HMS Income Fund, Inc. (BDC)
Master Private Equity Fund, LP
Sierra Income Corporation (BDC)
ARC Business Development Corporation of America Update
Berkeley Capital Trust, Inc.
FS Energy & Power Fund (BDC)
Gaines-Gentry Breeding & Racing, LLC
Galleon Ventures, LLC
Keating Capital, Inc.
Master Private Equity Fund LP
Pagoda Pharma Group, Inc. Offering
Sage Harbor – Ameritech Preferred Investors
Sage Harbor – KEG Land Investors, LLC
Sage Harbor – Surprise Prep School Update
Unity Resources, LLC-Emerald Royalty Fund
Unity Resources, LLC-Opinion Update
The Golfers Company Common Stock Offering
Virtus Real Estate Capital Fund, LP
Waveland Vestara Notes
Zea Capital Fund, LLC
Medical Hospitality Group, Inc.
American Realty Capital Daily Net Asset Value, Inc.
ARC Retail Centers of America
American Realty Capital Trust III, 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.
Behringer Harvard 2008 Multifamily REIT I
Behringer Harvard Opportunity REIT II
Bluerock Enhanced Multifamily Trust, Inc.
Carter Validus Mission Critical REIT
Clearwater Opportunity REIT
Cornerstone Core Properties REIT, Inc.
Hines Global REIT, Inc.
Inland Diversified REIT
Lightstone Value Plus REIT II
NetREIT Dubose Model Home REIT, Inc.
O’Donnell Strategic Industrial REIT, Inc.
Preferred Apartment Communities, Inc.
US Apartment Investors 2010, Inc.
Wells Core Office Income REIT
Wells REIT II
Wells Timberland REIT
ArciTerra Strategic Retail – Park Lee
Bluerock Mesa Ridge Apartments DST
PASSCO – Legends at Indian Springs
Inland Discount Retail Portfolio III
Inland Grocery & Pharmacy Portfolio DST
Inland Walgreens Pharmacy Portfolio II DST
Inland CVS Pharmacy Portfolio III DST
Inland CVS Pharmacy Portfolio IV
Inland National Net Lease Portfolio
Principle Equity National Oilwell Varco DST
Rainier Exchange Portfolio I, DST
Rancon Medical and Educational Center
REVA – Raleigh RTP, LLC 1
Salok TN, LLC
TNP 121 S. Martin Luther Blvd.
GDXJ, GDX, GLD, NUGT Losses
Atlantic Bullion & Coin
Adwar Drilling Fund I, LP
APX Drilling Partners 2011, LP
APX Energy, LLC (affiliated with Campbell Energy, LLC)
Atlas Resources Series 31-2011
Atlas Series 31 and 32
ATP Oil and Gas Corp
Aztec XII Drilling Program
Barclay’s Crude Oil ETF (OIL)
Black Stone Minerals, L.P. (BSM)
Blueknight Energy (BKEP)
Bradford Drilling Associates XXXI
Bryan Limited Partnership #33
Calumet Specialty Product Partners (CLMT)
Capital Product Partners L.P. (CPLP)
Catalyst Energy, Inc.
Cheniere Energy Partners (CQP)
Ciner Resources LP (CINR)
Clearbridge MLP and Midstream Fund (CEM)
CNX Midstream Partners LP
Coachman Bakken Drilling Fund III
Cohen & Steers MLP Income and Energy Opportunity Fund (MIE)
Crestwood Equity Partners LP (CEQP)
CSI Compressco LP (CCLP)
CVR Partners LP, symbol UAN
D & L Energy 2011 Program
DCP Midstream Energy (DCP)
Delek Logistics Partners, LP (DKL)
Dynagas LNG Partners LP (DLNG)
Enable Midstream Partners LP (ENBL)
Energy Hunter Partners 2011-A, Ltd.
Enlink Midstream Partners LP (ENLK)
ETACS S&P Crude Oil (OILX)
Ferrellgas Partners, L.P. (FGP)
Foresight Energy (FELPQ)
Frontier Income and Growth LLC 2010
Genesis Energy LP (GEL)
Goldman Sachs MLP & Energy Renaissance Fund (GER)
Goldman Sachs MLP Income Opportunities Fund (GMZ)
Gulf South Energy Partners 2011-A, LP
Hard Rock Partners 2011-A, LP
Heartland Oil Investors (Heartland Production and Recovery Fund)
Holly Energy Partners LP (HEP)
ICON Oil & Gas Fund
iPath Pure Beta Crude Oil (OLEM)
Legacy Reserves LP, symbol LGCY
Madison Capital Energy Income Fund III
Madison Capital Investments, LLC
Magellan Midstream Partners (MMP)
MDS Energy Well Development 2011, LP
Mewbourne Oil & Gas
MidCon Energy Partners (MCEP)
MPLX LP (MPLX)
NGL Energy Partners (NGL)
Noble Access 3 through 13 (2009 through 2012)
Noble Royalty Access Fund X
Noble Royalty Access Fund XI
Noble Royalty Access Fund XII
NuStar Energy LP (NS)
Oil States Trading Working Interest Program
Penneco PDA Programs
Plains All American Pipeline (PAA)
Proshares K-1 Free Crude Oil (OILK)
Proshares Ultra Bloomberg Crude Oil (UCO)
Resource Royalty, LLC
Rhino Resource Partners (RHNO)
Rice Drilling B, LLC
Shell Midstream Partners (SHLX)
Tallgrass Energy LP (TGE)
Talos Energy (TALO)
Targa Resource Partners (NGLS-A)
Tortoise Energy (TYG)
U.S. Energy – Strategic Income Fund
United States Oil Fund (USO)
Unity Resources 11-A
US Energy Alpha Energy Partners 2011 A & B
Viper Energy Partners (VNOM)
Waveland 2011 Drilling Program
Waveland Drilling Partners 2011-A, LP
Waveland Energy Partners 2011A
Waveland Energy Partners Lease Bank Program (2009 and 2010
Cawley Multifamily Fund Losses
Odyssey Residential Losses
KH Funding Notes Losses
TSG Real Estate Losses
Erickson Retirement Community STAMPS
RMC Medstone Capital
Roundstone Healthcare Capital Partners Investors
Warsowe Acquisition Corp Investors
KBS Real Estate Investment Trust Inc. (“KBS REIT I”).
UBS Yield Optimization Notes Fraud
Commonwealth Opportunity Fund II, LLC
Cypress Equipment Fund A, LLC
Legacy Income Fund I, Ltd.
The Golden State Income Fund VI, LLC
Atel 14, LLC
Cawley NNN Fund I
Commonwealth Income & Growth Fund 5
Commonwealth Income & Growth Fund VII
CSV Opportunistic Debt & Equity, TALF/PPIP Fund, LLC
Cypress Income Funds 10 & 11
Cypress Equipment Funds 17 & 18, LLC
Fertile Earth Company Stock Offering Update
ICON ECI Partners I & II, LP
ICON Leasing Fund Fourteen
ICON ECI Fund Fifteen, LP
IMH Holdings / Strategic Wealth & Income Fund
Investlinc Materials Fund, LLC
Macquarie Equipment Leasing
Pacific Office Properties Trust, Inc.
Passco Companies Income Fund I
Rainier Income Fund
RJO Global Trust
TNP Vulture Fund VIII, LLC
Triton Pacific Capital Partners Fund IV
U.S. Preventive Medicine Class E Common Stock Offering
Waveland Ventures IV – Estech
Westmount All Equity Income Fund
American Insurance Strategies (AIS) Fund II, LP
GWG Holdings, Inc. – Secured Debentures
GWG DLP Funding Notes Update
Q Life Fund, L.P.
GWG Renewable Secured Debentures UBS Puerto Rico Fund Losses (Various)
Detroit General Obligation Bond Losses (Various)
Tenant In Common Investment Losses
Bluerock Special Opportunity & Income Fund III, LLC
Cloverfields at Eastland Center
Dominion Opportunity Fund I, LP
Premium Point – KBR (B) & (R) Fund
Thread – KBR (B) and (R) Fund
AgraShares Fund III, LLC 8/1/09
Americap Distressed Real Estate Fund I
Avere Medical Real Estate Fund I, LP
BH Capital Strategic Debt Investment Fund I, LLC
Bluerock Special Opportunity & Income Fund II, LLC
BR Senior Secured Debenture Trust, LLC
Calliance Realty Fund, LLC
Cavan Strategic Capital Growth Fund, LLC
Cawley Multifamily Fund II, LP
Clearwater – Healthcare of Florence
CM Notes Program I, LLC
DCG/UGOC Equity Fund, LLC
DeBartolo Opportunity Fund II
DeBartolo Opportunity Fund I, LLC
De Rito Opportunity Fund I, LP
DIS Neighborhood Rejuvenation Fund I
EBS Fund IV
Encore Opportunity Hospitality Fund I
Epoch Properties Multi-Family Opportunity Fund, Ltd.
Epoch – Brier Creek Luxury Apts
FS Investment Corporation Follow-On
Granite Funding I, LP
Hertz Growth & Income Fund
HPF Residential Fund II
Inland Opportunity Fund II
JCAP Multi-Family Real Estate Fund, LLC
Jasper Stone Real Estate Fund IV, LP
JHFG Multifamily Opportunity Fund, LLC
VII Peaks-KBR Co-Optivist B Fund, LLC
VII Peaks-KBR Co-Optivist R Fund, LLC
Meridian Real Estate Opportunity Fund II, LLC
Meridian Southwest Healthcare Partners, LP
MPF Income Fund 27, Inc.
Northpark Real Estate Investors, LLLP Fund
PMRG Summit Real Estate Fund I, LP
Rainier Net Lease Retail Investors, LP
Redwood Opportunity Fund I, L.P.
REVA – Catalyst Fund Update
RMC Medstone Equity Fund, LLC
Roundstone Healthcare Capital, V, LP
Trinity Green Fund I, LLC
United Development Fund IV
Vertical US Recovery Fund II, LLC
Virtus Student Housing Fund
Virtus Storage Investment IV
Welsh US Real Estate Fund 2009
WNC Tax Credit Funds
Worth Investment Group
Hennion & Walsh SmartTrust UIT Losses
First Trust Tax-Advantaged Municipal Closed End
First Trust Senior Loan Limited Duration Opportunities Closed-End Portfolio Series 17
Thompson National High Yield Notes
(a) In recommending to a customer the purchase, sale, or exchange of any security, a member shall have reasonable grounds for believing that the recommendation is suitable for such customer upon the basis of the facts, if any, disclosed by such customer as to his other security holdings and as to his financial situation and needs.
(b) Prior to the execution of a transaction recommended to a non-institutional customer, other than transactions with customers where investments are limited to money market mutual funds, a member shall make reasonable efforts to obtain information concerning:
(1) the customer’s financial status;
(2) the customer’s tax status;
(3) the customer’s investment objectives; and
(4) such other information used or considered to be reasonable by such member or registered representative in making recommendations to the customer.
(c) For purposes of this Rule, the term “non-institutional customer” shall mean a customer that does not qualify as an “institutional account” under Rule 3110(c)(4).
A stockbroker cannot sell you investments that are not sold to you by the brokerage firm. Typically, these outside investments are riskier and payout a higher commission to the broker. For instance, if your broker solicits you to purchase securities away from the brokerage firm, your broker is “selling away.” This is a violation of the Financial Industry Regulatory Rules, state securities laws, and federal securities laws. Usually, these investments are in the form of limited liability partnerships and private placements. If you are a victim of selling away, you may have legal rights against your broker and the brokerage firm.
Did your broker or financial advisor overconcentrate your portfolio into one or just a few sectors? Diversifying your portfolio helps create a buffer during turbulent economic times. Further, a broker's failure to diversify a customer's portfolio may result in an excessive amount of risk to the investor. Over-concentration of an account is rarely suitable for any investor, especially elderly customers and clients who have a low-risk tolerance. Therefore, if you have too much of one stock, one sector, or several mutual funds owning the same core holdings, you may have legal rights against your broker and the brokerage firm.
The landmark case of Piper, Jaffray & Hopwood, Inc. v. Ladin, 399 F. Supp. 292; 1975 U.S. Dist. LEXIS 16441 (S.D. Iowa August 26, 1975), holds that “The imposition of a duty to investigate the financial capability of an investor entering a margin transaction and to inform that investor of the implications of a margin purchase can also be justified as part of a stockbroker’s professional responsibility.” If you have been put on margin without your permission, were not fully warned of the risks of investing on margin, or do not feel that it was suitable for someone of your age, experience, risk tolerance or net worth to be placed on margin you may have legal rights against your broker and the brokerage firm.
Did your broker or financial advisor excessively buy and sell securities in your account? Generally, churning is the practice of executing trades in order to generate commission for the broker or financial advisor. For churning to occur, your broker or financial advisor must exercise control over the investment decisions in your account. Churning can be a violation of SEC Rule 15c1-7 and other securities laws, worthy of broker investigations.
The Financial Industry Regulatory Authority (FINRA) has rules prohibiting churning and excessive trading. Excessive trading is the same as churning, but without the requirement that the person engaging in the trading does so for the purpose of generating commissions. Churning and excessive trading can violate FINRA Rule 2310, and FINRA Rule 2310-2(b)(2).
It is also against state securities laws and federal securities laws to churn an account. If you are a victim of churning you may have legal rights against your broker and the brokerage firm. Contact us if you're interested in broker investigations due to churning.
Broker-client disputes typically involve allegations that a brokerage firm and its registered representative churned or excessively traded a client’s portfolio in order to generate income for the broker and the firm and/or that the client was sold investments that were not suitable given the client’s investment objectives. At the root of churning cases is the question, “Was there a reasonable probability that the securities trading would be sufficiently profitable to cover its cost?”
Economists and securities industry professionals are often called as expert witnesses to assist arbitration panels in determining whether an account has been churned and, if so, what damages have been suffered by the client. Simple ratios and rules of thumb have long served as traditional economic analyses of liability and damages issues in churning cases. However, advances in computer technology and in our understanding of financial economics now allow for more thorough analyses.
The two common indicators of alleged excessive trading in churning cases: are 1) turnover ratios and 2) cost-to-equity ratios. Turnover ratios measure how often, on average, the securities in a client’s portfolio are traded in a year. Cost-to-equity ratios measure the annual cost of the trading as a percentage of the client’s investments.
There are three common measures of damages in churning and suitability cases: 1) out-of-pocket loss, 2) benchmark portfolio or well-managed account, damages, and 3) trading costs. Out-of-pocket loss is the change in a client’s equity less any net deposits made during the period. Out-of-pocket loss is an inappropriate measure of damages because it ignores the opportunity cost of invested funds. Also, general market movements that are unrelated to the alleged fraud significantly affect the out-of-pocket measure.
The benchmark portfolio measure of damages corrects the deficiencies in the out-of-pocket loss measure. The benchmark portfolio measure of damages is the difference between what the client’s equity would have been had the portfolio been appropriately managed and the client’s actual equity at the end of the disputed period. The benchmark portfolio measure of damages is most widely used in cases where the primary allegation is that unsuitable securities were purchased for the client.
Trading costs (commissions, bid-ask spreads, mark-ups and markdowns, margin interest, and fees incurred by the client) are a widely used measure of damages in churning cases. Although not generally understood, the simple trading cost measure suffers the same flaws as the out-of-pocket loss because, like out-of-pocket losses, it ignores the opportunity cost of invested funds. Fortunately, the adjustment necessary to correct the simple trading cost measure is straightforward and closely related to the benchmark portfolio measure of damages.
Your broker or financial advisor cannot make false statements or omissions. If your broker or financial adviser only talked about the “upside” and how much money you are going to make, without talking about the potential risk to your money, this may constitute a material misrepresentation or omission by your broker. Your broker has a duty to disclose to you known or readily available information such as the earnings and financial health of each company's stock.
False statements often include promises about future performance, price predictions, any guarantees, and special knowledge about the performance of a particular security. Omissions are the failure to disclose known or discoverable risks about an investment. If you are a victim of false statements or material omissions you may have legal rights against your broker and the brokerage firm. Contact us for broker investigations over false statements.
Did your broker or financial advisor recommend that you purchase an overly aggressive mutual fund? Did your broker or financial advisor disclose the underlying securities owned in the funds along with the inherent risks of the fund? Did your broker or financial advisor excessively trade your mutual funds? Did your broker or financial advisor explain the difference between share classes before you purchased your mutual fund? The difference between class A shares and Class B shares is that class A shares charge a front-end sales charge and class B shares do not impose a front-end sales charge. With class B shares a contingent deferred sales charge is used which is paid to the broker at the time of the sale. If you own class B shares you are generally charged a substantially higher annual expense than class A shareholders. Before purchasing class B shares in a mutual fund your broker or financial advisor should have carefully explained the difference in commissions between class A and class B shares. If you answered yes to any of the above questions or were sold class B shares without full disclosure of the risks and commissions you may have legal rights against your broker and brokerage firm.
Anyone who sells securities must also be registered under the Financial Industry Regulatory and the Securities Exchange Commission broker/dealer registration rules or find an exemption from registration. This is true for anyone who gives financial advice as to the purchase and sale of securities. Investment advisers must also be registered or find an exemption. When an investor purchases a security and the registration provisions have not complied with the investor may have a right to rescind the transaction and/or hold the unregistered party liable for damages. Federal securities laws and state “blue sky” laws require brokers, brokerage firms, and the securities sold to be either registered or exempt from registration. If your broker or financial advisor is not registered or sold you unregistered securities you may have legal rights against the broker and brokerage firm. Contact us for help with broker investigation.
http://smartcheck.cftc.gov/ Smart Check is an easy-access free tool to check the background of a financial professional and do your own quick broker investigations. Smartcheck.gov shows pending actions and more.