In an article, Feb. 7, 2013, in the New York Post, it was reported that (broker-dealer owner), Anastasios “Tommy” Belesis’ firm, John Thomas Financial, is being investigated by the FBI, the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority Inc. (FINRA).

Mr. Belesis has made many media appearances on cable business/financial shows.

According to FINRA’s BrokerCheck, S.W. Bach & Co. fired him in 2005 for “inaccurate representation of identity to customer.” In 2001, a client sued him and a firm for $750,000 for churning and a FINRA arbitration panel later awarded the client $259,000. Mr. Belesis and firms he’s worked for have settled two other FINRA arbitration claims for nearly $100,000. Belesis paid $46,000 as his share of the settlements.

John Thomas’ FINRA record shows failures to disclose fees to clients about transaction charges. Arkansas Securities Department fined John Thomas $25,000 last year for allegedly not disclosing to clients handling fees for stock orders. The Connecticut Banking Department fined the firm $20,000 over similar failures on fee disclosures, and FINRA fined it $275,000 for “postage and handling” violations.

If you have been a client of Anastasios “Tommy” Belesis, and/or his firm, John Thomas Financial, and experienced financial losses call a securities lawyer at (888) 760-6552 or visit http://www.securitieslawyer.com.

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On Feb. 6th., 2013, LPL Financial, LLC, was ordered by Massachusetts Security Division to pay restitution of more than $2 million to investors who bought shares of nontraded real estate investment trusts (REITs) and a $500,000 administrative fine, which involved investors who bought shares of several different nontraded REITs in violation of state limitations, and the company’s own rules and procedures. LPL also has agreed to review all nontraded REITs sold in Massachusetts and offered to make restitution to all other investors who bought the securities in violation of state limits or company rules.

LPL Financial and Ameriprise Financial Inc. are the two biggest sellers of nontraded REITs, accounting for almost 20% of the industry’s annual sales of $10 billion. Regulators recently have put the nontraded REITs on close watch as a number of the largest REITs have suffered sharp devaluations.

In its consent order with Massachusetts regulators, LPL admitted to a series of statements of fact around the sales of the REITs but neither admitted nor denied allegations stemming from the training and oversight of sales of nontraded REITs as well as alleged violations of securities laws. The REIT sales occurred between 2006 and 2009.

Below is a list of non-traded REITs sold by many broker/dealers:

American Realty Capital Daily Net Asset Value, Inc.
American Realty Capital Global Trust, Inc.
ARC Retail Centers of America
American Realty Capital Trust IV, Inc.
ARC Healthcare Trust
American Realty Capital Phillips Edison
Shopping Center REIT
American Realty Capital Trust, Inc.
American Realty Capital New York Recovery REIT
ARC Property Trust, Inc.
Arciterra National REIT, LP
Behringer Harvard Multifamily REIT II, Inc.
Bluerock Enhanced Multifamily Trust, Inc.
Carter Validus Mission Critical REIT
Clearwater Opportunity REIT
CNL Global Growth Trust, Inc.
CNL Global Income Trust, Inc.
Cornerstone Core Properties REIT, Inc. 2nd Offering
Hines Global REIT, Inc. 2012 Update
Inland Real Estate Income Trust, Inc.
Inland Diversified REIT
Lightstone Value Plus REIT II
NetREIT Dubose Model Home REIT, Inc.
NetREIT $200,000,000 Stock Offering Update
O’Donnell Strategic Industrial REIT, Inc.
Preferred Apartment Communities, Inc.
RREEF Property Trust, Inc.
UCM US RMBS Opportunity REIT, Inc.
US Apartment Investors 2010, Inc.
Wells Core Office Income REIT

Securities Attorney, Lars Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you or a family member have experienced losses through LPL Financial, LLC, or any other nontraded REIT, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses. To speak with an attorney, call 888-760-6552, or visit http://www.securitieslawyer.com.

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In a FINRA NTM 13-07 posted last Thursday on its website, FINRA asked for comment on an updated proposal that would keep the 5% guideline in place.

The action follows complaints about an earlier proposal to eliminate the 5% rule for markups and markdowns.

In other words, any FINRA broker/dealer can make up to 5% commission on the front and back end of every trade. This “commission” is hidden on the order ticket called a mark up. Many investors look at the transaction fee which is a usually a low flat consistent fee that they see on every ticket. A mark up is when firms add a cost to the price per share that is their profit. Look for it at the bottom of the order ticket in fine print where it will tell you the per share mark up and multiply by the number of shares you bought and suddenly the $25 you thought you were paying per trade just shot up to over $1,000.00. Yes, the industry is in it to make money for themselves, not for you.

“A majority of the comments received on the initial proposal opposed the elimination of the 5% policy,” FINRA said in the notice. “These commenters stated that the 5% policy generally has been effective in regulating broker-dealers for over 70 years and eliminating it would reduce investor protection.” It is only logical that the industry will oppose what keeps them rich and the investors poor.

In its initial proposal — floated nearly two years ago — FINRA had promised updated guidance to replace the 5% threshold, but commenters warned against eliminating it without setting a new standard.

Nevertheless, industry attorneys don’t like the old 5% limit, which dates from 1943.

It’s really is sending a bad message to member firms that a 5% markup or markdown is generally OK.

FINRA examiners actually use something closer to a 2% to 3% markup, observers say, and FINRA has consistently said the 5% rule is a guideline only.

“It’s like charades; you don’t know what they’re looking for,” Ms. Baird said.

If you have been charged excessive mark ups or mark downs call a securities lawyer at (888) 760-6552 or visit http://www.securitieslawyer.com.

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Those investors who believed they had constructed a “conservative” portfolio by being heavily invested in bonds could be reclassified as “aggressive.” Some also believe the move may be an attempt by the firm to lessen its liability in the event clients who are holding large positions in bonds decide to take legal action against UBS.

Mike Ryan, the chief investment strategist for UBS, said so-called “non consent” letters will be sent out to investors in the coming weeks alerting them of their changed classification – but he says it has little to do with a firm-wide bias against bonds. Rather, UBS is changing “its long-term view” reflecting what it views as a “volatile market…not just in fixed income.”

The Federal Reserve at some point will have to raise short-term interest rates (currently close to 0%), and end its quantitative easing program, which involves the Fed’s purchase of government bonds, which helps depress long-term interest rates and prop up bond prices (yields move in the opposite direction from price). Once this process starts, “conservative” investors with long bond positions will suffer devastating losses or be forced to hold to maturities of which can be decades down the road.

Bonds also carry credit risk and can default if the underlying company can no longer satisfy its obligations. Bonds are not without risk, however in many instances Bonds are presented as the safe alternative.

If you find yourself in this position, call for a free consultation on how to potentially recover your financial losses: 888-760-6552.

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There are many real estate investors attracted to Tenant-In-Common (TICs) for the purported tax savings through the like kind exchange provisions in the IRS code Section 1031, which allows for the investor a deferral of capital gains. Up until 2013, the capital gains rate was only 15%. Investors need to calculate the net amount of real estate that they are actually acquiring when they buy a Tenant-In-Common investment because many times it is less than 80% and the investor would net more money by paying the taxes.

Also, a factor to consider is that a TIC investment is really just a creative way to finance a real estate transaction that results in 1031 investors acquiring significantly more real estate than they needed to accomplish the like kind exchange. For example, if an investor sells 2 multi-family units and has $500k in proceeds, all the investor needs to do is purchase $500k or more in like kind real estate to qualify under section 1031. However, many TIC deals are highly leveraged and the $500k they use to buy into the property is usually encumbered by a pro rata share of a mortgage, which is typically 3 times the investment and the investor will end up with 4 times the amount of real estate they need to effectuate their 1031 exchange.

Securities Lawyer, Lars Soreide, points out that, “One of the errors investors make in TIC cases is to assume that the unit value of the investment equals the property value divided by the units.” When TIC cases are litigated, “many of these cases bog down in property valuation when in reality the issue in not the property value but the investment value, which is next to worthless even if the property has residual value. Think of this way, who would buy a unit in this investment given that the purchaser would have to take on 150% on additional debt, give up all property rights to become a tenant in common that is worthless as collateral and cannot be turned into cash? Given the structure of ownership with loans with covenants signed by the sponsor and cross collateralized usually, property value is secondary in these cases.” Often these investments are sold by a stock broker or financial adviser because a Tenant-in-Common Investment is a security. In a FINRA arbitration, “often Respondents/Defendants put on an appraiser to prove the property value, but there is an objection on relevance of this testimony because the appraiser does not opine on the market value of the security on the notional value of the unit which is usually not much at all if anything,” says Soreide. It is “critical to obtain the principal loan documents and assumption agreements to ascertain how encumbered and how much real estate you actually own.”

Soreide Law Group represents investors nationwide in Tenant-In-Common (TIC) cases before the Financial Industry Regulatory Authority. For a free consultation on how to potentially recover your financial losses call: 888-760-6552. More information on TICs and FINRA Arbitrations can be found on http://www.securitieslawyer.com.

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Tenant in Common (TIC) investments, or 1031 exchanges, are a form of real estate ownership in which multiple investors own fractional interests in a property. Many brokers and brokerage firms sold billions of these products to investors across the country allegedly charging high fees, and doing little or no due diligence. They were investments with high risk and highly illiquid, often not suitable for certain investors’ portfolios.

Below is a list of some of the firms who are present or former members of the Real Estate Investment Securities Association (REISA) (previously known as TICA – Tenant in Common Association):

AEI Fund Management Inc
St Paul, MN

American Capital Group
Bellevue, WA

American Investment Exchange
Hermosa Beach, CA

Argus Realty Investors, LP
San Clemente, CA

Ashforth Paradigm Capital Advisors
Boston, MA

Atlas Venture Partners, Inc.
Irvine, CA

B&H Real Estate Holding, LLC
Encino, CA

Behringer Harvard
Dallas, TX

BGK-Integrated Group
Santa Fe, NM

Bluerock Real Estate LLC
New York, NY

Bonaventure Realty Group, LLC
Arlington, VA

Cabot Investment Properties
Boston, MA

Capital Real Estate LLC
Denver, CO

Cole Companies
Phoenix, AZ

Cottonwood Capital, LLC
Salt Lake City, UT

Covington Realty Partners
Chicago, IL

DBSI Group of Companies
Meridian, ID

DeSanto Realty Group
Media, PA

Direct Invest LLC
Linthicum, MD

Dividend Capital
Denver, CO

Eliason 1031 Properties Corporation
Saint Germain, WI

Equitable Companies, LLC
Los Angeles, CA

Evergreen Realty Group, LLC
Pasadena, CA

ExchangePoint Properties, LLC
Beverly Hills, CA

First Guardian Group, LLC
San Jose, CA

FOR 1031/ Spectrus Real Estate Group
Boise, ID

FORT Properties, Inc.
Los Angeles, CA

Franklin 1031 Investments L.L.C.
Oakbrook, IL

Gemini Real Estate Advisors, LLC
New York, NY

Grand Peaks 1031 Properties
Denver, CO

Granite Investment Group, Inc.
Irvine, CA

Griffin Capital Corp.
El Segundo, CA

Inland Real Estate Exchange Corporation
Oak Brook, IL

International Realty Advisor
San Antonio, TX

Investment Properties of America
Richmond, VA

KBS Capital Markets Group, LLC
Newport Beach, CA

Kodiak Capital Partners L.L.C.
Dallas, TX

Meridian Realty Advisors, LP
Dallas, TX

Moody National Companies
Houston, TX

National Exchange Advisors, LLC
Sherman Oaks, CA

Noble Royalties, Inc.
Addison, TX

ORIX Real Estate Capital, Inc.
Dallas, TX

Parthenon Realty 1031 Investors, LLC
Alpheretta, GA

PASSCO Companies, LLC
Irvine, CA

Pennbridge Capital
Lehi, UT

Principle Equity Management
Houston, TX

Rainier Capital Management, LP
Dallas, TX

Real Estate Partners, Inc.
Irvine, CA

Real Estate Value Advisors LLC
Richmond, VA

REEF Oil & Gas Partners
Richardson, TX

Resource Real Estate, Inc.
Philadelphia, PA

RK Properties
Long Beach, CA

Sagebrush Realty Holdings LLC
Denver, CO

SCI Real Estate Investments, LLC
Los Angeles, CA

Sequoia 1031 Companies LLC
Northglenn, CO

Southfork
El Dorado Hills, CA

SRS Investments, LLC
Sarasota, FL

Texas Energy Holdings Inc.
Dallas, TX

The Geneva Organization
Minneapolis, MN

The Woodlark Companies
White Plains, NY

TIC Capital LLC
Boise, ID

TIC Properties, LLC
Greenville, SC

TREC Investment Realty
Las Vegas, NV

Triple Net Properties, LLC
Santa Ana, CA

TSG Real Estate, LLC
Chicago, IL

U.S. Advisors, LLC
Ladera Ranch, CA

Wells Real Estate Funds
Norcross, GA

Western America Equities LLC
Bellevue, WA

1031 Xpress Inc
Bellevue, WA

American Realty Capital
New York, NY

Atel Securities
San Francisco, CA

ATEL Securities Corp
San Francisco, CA

Axxcess Capital LLC
Newport Beach, CA

Bluerock Capital Markets LLC
Newport Beach, CA

Brennan Investment Group LLC
Des Plaines, IL

Calliance Realty Fund LLC
San Francisco, CA

CM Group
Henderson, NV

Coachman Energy LLC
Denver, CO

Commonwealth Capital Corp
Clearwater, FL

Cottonwood Capital LLC
Salt Lake City, UT

Cypress Capital Corporation
San Francisco, CA

Dividend Capital
Denver, CO

Energy Hunter Securities
Houston, TX

Gemini Real Estate Advisors LLC
New York, NY

Grubb & Ellis Realty Investors LLC
Santa Ana, CA

GWG Holdings
Minneapolis, MN

Hamilton Point Investments LLC
Old Lyme, CT

Healthcare Trust of America
Scottsdale, AZ

Hertz Capital Markets Group
Santa Monica, CA

Hines Real Estate Investments Inc
Houston, TX

Inland Private Capital Corporation
Oak Brook, IL

Inland Real Estate Investment Corporation
Oak Brook, IL

JH Financial Group LLC
Newport Beach, CA

KBR Capital Partners
Irvine, CA

KBS Capital Markets Group
Newport Beach, CA

Lightstone Securities LLC
Mahwah, NJ

MacDonald Realty Group
Desoto, TX

Moody National Companies
Houston, TX

New Start Capital LLC
Dallas, TX

Noble Royalties Inc
Addison, TX

NorthStar Realty Finance Corporation
Greenwood Village, CO

Passco Companies LLC
Irvine, CA

Penneco Oil Company
Delmont, PA

Preferred Apartment Communities Inc
Atlanta, GA

Principle Equity Management
Houston, TX

Rainier Capital Management LP
Dallas, TX

Somerset Partners LLC
New York, NY

Somerset Partners LLC
New York, NY

Steadfast Capital Markets Group
Irvine, CA

Strategic Capital Holdings LLC
Ladera Ranch, CA

Thompson National Properties
Irvine, CA

Time Equities Inc
New York, NY

Vertical Capital Markets Group
Irvine, CA

Waveland Capital Partners LLC
Irvine, CA

Wells Real Estate Funds Inc
Norcross, GA

Wilkinson Capital, LLC
Yakima, WA

Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, represents clients nationwide in arbitrations before FINRA. Call to speak to an attorney regarding your investment losses. For a free consultation on how to potentially recover those losses call: 888-760-6552, or you may visit our website at: http://www.securitieslawyer.com.

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With the stock market crash of 2008-2009 there has been an onslaught of investors filing lawsuits against their stock brokers and brokerage firms for providing them with unsuitable advice. There is a direct inverse correlation with stock index averages and new case filings. In other words, in a down market more cases are filed. Many of these cases had no merit and were largely suits over market losses, but a large percentage represented investors that were legitimately steered into investments products that proved to be illiquid, commission laden, or a complete fraud, such as a ponzi scheme. All of these claims against stock brokers and brokerage firms must be filed with the Financial Industry Regulatory Authority or “FINRA” for short.
Recently investors have been having success bringing FINRA arbitrations against brokerage firms for the sale of the following types of investments:

1) Reverse convertible notes- These were marketed as safe securities that produced an income that are typically linked to the common stock of a particular company and if the underlying stock drops, then the note converts to common shares, and unsuspecting investors who thought they had a fixed income product end up with large amounts of falling common stock they never wanted;

2) Fannie and Freddie Mac preferred shares -sold on and after their 2008 IPO where investors were told the investments were government insured when they were not;

3) Tenant in common or TIC investments- Investors were told to shelter their real estate profits by purchasing a TIC through a 1031 exchange but ended up paying excessive commissions that far exceeded any tax liability and ended up with an over leveraged illiquid asset;

4) Private Placements- Many of these investments have proven to be illiquid, commission laden, and lack material disclosures to the investors;

5) Account Churning- This is where the broker trades excessively in the account with a high velocity generating excessive commissions usually disguised to the investors as “mark ups” or “mark downs”. This is an extra “hidden” commission the investors do not usually realize typically this is coupled with an excessive use of margin; and

6) Overconcentration- This is where a broker recommends a high concentration in one security or one asset class which can result in unnecessary risk, especially if you are at or nearing retirement.

If you are an investor and you feel your stock broker recommended an inappropriate investment or investment strategy that resulted in significant losses, Soreide Law Group offers a free consultation and portfolio analysis to decide if you have legal grounds to pursue a FINRA arbitration. To speak with a lawyer call (888) 760-6552 or (954) 760-6552.

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Reverse convertibles, are often called “trigger notes,” “phoenixes,” or “auto-callables.” These structured products promised high yields of 6% to 12% or more, but trigger a conversion to Apple common stock if the price falls, usually on average 15% to 20%. With Apple down more than 25% from its high of last fall in 2012, many of these instruments may already converted and have handed their investors severe losses.

The price of Apple has dropped from over $700 to below $500 per share. Brokers sold a lot of structured notes based on the price when Apple was north of $700.

Many brokers represented to their clients that the structured notes were “safe and guaranteed,” and presented it as a way to benefit from the Apple’s rise without the risk. Unfortunately, the price of Apple plummeted, the notes converted and many conservative investors looking for a safe yield ended up with a lot of falling shares of Apple’s common stock.

$241 million of structured notes tied to Apple Inc. face losses after a 27 percent drop in the stock of the world’s most valuable company eroded built-in cushions that protect investors. Banks issued 76 US notes linked to Apple stock during the seven weeks starting August 20th. when the company was valued at $650 a share or more. In total, banks issued $1.66 billion of such notes, making Apple the most popular underlying company in such high commission structured products.

If you were a conservative investor who was seeking yield and ended up with a bunch of falling Apple common stock after buying Apple-linked reverse convertibles in 2012, Soreide Law Group would like to speak with you about your potential claim. Call 888-760-6552 or visit http://www.securitieslawyer.com.

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The Securities and Exchange Commission (SEC) today, January 29th., 2013, on it’s website announced that it has charged a former managing director of Jefferies & Co., Inc. (Jefferies), a New York-based broker-dealer, with making misrepresentations and engaging in misleading conduct while he sold mortgage-backed securities (MBS) in the wake of the financial crisis.

The SEC alleges that Jesse Litvak, a senior trader on Jefferies’ MBS Desk who worked at Jefferies’ office in Stamford, Connecticut, where he bought and sold MBS from and to his customers. From 2009 to 2011, Litvak allegedly lied to, or otherwise misled, those customers about the prices that Jefferies had purchased the MBS before selling it to another customer and the amount of his firm’s compensation for arranging the trades. Litvak also misled his customer into believing that he was arranging a MBS trade between customers, when Litvak really was selling the MBS out of Jefferies’ inventory. Litvak also misled customers about how much money they were paying in compensation to Jefferies. These customers included investment funds established by the United States government in the wake of the financial crisis to help support the market for MBS as well as other investment funds, including hedge funds.

It was also noted in the article on the SEC website that according to the SEC’s complaint filed in U.S. District Court for the District of Connecticut, Litvak engaged in misconduct on over 25 trades. When Litvak offered his customers MBS, he lied to them about how much Jefferies had paid (or was paying) for the securities. On some occasions, Litvak also pretended to be actively negotiating with an outside party to buy a security that he would then re-sell to his customer. But none of these negotiations were taking place; instead, Litvak fabricated the existence of the seller and every detail about active negotiations with it. In fact, as Litvak knew, Jefferies had purchased these bonds days before and already held them in its inventory.

The SEC’s complaint charges Litvak with violating the antifraud provisions of the federal securities laws. The complaint seeks a final judgment permanently enjoining Litvak from future violations of the federal securities laws, ordering him to disgorge his ill-gotten gains plus prejudgment interest, and order him to pay civil penalties.

Securities Lawyer, Lars K. Soreide, of Soreide Law Group, represents clients nationwide before FINRA. If you or a loved one have sustained investment losses due to your stock broker or financial advisor’s recommendations, call for a free consultation on how to potentially recover your losses. To speak with an attorney call 888-760-6552, or visit our website at: http://www.securitieslawyer.com.

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The Financial Industry Regulatory Authority Inc., also known as FINRA, is proposing a new rule that would allow investors to access information about a financial advisor’s business and disciplinary history directly from the firm’s web page.

FINRA filed a regulatory notice in the Jan. 25 edition of the Federal Register. FINRA said the rule would require its broker-dealer members to include “a prominent description of and link to BrokerCheck on their websites, social-media pages and any comparable Internet presence.”

BrokerCheck contains information on brokers, including professional background, the type of practice they run and whether they have been disciplined by FINRA or other regulators. Under the new proposal, a broker or firm’s website would have a direct link to the broker’s or firm’s specific BrokerCheck page. Investors would be able to click and go right to those pages.

“FINRA believes that the proposed rule change would increase investor awareness and use of BrokerCheck, thereby helping investors make informed choices about the individuals and firms with which they conduct business,” the Federal Register notice stated.

This proposal responds to a January, 2011 study by the Securities and Exchange Commission (SEC), mandated by the Dodd-Frank financial reform law, that examined ways to increase investor access to BrokerCheck.

This proposal follows a recent FINRA proposal to make brokers disclose their compensation incentives when they move from one firm to another. This comes at a time when there is much confusion about how investment advisors and brokers can use websites, blogs and social media.

Securities Lawyer, Lars K. Soreide, of Soreide Law Group, who represents clients nationwide before FINRA. For a free consultation with an attorney on how to potentially recover your losses, call 888-760-6552, or visit our website at: http://www.securitieslawyer.com.

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