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Wednesday, August 27, 2014

State Regulators Seek To Limit Non-Traded REITs Concentrations

We've handled over 50 FINRA arbitration claims related to non-traded REITs in the last 6 years.  Most of these products have very large fees and expenses and represent a concentrated sector bet in one narrow area of the market.  Many of the purchasers of these products are elderly or retired.  While regulators like FINRA have hit hard certain peddlers of these products, like David Lerner, many other firms have got away with little in terms of fines or regulatory actions.  This week, NASAA, the group of state securities regulators, presented a list of 33 recommendations to the industry of non traded REITs sellers.  The most important ones relate to concentration limits for investors.  Many of our FINRA arbitration claims center around suitability claims related to the amount, or concentration, of client funds in these illiquid products. We consider these recommendations by NASAA to be a very good development.

Good News for Investors Who Are Suing Wedbush Securities

Good news for investors wishing to sue brokerage firm Wedbush Securities.  The firm this month got hammered by its main regulator, FINRA Enforcement, for issues related to supervisory and anti-money laundering violations.  According to FIRNA, from January 2008 through August 2013, Wedbush failed to dedicate sufficient resources to ensure appropriate risk management controls and supervisory systems and procedures. This enabled its market access customers to flood U.S. exchanges with thousands of potentially manipulative wash trades and other potentially manipulative trades, including manipulative layering and spoofing. Despite its obligations to monitor, review, and detect suspicious and potentially manipulative trades, Wedbush largely relied on its market access customers to self-monitor and self-report such trading without sufficient oversight and controls to detect red flags. While these claims arent related to issues that burned investors usually sue the firm for (unsuitable investment recommendations, fraud, churning and breach of fiduciary duty) virtually every FINRA arbitration has supervisory issues related to it.  With these charges being linked to supervisory lapses at the firm, burned clients who are suing Wedbush will clearly be able to use regulatory actions like this to argue the firm didnt have the proper supervisory infrastructure in place.  To learn how to sue Wedbush Securities in the FIRNA arbitration process, please call our securities law firm in Chicago, Illinois.

Citigroup Gets Caught With Hand in Cookie Jar

Yesterday FIRNA fined Citigroup Global Markets Inc. $1.85 million for failing to provide best execution in approximately 22,000 customer transactions involving non-convertible preferred securities, and for related supervisory deficiencies for more than three years.  According to the regulator, Citigroup's order execution system, BondsDirect, also failed to locate the best prices in more than 7,200 cases because it only checked the securities' primary listing exchange, according to Finra.  FINRA also found that Citigroup's supervisory system and written supervisory procedures for best execution in non-convertible preferred securities were deficient. Citigroup failed to perform any review of customer transactions in non-convertible preferred securities executed on BondsDirect or manually by the trading desk to ensure compliance with the firm's best execution obligations. The entire release, with all its gory details, can be found at the link below.

Merrill Lynch Hit For Supervisory Lapses (Again)

Merrill Lynch got caught with its hand in the cookie jar once again.  Yesterday the CFTC settled charges with Merrill Lynch for failing to diligently supervise employees' processing of futures exchange and clearing fees charged to its customers from at least January 1, 2010 through April 2013.  The CFTC Order finds that Merrill Lynch's fee reconciliation process for identifying and correcting discrepancies between the invoices from the exchange clearinghouses and the amounts charged its customers had been faulty for more than two years.  The entire order, and all its gory details, can be viewed at the link below.

Tuesday, August 26, 2014

Legal Options for Recovering Anthony Diaz Related Investment Losses

Clients burned by financial advisor Anthony Diaz have legal options for attempting to recover their investment losses. Recently, the Department of Enforcement for the Financial Industry's Regulatory Authority alleges that Diaz bought unsuitable variable life insurance investments on behalf of about 80 clients. Most of these clients were near retirement age, and the funds had large exit fees. The authority also accuses Diaz of falsifying financial information and dates. That includes fudging the net worth of some clients to make it look as if they satisfied the minimum wealth needs of a fund. His employing brokerage firm had the obligation to supervise him during the period he was affiliated with the firm. Failing to do so can make them liable for all losses sustained by the clients. To hear more about contingency fee legal options, please call our securities arbitration law firm.

Financial Exploitation of Brokerage Firm Customers and What Can Be Done

Defrauding unsuspecting seniors through financial scams is extraordinarily common.  The Investor Protection Trust, an investor information organization, said in 2012 that one out of every five citizens over the age of 65 had been victimized by a financial scam. People over 60 made up the largest age group reporting fraud to the Federal Trade Commission last year: 27% were 60 or older, up from 22% in 2011.  The entire article can be viewed at the link below.  

Unfortunately, brokerage firms and registered investment advisers prey on the trusting, unsuspecting nature of many seniors and peddle high risk investments like private placements, non traded reits, risky stock trading programs and other similar investments. 

Fortunately for investors who have been taken, the FINRA arbitration claims process or lawsuits can be used to recover these losses in some instances.  Seniors are often a protected class in many states and therefore there are laws against the financial exploitation of these people.  To learn how to sue to recover losses associated with the financial exploitation of the elderly, please call our securities fraud law firm in Chicago, Illinois.

Update for Clients of David Lerner and Apple REITs...

I discuss with journalist Susan Antilla the case of New York based David Lerner and his Apple REITs.  The entire story can be viewed at the link below.  After agreeing to pay a large fine to FINRA for sales practice issues related to selling non traded REITs, the firm continues to peddle these high commissioned products to seniors in New York and Florida.

I Discuss With Financial Planning Magazine The Cat Fight...

Between the CFP board and a couple of its members concerning the seeking of information of member client lists.  The entire article can be viewed at the link below.

Monday, August 25, 2014

On CNBC’s Closing Bell Friday, I Take To Task…

the argument that federal regulators "extorted" banks like Bank of America into multi-billion settlements for actions related to the 2008 market crash. The edited version of the interview can be seen at the link below.  

On CNBC’s Closing Bell Friday, I Take To Task…

the argument that federal regulators "extorted" banks like Bank of America into multi-billion settlements for actions related to the 2008 market crash. The edited version of the interview can be seen at the link below.