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Feb/13

14

FINRA Fines Broker $1.8mill in Sale of ETFs

Comments off · Posted by Securities Lawyer in FINRA

Nicholas Rowe and his firm, Focus Capital Wealth Management, Inc. of Bedford, New Hampshire, were found liable in a case alleging negligence, civil fraud, and other misdeeds, involving the sale of risky ETFs (Exchange Traded Funds) to nine investors, according to a ruling by a Financial Industry Regulatory Authority (FINRA) arbitration panel. Some of these investors were in their fifties and sixties, including two widows. Rowe was ordered to pay $1.8 million to the investors.

The Reuters article goes on to explain that leveraged and inverse ETFs were designed to amplify short-term returns by using debt and derivatives and are considered more suitable for professional traders than for long-term investors or anyone does not want a high-risk portfolio. In 2009, FINRA and other regulators began issuing warnings about the sale of leveraged and inverse ETFs because they worried that brokers were selling them to buy-and-hold investors – a strategy likely to cause heavy losses.

The Reuters article says that FINRA arbitration may be the last hope for some investors whose advisers guided them to leveraged and inverse ETFs and then mismanaged the investments.

Investors in the Rowe case were all heavily concentrated in leveraged and inverse ETFs. That strategy is nearly guaranteed to lead to losses, since the investments effectively require betting on whether the market is going up or down.

Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, represents clients nationwide. If you invested with Nicholas Rowe or Focus Capital Wealth Management, Inc., or had losses in other leveraged and inverse ETFs, call: 888-760-6552, or you may visit our website and complete the online form at: http://www.securitieslawyer.com.

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Feb/13

13

Lar Soreide, Florida Attorney, Helps Alleged Rip-Off Victims of Broker Jesse Litvak

Comments off · Posted by Securities Lawyer in FINRA

Recently, a New York City man working as a broker/dealer in Stamford, Connecticut, has been charged with securities fraud, according to a news release from U.S. Attorney David B. Fein’s office.

Jesse Litvak, 38, while working in the Stamford office of Jefferies & Co., is suspected of scheming to defraud by misrepresenting transactions either with the seller’s asking price to the buyer, or the buyer’s price to the seller, the release said. The difference in the price paid would be kept for Jefferies, the release said.

The release also said that he is suspected of misrepresenting bonds to buyers in Jefferies inventory by offering them for sale by third parties he made up, the release said. If he did this he was then able to charge the buyer an extra commission, the release said.

Jesse Litvak is suspected of doing this with residential mortgage-based securities, and allegedly defrauded six Securities Public-Private Investment Program funds and multiple private funds for $2 million, the release said. Litvak was also was charged with 11 counts of securities fraud, one count of Troubled Asset Relief Program fraud, and four counts of making false statements to the federal government, the release said.

If you feel you have been involved in this or any other rip-off to the investors by broker/dealers, call Lars Soreide of Soreide Law Group, PLLC, for a free consultation on how to potentially recover your losses. To speak with an attorney call 888-760-6552, or visit our website and complete our online form at: http://www.securitieslawyer.com.

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Feb/13

7

LPL Financial Ordered to Pay $2 mill Over Sales of Non-Traded REITs

Comments off · Posted by Securities Lawyer in FINRA

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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Feb/13

1

What You Should Consider Before Investing in Tenant-In-Common (TIC) Investments

Comments off · Posted by Securities Lawyer in FINRA

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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Jan/13

31

FINRA Wants to Change Public Arbitrator Qualifications

Comments off · Posted by Securities Lawyer in FINRA

The Financial Industry Regulatory Authority Inc., also known as FINRA, is proposing to tighten its definition of “public” arbitrator. FINRA would like to exclude people associated with a mutual fund or hedge fund from its pool of public arbitrators and require others to wait for two years after ending an industry affiliation before being classified as a public arbitrator, writes Dan Jamieson in an article from the InvestmentNews.com.

On the Securities and Exchange Commission’s website, Finra said the change “would improve investors’ perception about the fairness and neutrality of Finra’s public arbitrator roster.”

FINRA is proposing a two-year cooling-off period for attorneys, accountants and others who have done a certain amount of work for securities industry clients, and for those who work for or serve as officers or directors of entities controlled by securities firms. This two-year wait would cover spouses and immediate family members of such individuals as well.

“In one instance, an individual applying to be a public arbitrator had retired one month earlier from a lengthy career at a law firm that represented securities industry clients,” FINRA said in its filing.

FINRA already has a five-year waiting period for former securities industry employees wishing to serve as public arbitrators, and bans those associated with the industry for at least 20 years from ever becoming public arbitrators.

Many feel Finra needs to go further and eliminate anyone who has had any connection with the industry as an arbitrator.

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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Jan/13

30

Does Your Stock Broker Owe You Money?

Comments off · Posted by Securities Lawyer in FINRA

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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Jan/13

30

Reverse Convertibles Investors Linked to Apple Common Stock–Got Burned

Comments off · Posted by Securities Lawyer in FINRA

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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Jan/13

29

FINRA’s BrokerCheck May Soon Be Linked to Firm Websites

Comments off · Posted by Securities Lawyer in FINRA

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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Jan/13

24

FINRA Fines and Suspends Reps

Comments off · Posted by Securities Lawyer in FINRA

The following information is from FINRA’s website under “Disciplinary and Other FINRA Actions, January, 2013.”

Charles Tuttle Mason aka Chip Mason (CRD #2206257, Registered Principal, St. Pete Beach, Florida)

and Darren Duane Gibson (CRD #2311950, Registered Representative,Oceanside, California)

were each fined $5,000 and suspended from association with any FINRA member in any capacity for three months. Without admitting or denying the allegations, Mason and Gibson consented to the
described sanctions and to the entry of findings that while employed as wholesalers at their member firm, they were responsible for promoting a non-registered entity’s offerings
to retail broker-dealers, through sales presentations and providing marketing materials to registered representatives.

FINRA’s findings stated that Gibson, secured selling agreements from retail broker-dealers, who in turn raised more than $300 million from investors and earned $2,930,000 secured selling agreements from broker-dealers, who in turn raised more than $132 million from investors and earned approximately $1,500,000.

FINRA’s findings also included that Mason and Gibson assisted the retail broker-dealers with product training.

Several of the third-party due diligence reports raised concerns about the accounting of inter-offering transactions and the ability of the offerings to generate sufficient revenue from oil and gas investments. Mason and Gibson, continued to market the offerings without having adequately investigated the subject concerns and determining for themselves whether the offerings were appropriate to be recommended to investors.

Mason’s suspension is in effect from November 19, 2012, through February 18, 2013.

Gibson’s suspension is in effect from November 19, 2012, through February 18, 2013.
(FINRA Case #2011026598101) This ends the information from FINRA’s website.

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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Jan/13

24

Did You Invest in UBS Willow Fund?

Comments off · Posted by Securities Lawyer in FINRA

Soreide Law Group is currently investigation the UBS Willow Fund. This distressed debt hedge fund was formed in 2000. In October, 2012, its investors were informed that the fund would be liquidated after having sustained substantial losses. Willow Fund’s net asset value declined over $300 million.

In December, 2012, a class action lawsuit was filed against the UBS Willow Fund. The class action lawsuit may result in a recovery of some losses for UBS Willow Fund investors, however, we are investigating the liability that the brokerage firms and financial advisors potentially have for selling the UBS Willow Fund.

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

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