Posts Tagged ‘Stock Fraud Attorney’

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.

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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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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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Principal Protected Notes, Lehman Brothers and UBS Financial Services Arbitrations

June 14th, 2011
Head office of Lehman Brothers in Frankfurt, G...

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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.

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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)

Did Goldman Sachs Play an Unwholesome Role in the Recent Financial Crisis?

June 2nd, 2011
Goldman Sachs Headquarters, New York City

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According to an article published by Reuters on June 2, 2011, Goldman Sachs has been subpoenaed by the Manhattan District Attorney’s Office for information regarding its role in events which precipitated the recent worldwide financial crisis. Earlier this year, the Wall Street Journal reported that the U.S. Department of Justice also plans to subpoena Goldman Sachs.

Both federal and New York prosecutors want more information about documents discovered through a U.S. Senate subcommittee probe regarding the part Wall Street played in the collapse of the housing market. According to the subcommittee report, as the market began to drop in late 2006 and 2007, Goldman Sachs offloaded much of its subprime mortgage risk to innocent clients. The firm also purportedly took its time fulfilling customer requests to close out their failing accounts.

Last year, the Securities and Exchange Commission (SEC) filed a civil fraud suit against Goldman Sachs for its failure to disclose information linking it to complex mortgage securities. While the firm settled the charges, it refused to respond to the charges.

Are these current subpoenas a serious problem for Goldman Sachs? Financial experts disagree. Dick Bove, a Rochdale Securities analyst, says authorities are simply looking for someone to punish and Goldman Sachs seems like a likely candidate. Still, according to reporter Brad Hintz, any legal action against Goldman Sachs—whether successful or not—is bound to hurt the firm. Hintz advises that the company “make amends.” Other analysts maintain that the investigations will prove fruitless and have little impact on the company.

Meanwhile, Goldman Sachs has issued a public statement that it will “cooperate fully” with the Manhattan DA.

If you experienced financial loss during the recent financial crisis due to stockbroker malpractice, contact a stockbroker attorney at Carlson Law today at 619-544-9300 for a free consultation.

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Posted in Broker Fraud, Fiduciary Duty Breach, Investment Fraud, Negligent Misrepresentation, Securities Arbitration, Securities Fraud, Securities Law, Securities Litigation | Comments (0)

Did Wall Street Bankers Commit CDO Fraud?

May 25th, 2011
Goldman Sachs New World Headquarters

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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.

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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)

FAQs About Mutual Funds

May 13th, 2011

How do you buy mutual funds?
To purchases shares (portions) in a mutual fund, investors may go through stockbrokers, banks, insurance agents and other investment professionals. They can even buy portions from the fund directly.
When you buy shares, you pay the current net asset value (NAV) for each share. You also pay any sales charge (sales load).

Are mutual funds easy to sell?
Yes, any mutual fund will buy back your shares during regular business hours. Within seven days, you’ll receive the NAV for each share sold minus any sales load.

Are mutual funds a risk-free investment?
No. Just as individual stocks fluctuate in value, so does the portion price of mutual funds. Therefore, the value of your investment will sometimes be more, sometimes less than its original price.

How do you choose the mutual fund that’s right for you?
To determine if you should invest in a mutual fund, acquaint yourself with the major types that are available.

Mutual funds may be categorized by their asset types. Most are either bond funds, stock (equity) funds or money market funds. However, numerous variations exist within these three categories. In fact, some mutual funds combine several types of investments. An asset allocation fund, for instance, is a type of mutual fund that combines all three asset classes—funds, stocks and money markets. Some mutual funds, funds of funds, invest in other mutual funds rather than in individual securities.

Mutual funds may also be categorized according to the investment strategy that they follow. Funds that attempt to reduce tax liability, for example, are called tax-efficient funds. Some mutual funds are managed actively while others try to imitate an index.

Every mutual fund has its own rewards and risks. In general, the greater the potential return, the greater the risk of loss.

When you’re looking for a mutual fund, be sure to shop around, comparing mutual funds of the same type with each other. If you find a mutual fund that interests you, carefully examine its prospectus. Think about the goals, risks, and expenses involved in investing. Is the mutual fund’s aim in keeping with your own? Are the risks acceptable to you?

If you feel overwhelmed by your investment options, do what many other investors do: consult a financial expert. If you were advised to invest in funds that were higher risk than was explained to you by your financial advisor, you may have a claim to recover your losses. Contact Carlson Law for a free consultation.

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Posted in Broker Fraud, Fiduciary Duty Breach, Investment Fraud, Negligent Misrepresentation, Securities Arbitration, Securities Fraud, Securities Law, Securities Litigation, Stock Fraud, Stock Loss | Comments (8)

Trusting Your Financial Advisor – Do You Really Know Who is Handling Your Life Savings?

April 15th, 2011

There are over 210 possible different credentials available to financial advisors.  Very few of those credentials are regulated and some mean little or nothing.  It is important for every investor to do their homework and really get to know their financial advisor, their credentials, licensing and experience.  Simply because your advisor has many credentials or friends have recommended them is not enough.

While the CFP (Certified Financial Planner) and CFA (Certified Financial Advisor) designations require course work, exams and continuing education many certifications in the financial industry do not.   So what should an investor do in order to select a financial advisor? There are a number of things that can be done.

  1. Everyone can go and look up the record of the advisor they are considering using on the Financial Industry Regulatory Authority’s BrokerCheck service.  The BrokerCheck service will give you important information about the advisor you are considering; such as if that advisor has had prior complaints, been sued before, where he or she has worked in the past and for how long,  the reason they left a prior employer, in addition to information about licensing and credentials.
  2. Next, look at the information from state securities regulators at the North American Securities Administrators Association.
  3. Also, review the National Association of Insurance Commissioners website regarding the advisor you are considering using.

A good question to ask a prospective advisor regarding their credentials is what percentage of people who apply for the credential obtain it?  Also, feel free to ask about the qualifications of the instructors for the credential program touted.  As an investor interviewing a financial advisor, you should be careful if the advisor is put off or unable to answer such simple questions.

If you have already fallen victim to an unqualified investment advisor and suspect an incidence of investment fraud, please call the Carlson Law Firm at (619) 544-9300 or contact a San Diego securities fraud attorney today.

 

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Posted in Broker Fraud, Fiduciary Duty Breach, Investment Fraud, Negligent Misrepresentation, Securities Arbitration, Securities Fraud, Securities Law, Securities Litigation, Stock Fraud, Stock Loss | Comments (11)