial Industry Regulatory Authority (FINRA) has decided to come down hard on the sales of Reg. D Private Placements. At a yearly meeting of the agency, FINRA CEO and Chair Richard Ketchum explained that in the future brokers who promote and sell private placements must “push and pull” for the necessary due diligence information in order to avoid liability and assure that they’re making sound investment recommendations for their clients. That means doing a lot more than reading basic investment documents and attending “canned” meetings if questions needed to be asked.
At Carlson Law we pursue brokerage firms and financial professionals who recommend inappropriate, high-risk private placements to clients. For elderly investors, conservative investors, and those with a net worth of less than $1 million or a yearly income of less than $200,000, private placements may be per se inappropriate investments. If you’ve suffered financial loss due to stockbroker malpractice, contact Carlson Law in San Diego today at 619-544-9300.
Tags: Brokerage firm, Due diligence, Finance, Financial Industry Regulatory Authority, financial loss, financial losses, FINRA, inappropriate investments, Investment, investment attorney, Investor, Private placement, private placements, Reg. D Private Placements, San Diego, stockbroker malpractice
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If you’ve invested in mutual funds, you should know that taxes can affect your investment, sometimes significantly reducing your net returns. To completely avoid federal taxes, consider investments such as tax free municipal bonds. Also be aware that some mutual fund investments are more tax efficient than others. Below is some basic information regarding mutual fund fees, expenses and income taxation, check with your professional tax preparer regarding your specific tax situation.
What other costs are associated with mutual funds?
In addition to taxes, mutual fund fees and ongoing fund expenses related to holding mutual funds affect your net returns. For instance, when you sell, buy, and exchange shares, you will likely pay sales loads and transaction fees. Additionally, as a mutual fund holder you must pay ongoing expenses, i.e. management fees and 12b-1 fees.
When you’re considering purchasing a mutual fund, be sure to consult the fee table located at the front of its prospectus. This table compares the costs of different funds. And be aware that just because high fees are associated with a fund doesn’t necessarily mean that it’s a high-performing investment product.
Nontaxable capital returns
You can receive a return on a mutual fund without having to pay taxes on it. Usually, this happens when the return recovers some or all of your cost basis in the fund. Because they’re not strictly earnings, these returns are tax-free. You must, however, report them on your tax return.
Taxable dividend income
Many mutual funds pay dividends on a yearly, monthly, or quarterly basis to shareholders on a pro-rata basis. These dividends must be reported on your tax return for the year they were distributed.
Mutual fund dividends earned by individual shareholders often, but not always, qualify for taxation at capital gains rates. For instance, corporate stock dividends that a mutual fund receives and passes to shareholders usually qualifies for taxation at capital gains rates. If, however, mutual fund dividends are the result of other some other type of earning, such as interest, they’re taxed like ordinary income. Furthermore, special holding period requirements often must be met in order for dividends to qualify for long-term capital gain tax treatment.
Short-term capital gains
For tax purposes, short-term capital gain distributions are usually treated like dividends.
Long-term capital gains
Fund shareholders receive long-term capital gain distributions on a pro-rata basis. They must report these earning on their tax returns as long-term capital gains no matter how long they have held them.
Selling shares
When you sell shares in a mutual fund, usually you must pay tax on any capital gains earned. The taxable amount is ordinarily equal to the difference between the sale price and the original share purchase price. The tax owed on a gain depends on the rate at which the gain is taxed, which depends on how long you held the shares before selling them. In general, if you hold shares over a year before you sell them, any gain realized is considered long-term capital gain. On the other hand, if you sell after less than a year, any gains you earn will be considered short-term gain and taxed accordingly.
Tags: Capital gain, capital gains, Capital gains tax, Dividend, dividends, fees, Investment, investment product, Investor, long-term capital gains, mutual fund, Mutual fund fees and expenses, mutual fund investments, mutual funds, short-term capital gains, Tax, taxes
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Although it’s been three years since financial misconduct on Wall Street rocked the nation, investors still have opportunity to recoup some or all of their financial loss.
If you suffered financial loss during the recent crisis, your broker, brokerage or financial advisor may be legally responsible for that loss. A variety of legal actions can be brought against financial professioals for malpractice, such as negligent investment misrepresentation for making inappropriate investment product recommendations, intentinal securities fraud and inapropriate account turnover/excessive trading or “churning” to name only a few examples.
“Each state has different statutes of limitations for different kinds of claims,” explains Daniel Carlson of Carlson Law, a securities litigation firm in San Diego. “Your ability to file for damages depends on where you live and the kind of claims you have. While one state may have a three-year statute of limitations for all claims, others may have deadlines as long as 10 years for claims like breach of fiduciary duty. And in some states, the ‘discovery rule’ applies to fraud. That means the statute of limitations’ clock doesn’t start ticking until an investor ‘discovers’ he or she has been defrauded.”
Defrauded investors may also be able to file claims in more than one state. “It depends upon where you live, where you transacted business with your broker and whether the account agreement has a ‘choice of law’ provision indicating the state law that applies in the event of any claims,” Carlson says.
“And of course there’s more than one way to file a claim,” he adds. “If there are several options available, a good litigator will choose the state and the claims that give their clients the best chance of success.”
Did you experience financial loss due to your financial advisor’s misconduct? Did your broker lie to you about an investment? Did he or she give you advice inappropriate to your financial goals? Don’t wait any longer to fight for the compensation you deserve. Remember, legal deadlines do exist, and your time could be running out.
To discuss your options, contact Carlson Law at 619-544-9300 for a free consultation with an experienced investment recovery lawyer.
“Even if claims seem to have exceeded the applicable statute of limitations, defrauded investors should still contact an attorney,” Carlson advises. “By using all the legal means at their disposal, securities fraud attorneys can sometimes still recover client losses through arbitration even after a statute of limitations has expired.”
Tags: breach of fiduciary duty, broker malpractice, churning, claims, damages, Dan Carlson, financial advisors, financial loss, fraud, investment recovery lawyer, Investor, Law, San Diego, securities fraud attorney, securities litigation firm, statutes of limitations, Wall Street
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In 2009, the Securities and Exchange Commission (SEC) began a civil fraud investigation of over a dozen banking firms that traded and sold mortgage-backed collateralized debt obligations (CDOs). This investigation has engendered subsequent probes into the behavior of Wall Street firms.
Did Wall Street bankers defraud investors by selling them CDOs in order to make a profit for themselves—and a few special clients—when the mortgage market collapsed? Federal prosecutors believe so. In fact, in the spring of 2010, they launched a criminal investigation into the matter, and it’s still ongoing.
Investigators allege that a number of major Wall Street banks (including Citigroup, Deutsche Bank, Goldman Sachs, J.P. Morgan Chase, Morgan Stanley and UBS) created CDOs in order to sell and then bet against (short) them in the event of a crash. These CDOs include Baldwin 2006-I and AB Spoke, which Morgan Stanley sold investors, and Carina, Cetus and Virgo, which Citigroup, Deutsche and UBS may have sold for fraudulent purposes.
New York’s Attorney General Andrew Cuomo has also begun an investigation into the behavior of Wall Street banks regarding CDOs. Investigators allege that Citigroup, Credit Agricole, Credit Suisse, Deutsche Bank, Goldman Sachs, Merrill Lynch, Morgan Stanley and UBS gave credit rating agencies misleading data in order to inflate CDO ratings. These agencies in turn have been harshly criticized and even sued for assigning high scores to numerous toxic CDOs.
Furthermore, the U.S. Attorney’s Office of Manhattan and the SEC are collaborating to determine if Wall Street banks misrepresented CDOs to their clients, failing to disclose pertinent facts when trading, marketing and selling them to clients.
Since hearings in Congress revealed that fraudulent conduct on Wall Street precipitated the nation into financial crisis, prosecutors have taken legal action against two traders for Bear Stearns without success. However, legislators are calling for more prosecutions, and criminal probes into Wall Street’s activities widening.
The SEC has subpoenaed Citigroup, Deutsche Bank, J.P. Morgan Chase and UBS, asking that they turn over a wide range of paperwork, including prospectuses and offering documents (final copies as well as drafts) and lists of investors associated with mortgage-related transactions. The SEC has also filed an action in federal court against Goldman Sachs, claiming that a trader on behalf of the company created an investment product designed to fail so that one of the company’s pet hedge-fund clients could bet against it and profit at the expense of less favored Goldman investors. Goldman is purportedly seeking to settle the case out of court.
From 2005 to 2007, diverse Wall Street banks issued CDOs totaling $1.08 trillion. The research firm Thomson Reuters reports that Citigroup, Deutsche Banks and Merrill Lynch issued the greatest dollar amount. J.P. Morgan, Morgan Stanley, UBS and Goldman were numbers five, seven, ten and 14 on the list, respectively.
If you believe that you’ve suffered financial loss due to CDO fraud, contact Carlson Law at 619-544-9300 for a free consultation today. The investment recovery litigators at Carlson Law are dedicated to getting justice for securities fraud victims.
Tags: CDOs, Collateralized debt obligation, Deutsche Bank, financial loss, fraud, Goldman Sachs, investment loss, investment recovery litigators, JPMorgan Chase, Merrill Lynch, Morgan Stanley, Securities Fraud, Stock Fraud Attorney, UBS, Wall Street, Wall Street banks, Wall Street firms
Posted in Broker Fraud, Fiduciary Duty Breach, Investment Fraud, Negligent Misrepresentation, Securities Arbitration, Securities Fraud, Securities Law, Securities Litigation, Stock Fraud, Stock Loss | Comments (1)
