Posts tagged ‘unsuitable investments’
FINRA Arbitration Panel Demands Oppenheimer Repurchase Auction Rate Securities
According to a recent article from Reuters, a Financial Industry Regulatory Authority (FINRA) arbitration panel has ruled in favor of an investor who invested in Auction Rate Securities with Oppenheimer & Co. before that market failed in 2008. The panel reportedly ruled that the investor “was entitled to “recission of $5.98 million in New Jersey Turnpike auction rate securities that she bought in 2007…” In addition to repurchasing the nearly $6 million dollars’ worth of ARS, Oppenheimer must also cover legal fees in excess of $100,000. In the claim filed against Oppenheimer & Co., in addition to other allegations, they were accused of breach of fiduciary duty and negligence.
Reuters described that “Auction rate securities were sold as highly liquid short-term instruments similar to money-market funds, but with slightly higher returns,” but as a result of a massive market failure in 2008, “…large investment banks that ran the auctions ran into liquidity crunches, [and] thousands of investors were left with securities that could not be sold.
The freeze in the auction rate securities market caused major problems for investors and brokerage firms alike. Litigation followed and, as evidenced by this recent panel decision, continues. There may still be time for investors who suffered investment losses as a result of the purchase of auction rate securities (ARS) to pursue their investment losses through a FINRA arbitration claim.
The White Law Group may be able to assist investors damaged due to the purchase of auction rate securities in pursuing recovery of losses through the FINRA dispute resolution process. The White Law Group is nearly exclusively dedicated to FINRA arbitration proceedings on behalf of investors.
If you invested in auction rate securities (ARS) prior to the market failure in 2008 with Oppenheimer & Co. or another firm, suffered losses, and would like to speak to a securities attorney about your potential to recovery your losses through a FINRA arbitration claim please call our Chicago office at 312-238-9650.
The White Law Group, LLC is a national securities fraud, securities arbitration, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.
Potential Recovery of Martin T. Wegener Investment Losses through FINRA Arbitration
Have you suffered losses due to your investment with Martin T. Wegener (Marty Wegener) and/or his entities Wealth Resources, Inc. and Wealth Resources, LLC? If you have, The White Law Group may be able to help you recover some of your losses through a Financial Industry Regulatory Authority (FINRA) dispute resolution claim.
In June of 2010 the Securities and Exchange Commission (SEC) “filed a civil injunctive action against Martin T. Wegener (Wegener)…and two companies formed, owned, and controlled by Wegener, Wealth Resources, Inc. and Wealth Resources, LLC (collectively, Wealth Resources), for fraudulently offering and selling at least $6.5 million in securities.” More recently, in November of 2011, The Grand Rapids Press reported that Mr. Martin Wegener was also facing felony criminal charges related to the alleged investment scheme. And Last week, The Grand Rapids Press stated that Mr. Wegener “pleaded guilty to mail fraud in a $6-million Ponzi-type scheme involving at least 20 investors” and further that he had accepted a plea deal in which he “acknowledged he intended to defraud clients.”
The SEC release about the civil injunction filed in 2010 said that “from at least 2007 to March 2010, Wegener, who, along with Wealth Resources, acted as an unregistered broker and investment adviser, raised at least $6.5 million from at least twenty investors by falsely representing that he would invest their funds in securities through Wealth Resources.” Wegener apparently also provided the investors with “…purported “brokerage account” statements from Wealth Resources that falsely represented that he invested the money in a variety of investments…”
Instead of investing the money raised in securities, the SEC alleged that Mr. Wegener misappropriated the money and used it for personal uses, business expenses and “…to make Ponzi-like payments to other customers who requested a return of all or part of their investment.”
According to Martin T. Wegener’s CRD (CRD# 2247662), publicly available at FINRA.org, he has not been a registered representative of a FINRA member firm since 05/2010. The CRD indicates that he was registered with New England Securities, a FINRA member firm, from 03/1998 – 05/2010. This time period overlaps with much of the time frame associated with the alleged fraud.
When a registered broker conducts business outside of the firm he is registered with, that activity may be considered “selling away.” If a registered broker “sells away” from his firm, the firm may still be liable for negligent supervision of their broker agent and may be responsible for investment losses in a FINRA dispute resolution claim.
If you invested with Martin T. Wegener and/or his entities Wealth Resources Inc. and Wealth Resources LLC and would like to speak to a securities attorney about your potential to recover the investment losses through FINRA arbitration please call our Chicago office at 312-238-9650.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.
Potential Recovery of Brian A. Bjork Investment Losses through FINRA Arbitration
Have you suffered losses due to your investment with Brian A. Bjork, Select Asset Management and/or his late business partner David Salinas (or his entities)? If you have, The White Law Group may be able to assist you in recovering some of your losses through a Financial Industry Regulatory Authority (FINRA) dispute resolution claim.
In August, the Securities and Exchange Commission (SEC) alleged in documents filed in a Texas district court that “From at least 2004 through the present, Defendant Bjork offered securities in two fraudulent securities schemes, raising approximately $52 million combined…” In addition to Brian A. Bjork, other defendants named were J. David Group of Companies, Inc., J. David Financial Group, Select Asset Management, LLC, Select Capital Management, LLC, Select Asset Fund I, LLC, Select Asset Prime Index Fund, LLC, and the Estate of Joel David Salinas.
According to the SEC, the first of two schemes “defrauded more than 100 investors of approximately $39 million…” It appears, “…Bjork offered investors corporate bonds through Defendants J. David Group and J. David Financial.” It appears Bjork “offered the bonds alongside his business associate,” Mr. Joel David Salinas, who was the president of the J. David Group until his apparent suicide last July. The SEC alleges that they “promised investors safe, fixed income by investing in highly rated corporate and other bonds with annual yields up to 9%,” but that the bonds they offered “…did not exist or that neither J. David Group nor J. David Financial ever acquired as promised.”
The second of the alleged schemes, says the SEC, involved Select Asset Management and Select Asset Capital. The SEC claims that Bjork “offered securities issued by two private funds, Defendants Fund I and Fund II, raising approximately $13 million from at least 52 investors since August 2007” through the two entities. According to the filing, “Bjork controlled Defendant Select Asset, serving as its CEO, and also controlled Defendant Select Capital, serving as one of its three “Principals” named in Fund I and Fund II private-placement memorandums (“PPMs”), which Bjork disseminated to investors.”
At the time of its court filing, the SEC believed that “Defendants participated in fraudulent schemes involving the offer and sale of securities and have violated, and, unless enjoined, will likely continue to violate, anti-fraud provisions of the federal securities laws…”
According to his FINRA CRD, publicly available on FINRA.org, Brian A. Bjork (CRD# 2576087) has not been registered with a member firm since 07/2011. However, his CRD indicates that Mr. Bjork was registered with Securities America, Inc. from 02/1996 – 12/2003, Golden Beneficial Securities Corporation from 12/2003 – 04/2011, and then briefly with World Equity Group, Inc. from 03/2011 – 07/2011.
When a registered broker conducts business outside of the firm he is registered with, that activity may be considered “selling away.” If a registered broker “sells away” from his firm, the firm may still be liable for negligent supervision of their broker agent and may be responsible for investment losses in a FINRA dispute resolution claim.
If you invested with Brian A. Bjork, Select Asset Management and/or his late business partner David Salinas (or his entities) and would like to speak to a securities attorney about your potential to recover the investment losses through FINRA arbitration please call our Chicago office at 312-238-9650.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.
Wells Fargo Fined $2 Million by FINRA for Sale of Unsuitable Reverse Convertibles
The Financial Industry Regulatory Authority (FINRA) has announced that it has levied a $2 million fine on Wells Fargo Investments, LLC. The fine is related to the sale of reverse convertible securities to more than 20 customers by a former registered representative, Mr. Alfred Chi Chen. The fine also resulted from a failure “to provide sales charge discounts on Unit Investment Trust (UIT) transactions to eligible customers. “
FINRA indicated that “As part of the settlement, the firm is required to pay restitution to customers who did not receive UIT sales charge discounts and to provide restitution to certain customers found to have unsuitable reverse convertible transactions.” Wells Fargo Investments, LLC has “neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.”
Reverse convertibles, according to FINRA, “are interest-bearing notes in which repayment of principal is tied to the performance of an underlying asset, such as a stock or basket of stocks.” Reverse convertibles can be considered a risky investment because “an investor risks sustaining a loss if the value of the underlying asset falls below a certain level at maturity or during the term of the reverse convertible.”
FINRA found in this case that Wells Fargo Investments’ former registered representative Mr. Alfred Chi Chen “recommended hundreds of unsuitable reverse convertible investments” and many of the investors “were elderly and/or had limited investment experience and low risk tolerance.” FINRA reported that of Chen’s 172 accounts, a staggering 142 of them had reverse convertible concentrations of over 50%. In the opinion of the securities regulators “The reverse convertible transactions exposed these customers to risk inconsistent with their investment profiles, and resulted in overly concentrated reverse convertible positions in their accounts.
FINRA also determined that “Wells Fargo failed to provide certain eligible customers with breakpoint and rollover and exchange discounts in their sales of UITs…” FINRA believes that this was the result of “insufficient systems and procedures to monitor for unsuitable reverse convertible sales and to ensure that UIT customers received discounts for which they were entitled.”
If you are concerned about an investment you made with Alfred Chi Chen while he was employed at Wells Fargo Investments, LLC and would like to speak to a securities attorney about your potential to recover investment losses through FINRA arbitration please call our Chicago office at 312-238-9650.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.
Recovery of Leveraged and Inverse Exchange-traded Fund (ETF) Investment Losses
According to the North American Securities Administrators Association (NASAA) “Exchange–traded funds (ETFs) have grown increasingly popular with retail investors during the last decade.” The fact that retail, everyday investors are more frequently investing in ETF’s is reportedly a concern for securities regulators because “investors may not understand how these complex investment products work or the potential risks they may face.” The NASAA put out an investor advisory in the summer of 2011 attempting to caution and educate investors in ETF’s and the Financial Industry Regulatory Authority (FINRA) has also weighed in on the potential risks of some ETF’s in an investor alert of their own.
The NASAA describes ETF’s as “baskets of investments such as stocks, bonds, commodities, currencies, options, swaps, futures contracts and other derivative instruments that are created to mimic the performance of an underlying index or sector.” ETF’s have been around for some time, but it has only been in the last couple years where the market hasn’t been almost exclusively the territory of sophisticated investors.
Traditional ETF’s are often compared to mutual funds and have drawn in retail investors. In some cases traditional ETF’s may be suitable for everyday investors seeking long term returns, but as FINRA states “ETFs have evolved over the years, becoming more complex. Investors considering ETFs should evaluate each investment closely and not assume all ETFs are alike.” New and more complex ETF’s, also called synthetic or non-traditional, like inverse and leveraged ETF’s, may not be suitable for most everyday investors. Both the NASAA and FINRA stress that investors need to understand the ETF they are going to purchase before investing.
The NASAA said, “Synthetic products like leveraged or inverse ETFs are not appropriate for “buy and hold” investors because an ETF may reset each day, and its performance may quickly deviate from the underlying index, currency, commodity or basket of assets it is attempting to mirror. “ If an investor is holding leveraged or inverse ETF’s in their portfolio, they may be unsuitably invested in ETF’s. Some of the industry leaders in inverse and leveraged ETF’s are Direxion Funds, ProShares, and Rydex.
The NASAA’s advisory seeks to educate investors about some of the risks associated with ETF’s including the potential for liquidation, tax consequences of non-traditional ETF’s, Redemption issues, and potentially high fees. FINRA’s investor alert similarly urges investors to understand the product and ask a lot of questions about the products to the financial professional who recommends them to you.
Leveraged and inverse ETF’s in particular have been the source of an increasing amount of securities litigation. It appears that as non-traditional ETF’s increased in popularity some financial professionals and brokerage firms were unsuitably recommending the investments to everyday investors. As indicated by the concern of both the NASAA and FINRA, non-traditional ETF’s, like many of the ones offered by Direxion Funds, ProShares, and Rydex, may not be suitable for everyday retail investors.
If you invested in leveraged or inverse ETF’s, like those offered by Direxion Funds, ProShares, or Rydex, suffered investment losses and would like to speak to a securities attorney about your potential to recover your investment through FINRA arbitration please call our Chicago office at 312-238-9650.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.