Posts Tagged ‘breach of fiduciary duty’
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
- Logo of The Goldman Sachs Group, Inc. Category:Goldman Sachs (Photo credit: Wikipedia)
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)
Annabel McClellan, the wife of Arnold McClellan, who was formerly the head of Deloitte Tax LP’s Mergers and Acquisitions, has settled a lawsuit
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alleging that she provided confidential information regarding mergers to family members. If the judge accepts Annabel’s $1M settlement, the Securities and Exchange Commission (SEC) has agreed to drop comparable charges against her husband.
According to the Commission, Annabel gave confidential insider information to her sister, Miranda Sanders, and Miranda’s husband James, on at least seven occasions. The Sanders used the information to make trades that earned them millions of dollars. The SEC claims that James Sanders, who is the proprietor of a financial firm, not only used the tips for his own advantage but also to the benefit of his partners and customers, who also made millions. The SEC further alleges that James took positions with companies in the U.S. that Annabel told him were targeted for acquisition. According to Annabel, her husband was unaware that she was providing confidential information to her sister and brother-in-law.
By settling the lawsuit, Annabel is neither admitting nor denying the charges against her. However, she has pled guilty to lying to the SEC during their investigation of the insider trading scam.
Annabel and Arnold McClellan were first charged by the SEC in 2010 after investigations were conducted simultaneously by the SEC, the Department of Justice (DOJ), the Federal Bureau of Investigation (FBI), and the Financial Services Authority (FSA).
Insider trading is breach of fiduciary duty on the part of a financial officer.
As such, it negatively affects the stock market in various ways. Most obviously, it hurts investor confidence. When a company’s confidential information is used for the benefit of a few, it may also harm the company, ultimately causing financial loss. When insider trader occurs, who is held responsible for this breach of trust? All of the parties involved. That includes the individual who passes the tip along and the person who receives it, as well as anyone who trades based upon illegally obtained insider information.
Are you are aware of an insider trading situation that has been detrimental to your financial welfare? If you feel that you are, contact a securities litigation attorney immediately. For a free consultation, contact security lawyer Dan Carlson of Carlson Law in San Diego today.
Tags: breach of fiduciary duty, Dan Carlson, financial loss, insider trading, Lawsuit, scam, SEC, Securities Fraud Attorney San Diego, Securities Litigation, Security Lawyer
Posted in Securities Law | Comments (0)
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In its roles as conservator for Freddie Mac and Fannie Mae, the
Federal Housing Finance Agency (FHFA) filed securities lawsuits against 17
financial entities in federal court as well as in the state courts of
Connecticut and New York in early September 2011. In the lawsuits the FHFA
alleges that the financial institutions, which range from Bank of America and
Citigroup to Deutsche Bank and Credit
Suisse, violated numerous federal securities and common laws in their sales of
mortgage-backed securities. Citing the Securities Act of 1933, the FHFA seeks
both civil penalties and damages.
According to an FHFA press release, Bank of America and its
fellow financial institutions committed a breach of fiduciary duty when they provided
Fanny May and Freddie Mac with misleading loan descriptions. These
descriptions, which were part of sales and marketing materials, failed to
reveal the true character of the loans, particularly their risk factors. In
other words, they constituted banking fraud.
The current FHFA lawsuit is part of a continuing effort on
the part of Congress and regulators to deal with institutions that engaged in
practices that precipitated the financial crisis of 2008, a crisis in which
risky mortgage-backed securities played an important role. The Washington Post estimates that almost
$200 billion in risky securities were sold to Freddie Mac and Fannie Mae.
Regardless of possible negative effects on the financial
sector and on the recovery process of the housing market, the government appears
to be stepping up its efforts to recover the financial losses investors
incurred during the 2008 crisis. These recent FHFA lawsuits are comparable to
an earlier lawsuit in 2011 which the FHFA filed against UBS Americas, Inc.
If you believe that you have
experienced investment loss due to the misleading marketing practices of a
banking institution, contact an investment recovery lawyer in San Diego today
at Carlson Law.
Tags: Bank of America, banking fraud, breach of fiduciary duty, Fannie Mae, Federal Housing Finance Agency, FHFA, Freddie Mac, investment loss, investment recovery lawyer, Securities Act of 1933, Securities Fraud Attorney San Diego, securities lawsuits, UBS, Washington Post
Posted in Investment Fraud, Negligent Misrepresentation | 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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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
Posted in Broker Fraud, Fiduciary Duty Breach, Investment Fraud, Negligent Misrepresentation, Securities Arbitration, Securities Fraud, Securities Law, Securities Litigation, Stock Fraud, Stock Loss | Comments (2)
An arbitration panel of the Financial Industry Regulatory Authority (FINRA) has ordered the investment banking firm of Morgan Keegan to pay investors $881,000 in compensation for the financial loss clients sustained due to the company’s proprietary funds, which were concentrated in risky subprime mortgage assets.
The firm, which is a subsidiary of Regions Financial Corporation, cost clients approximately $2 billion in these, as well as other, high-risk funds: RMK High Income, RMK Multi-Sector High Income, RMK Advantage Income, RMK Select Intermediate Bond and RMK Strategic Income Fund.
Claimants alleged a variety of broker misbehaviors, including general negligence, negligent misrepresentation, negligent omission, breach of fiduciary duty and failure to supervise. They also claimed vicarious liability and breach of contract. They further maintained that Morgan Keegan violated not only FINRA rules but also the Securities and Exchange Act in its dealings with clients.
The panel found Morgan Keegan liable on a number of the claims and ordered them to pay compensatory damages to Kathy and Palmer Albertine ($33,382), Jon Albright ($105,844), Sam and Susan Davis ($254,642) and Kendall and Peter Tashie ($458,625). FINRA also ordered the firm to pay $26,850 in arbitration forum fees, $28,500 in fees for the claimants’ expert witness and $600 in nonrefundable filing fees.
Tags: breach of fiduciary duty, Broker Fraud, failure to supervise, financial loss, investment loss, Morgan Keegan, Negligent Misrepresentation, Regions Financial Corporation, RMK Advantage Income, RMK High Income, RMK Multi-Sector High Income, RMK Select Intermediate Bond, RMK Strategic Income Fund, Securities Fraud Attorney San Diego
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)
