Posts Tagged ‘stockbroker malpractice’

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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Posted in Investment Fraud | Comments (0)

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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Posted in Fiduciary Duty Breach | Comments (0)

Goldman Exec’s Op-Ed NY Times Article Airs Investment Banking Firms Self Interest at its Clients’ Expense

April 9th, 2012

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...

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.

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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 (0)

FINRA CEO Says Brokers Must “Push and Pull” for Private Placement Information

June 6th, 2011

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.

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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

Image via Wikipedia

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)