Posts Tagged ‘Securities Fraud Attorney San Diego’

“Buckets of Money” Claims Lead To Hefty Fines

July 11th, 2013
English: Certified Financial Planner, author, ...

Certified Financial Planner, author, radio and television personality, and inventor of the Buckets of Money strategy Ray Lucia at Sean Hannity’s Freedom Concert in San Diego, California, August 28, 2010. Photo by Andi Hazelwood. (Photo credit: Wikipedia)

Mr. Raymond Lucia Sr., a financial advice author and syndicated radio personality, has been fined $50,000 related to SEC allegations.  The SEC alleged Mr. Lucia provided investors with misleading information regarding his wealth-management strategy, Buckets of Money (BOM).

Mr. Lucia currently hosts the weekday “Ray Lucia Show” which promotes investment strategies that focus on retirees. The SEC alleged that slideshows and other media used by Mr. Lucia to demonstrate the BOM strategy used misleading data to illustrate how a series of fictional portfolios would have performed during various markets over time.

According to an initial decision issued on Monday of this week by an administrative judge, Mr. Lucia made false claims that this “time-tested” investment strategy—geared towards providing retirees with inflation-adjusted income—had been “backtested” empirically during bear markets. The administrative judge further barred Mr. Lucia from any association with any investment broker or adviser and ordered Mr. Lucia’s San Diego-based law firm, Raymond J. Lucia Companies Inc., to pay $250,000. The firm’s investment adviser registration was also revoked.

Mr. Lucia was initially accused by the SEC last September of promoting the misleading “Buckets of Money” strategy at a series of investment seminars. These seminars were hosted by Mr. Lucia and his company and were put on for potential clients. According to the SEC’s September order instituting administrative and cease-and-desist proceedings, the backtesting on the “Buckets of Money” strategy evidenced by Mr. Lucia was insufficient.  Further, the SEC alleged that Mr. Lucia made misrepresentations and omissions related to investment-adviser fees, returns on real estate investment trusts, and inflation rates.

Presently, Mr. Lucia is reviewing the opinion within the SEC’s case and is considering an appeal according to Wrenn Chais, Mr. Lucia’s attorney with Locke Lorde LLP in Los Angeles. “While we respect the commission and its regulatory processes,” said Wrenn, “we respectfully disagree with the majority of the findings of the opinion and the penalties assessed.”

The Carlson Law Firm is investigating potential claims related to this decision. Please feel free to contact our office if you feel you may have a claim at 619-544-9300.

Daniel Carlson is a lawyer in San Diego focused on securities litigation who specializes in recovering investment losses for his clients.

 

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Crowdfunding: The Good, The Bad, And The Fraudulent

July 2nd, 2013
Official photographic portrait of US President...

Official photographic portrait of US President Barack Obama (born 4 August 1961; assumed office 20 January 2009) (Photo credit: Wikipedia)

Daniel Carlson is a lawyer in San Diego focused on securities litigation who specializes in recovering investment losses for his clients.

Signed in April 2012 by President Barack Obama, the JOBS Act creates crowd-sourced funding (“crowdfunding”) as an industry.  The act enables small businesses the opportunity to increase their ability to raise venture funds and sell small amounts of stock to many investors on a national level.  Oversimplified, “crowdfunding” allows the sale of small amounts of shares to many investors through many different platforms and social media.  The regulatory framework for this new investment vehicle is in development, and may not provide the same protection the public has been used to receiving.

This new investment sourcing vehicle is designed to help small businesses and startups and effectively removes many SEC rules and regulations in soliciting invest dollars.  In the past many small businesses have felt they were unfairly subjected to SEC rules and regulations that were not applicable to charities and non-profit organizations.  In a nutshell, previous SEC rules for private investing provided 1) strict rules regarding advertising for investors, 2) limited shareholder numbers, and 3) those looking to become potential investors in many non-publically traded businesses were required to have either an annual income larger than $200,000 or liquid net wealth totaling over $1 million.  Since the JOBS Act, small businesses will be allowed to use crowdfunding, selling small amounts of shares to many investors through many different platforms and media with a murky regulatory framework.

The relatively new investment vehicle of crowdfunding allows potential fraudsters the opportunity to take relatively small amounts of money from a large number of people.  Most investments that are crowdfunded do not require a minimum investment.  In addition, the majority of legal requirements to become an investor in such high risk investments have also been removed and the regulatory framework for this investment device going forward is still unclear.

Back in the 1920’s, business ventures would engage the public by offering to sell stakes in new and upcoming ventures, such as transportation infrastructure or newly invented consumer goods. Eventually, the stock crash of 1929 led to new regulations and standards that changed the way business were funded, including the sale of stock. Through his support of this crowdfunding innovation, President Obama has essentially laid the groundwork for anyone and everyone to invest money in startups and small businesses.  This also opens the door to many types of potential investor fraud and abuse.  The SEC will provide details to regulate the debt and equity crowdfunding provisions of the bill, however at this point they are still unclear.  Financial Industry Regulatory Authority (FINRA) is also planning to provide rules for member firms engaged in crowdfunding.  But as usual, the investor needs to beware of deals that sound too good to be true, and be aware of new ways their investment dollars are being sought.

If you think that you have been the victim of investment fraud, via crowdfunding or otherwise, contact Daniel Carlson at the Carlson Law Firm today for a free consultation at 619-544-9300.

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LPL Ordered to Pay $2.5 Million for Non-Traded REIT Sales

February 28th, 2013

Daniel Carlson is a securities litigation attorney in San Diego who specializes in recovering investment losses for his clients.

English: Seal of the Commonwealth of Massachusetts

English: Seal of the Commonwealth of Massachusetts (Photo credit: Wikipedia)

In late December of last year, securities regulators for the Commonwealth of Massachusetts filed an administrative lawsuit accusing LPL Financial, LLC of violating securities laws in regards to their sale of non-traded REITs (Real Estate Investment Trusts). After an investigation of 587 transactions valued at $28 million dollars, agents found that LPL violated prospectus requirements in 569 of those transactions. The lawsuit demanded that LPL make full restitution to all Massachusetts investors who invested in the non-traded REITs.
On February 6th, 2013, the lawsuit settled when Massachusetts’ regulators ordered LPL Financial to pay up to $2 million dollars to investors and another $500,000 in fines. Massachusetts residents will be allowed to surrender their non-traded REIT’s back to LPL at the investors’ original purchase price, which was around $10 dollars a share.
REITs investments vary, many invest in commercial real estate such as strip malls and hotels. They are often promoted to investors with the sales pitch that the properties will increase in value. Of course, this may or may not happen. Many REITs are publicly traded, meaning that an investor can easily sell the interest if the investor needs to for any reason. A large problem for many investors with non-traded REIT’s, which do not trade on securities exchanges, is that they can be very difficult to sell and get out of. In addition, investors can continue being forced to contribute to the non-traded REIT for things like maintenance and repairs, depending on the language of the individual investment agreement. There are many non-traded REITs who stopped distributions long ago and left investors holding an interest that has little value as malls and hotels closed.
Not surprisingly, non-traded REIT’s generate higher fees and commissions for brokers. This can act as an incentive to unscrupulous agents to sell them to unsuspecting investors, especially seniors.
TIME IS OF THE ESSENCE
While the above action only applies to residents of Massachusetts, LPL sold the non-traded REITs nationwide. Residents of other states, including California, would be well advised to seek legal consultation on their non-traded REITs sold by LPL and other advisors. Since many of the LPL REITs were sold beginning in 2006, it is important to pursue your claim as soon as possible. .
If you think that you have been the victim of investment fraud in regards to non-traded REITs sold by LPL or other companies, contact Daniel Carlson at the Carlson Law Firm today for a free consultation at 619-544-9300.

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FINRA System Open to Investment Adviser Disputes

November 16th, 2012

English: Wall Street sign on Wall Street

On Thursday, November 1st, 2012, FINRA Dispute Resolution issued guidance to attorneys who represent investors and those who represent non-FINRA investment advisers as to the availability of the arbitration and mediation services of the FINRA forum to resolve their disputes.

FINRA, The Wall Street funded watchdog, has long acted as the arbitration system in which investors and securities brokerages could, and were often forced by contract, to settle their legal disputes.  However, until now, whether that system was open to registered investment advisers and individual investors was dubious and unclear.

Despite the fact that using FINRA arbitration might be more cost effective than going to court, most investment advisers are opposed to the changes.   David Tittsworth, executive director of the Investment Adviser Association questioned the ruling, noting that there are few registered investment adviser account agreements requiring clients to forgo court and instead arbitrate any disputes.

Those favoring the changes say that using FINRA will be more cost effective than going through the expensive process of court and that for those investment adviser contracts which currently require arbitration, FINRA offers a much better financial deal than other arbitration services.

While the guidance provides some clarity as to how lawyers and investors can proceed, one thing to note is that FINRA does not regulate investment advisers.  Therefore, FINRA can only do so much.  Even with a ruling that goes against an investment adviser, unlike rulings against brokers, FINRA lacks the authority to suspend the adviser for failure to pay.

Carlson Law Firm is reviewing potential claims against investment advisers.  To speak with an attorney regarding your, please call Carlson Law Firm 619-544-9300 for a free consultation.

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SEC Continues Record Crackdown But Does it Help Investors?

November 16th, 2012

Once again, it is record setting time at the SEC.  The United States Securities and Exchange Commission announced on Wednesday, November 14, 2012, that they have set yet another record in 2012 in their enforcement actions against broker-dealers, investment advisers, and senior executives involved in fraud.

Seal of the U.S. Securities and Exchange Commi...

Touting examples of their ramped up efforts, the SEC highlighted two cases – one against Oppenheimer Funds, which to have misled the investing public in funds that suffered dramatically during the financial crisis, and another against UBS Financial Services of Puerto Rico and several of its executives for disclosure violations in regards to the sales of mutual funds.

Despite the news of record setting enforcement activity, it is rare for damaged investors to ever be made whole as the result of an SEC enforcement action.  While the SEC may impose fines and penalties against the brokers and companies, individual investors are left with no other avenue but to pursue their grievances in private litigation either in court or binding arbitration.

At Carlson Law Firm, we are experts in protecting investors’ rights.  We offer a free evaluation of your case and based on that review, a variety of fee agreements.  We can help you recover what the SEC cannot, with the goal of making you whole again.

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Ray Lucia San Diego Investment Advisor charged by SEC – Buckets of Money?

September 14th, 2012

The Securities and Exchange Commission today accused local San Diego radio talk show host and bestselling author Ray Lucia of misleading potential investors in regards to his investment strategy called “Buckets of Money.”

Seal of the U.S. Securities and Exchange Commi...

Seal of the U.S. Securities and Exchange Commission. (Photo credit: Wikipedia)

The SEC alleges that Lucia misled potential investors when he told them that his method had been “back-checked” using historical data from past bear markets and that the investors money would be safe and grow.  According to the SEC, the investment program failed to account for fees and included artificially lowered inflation rates.   When historically accurate rates of inflation were used, a 1973 investor would have run out of money by 1989, the SEC said, a far cry from the return claimed by Lucia.

The SEC said Lucia and his company “have admitted during the SEC’s investigation that the only testing that actually performed were some calculations that Lucia made in the 1990’s – copies of which no longer exist – and two two-page spreadsheets.”  Lucia was aware that using the undervalued inflation rate would “make the results look more favorable for the Buckets of Money Strategy,” according to the SEC.

In addition to barring Lucia from making misleading claims, the SEC’s Order instituting Administrative and Cease-and-Desist Proceedings seeks financial penalties and “other remedial actions.”

Lucia quickly posted a passionate defense to the SEC allegations on his website on Wednesday afternoon, stressing that the investigation was a civil matter and not a criminal case and that it involved something he had not used in over two years.  “I want to assure you that I intend to vigorously defend this absolutely meritless lawsuit and will seek an early trial,” said Lucia.

Despite the allegations, Lucia’s website is promoting a seminar to be held at The Hilton San Diego Resort & Spa on September 22nd, which will be co-hosted by actor and financial columnist Ben Stein, and former San Diego Mayor and current talk show host Roger Hedgecock.

Carlson Law Firm is reviewing potential claims against Ray Lucia and his affiliates.  To speak with an attorney regarding your, please call Carlson Law Firm 619-544-9300  for a free consultation.

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Investment Scams: How Vulnerable Are You?

September 5th, 2012

Although anyone can fall victim to financial fraud, some investors are more likely than others to be targeted by scam artists.

Logo

Logo (Photo credit: Wikipedia)

According to a survey conducted by the Financial Industry Regulatory Authority (FINRA) Foundation, victims of investment fraud differ from non-victims in their financial behavior. Below are five of the top high-risk behaviors that they share. If you’re engaging in one or more of these behaviors, you’re placing a bull’s eye on your financial security and making yourself a potential target for fraudsters.

Five Behaviors That Make You a Target for Scam Artists

1.      Failing to Research Your Financial Advisor

Victims of investment fraud often know very little about their financial advisors. Failing to check your stockbroker’s licensing/registration credentials puts you at great risk of investment fraud. (And don’t forget to run a criminal background check on your broker, too!)

2.      Buying High-Risk Products

Investors who buy high-risk financial products such as futures, penny stocks, promissory notes and private foreign investments are more likely to be victims of investment fraud.

3.      Getting Financial Advice from Nonprofessionals

Taking investment advice from nonprofessionals (family members, friends, coworkers, etc.) is another high-risk behavior that victims of investment scams share.

4.      Falling for High-Pressure Sales Techniques

Victims of financial scam artists are more susceptible to high-pressure sales strategies than non-victims.  Pitches such as “You must act now!” are often taken at face value, rather than recognized as the aggressive sales tactics that they are.

5.      Attending Free Investment Seminars

Actively seeking out new investments also puts investors at risk. In fact, victims of investment fraud are much more likely than non-victims to attend free investment seminars, thus opening themselves up to potentially fraudulent investments.

If you believe that you have been the victim of investment fraud, contact the investment fraud attorney at Carlson Law today at 619-544-9300 for a free consultation.

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Attention Facebook IPO Stock Fraud Victims: Private Arbitration May Be an Option

June 18th, 2012

In the Initial Public Offering (IPO) class action suits of the 1990s, individual shareholders claimed that underwriters pushed them to buy tech stocks, driving up prices for the benefit of institutional clients who then dumped their holdings when prices were high, netting huge profits which they shared with investment banks and leaving lone investors with deflated stocks and hefty financial losses.

It took until 2009 for the IPO class action suit to be settled for $586 million.

 

Have Individual Investors Been Screwed Over Once Again? Probably.

Facebook logo Español: Logotipo de Facebook Fr...

Facebook logo Español: Logotipo de Facebook Français : Logo de Facebook Tiếng Việt: Logo Facebook (Photo credit: Wikipedia)

What did Wall Street learn from the IPO debacle of the ‘90s? Not much, apparently.

Instead of maintaining an even playing field for all investors, class action suits recently filed allege that Defendants involved in the Facebook IPO favored certain institutional players and “preferred investors,” with underwriters privately providing them with information regarding the earnings stream for Facebook —information that differed from that published in Facebook’s prospectus and available to the general investor.

Unsurprisingly, a steadily increasing number of lawsuits are being filed against Facebook and the banks that underwrote its IPO, with claims likely to top $100 million.

 

Should Individual Investors Pursue Separate Suits? It Depends.

If you’re an investor who has suffered financial loss due to the alleged Facebook IPO stock fraud, you may want to join a class action, or you may be able to pursue an individual claim depending on the facts on your case.  If you bought the Facebook IPO from Morgan Stanley, J.P. Morgan, Goldman Sachs, Bank of America or one of the “preferred investors” allegedly tipped about Facebook lower revenue streams, a FINRA arbitration may be your best bet to recover your losses.

 

Contact Carlson Law to evaluate your claim.

Carlson Law is reviewing claims for investors and closely following the SEC, Financial Industry Regulatory Authority, Commonwealth of Massachusetts, and congressional panels reviewing what happened in the IPO.

If you lost money due to Facebook IPO alleged stock fraud, contact Carlson Law today at 619-544-9300 to review your claim and advise you about your best opportunities for recovery.

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Signs of Investment Fraud

May 30th, 2012

Investment fraud can happen to anyone. To protect against financial loss, it’s imperative that investors become active participants in their financial wellbeing, learning as much as they can about their investments, monitoring their portfolios diligently, and being alert for signs of investment fraud.  A few signs to watch for:

Sure Things
Financial advisors who guarantee that an investment will perform in a certain way, i.e. often provide high returns in a short time, should immediately be suspect. No investment is a sure thing; all of them carry risks. Any broker who tells an investor otherwise is being less than honest.

Undue Sales Pressure
Trustworthy brokers do not pressure clients into investments. Even if no fraud is involved, such behavior is inappropriate. Investors should avoid stockbrokers who urge them to make snap decisions, tell them that they must “act now,” or apply other heavy-handed sales techniques.

Inexplicable Complexity
Investors should not sink their money into investments they cannot comprehend. All aspects of any investment, including how it works and what its risks are, should be understandable. Investments that a broker claims are successful because of their intricacy—a complexity the financial analyst cannot explain—should be considered suspect investments.

Consistent Pay Outs
All investments, even those that are low risk, go up and down in value. That’s their nature. When returns remain unnaturally consistent or increase in value despite negative economic conditions, that’s a red flag that an investor may have

The unsustainable geometric progression of a c...

The unsustainable geometric progression of a classic pyramid scheme, from Securities and Exchange commission report on pyramid schemes. (Photo credit: Wikipedia)

invested in a pyramid scheme, a ponzi scheme or some other investment fraud scheme.

Account Discrepancies
Unauthorized activity, missing money and other problems with a client’s account statement may simply be mistakes. However, they could also be signs that the broker is churning the account or engaging in some other type of investment fraud. To lessen this possibility, investors should monitor their account statements.

Unlicensed Brokers
Investors who do business with unlicensed brokers run a high risk of fraud. Investment scams are often perpetrated by unlicensed brokers who sell financial products that have not been registered with the Securities and Exchange Commission (SEC) or issued by a legitimate agency. Unregistered products may include stocks, bonds, notes and hedge funds, among others.

Missing Documentation
Just as investors should avoid doing business with unlicensed brokers, they should also avoid making investments that have little or no documentation. Lack of documentation is a sign that an investment may be unregistered. For instance, if a mutual fund or a stock has no prospectus, or a bond has no offering circular, it might be an unregistered security. Likewise, stocks that do not have stock symbols may be unregistered.

Investor should also keep in mind, however, that not all legitimate investment products are registered with the SEC. Regulation D products, for example, are exempt from registration, as are those issued by the federal government or a state or municipal government.

If you think that you have been the victim of investment fraud, contact Carlson Law today for a free consultation at 619-544-9300. A securities fraud attorney may be able to help you recover some or all of your financial losses.

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Linsco Private Ledger Found Liable for Failure to Supervise in Stockbroker Malpractice

May 10th, 2012

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 testi...

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.

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