A Maryland financial advisor was recently sentenced to four years in prison and three years of supervised release for bilking vulnerable investors out of nearly $1 million. In fact, much of the money was fraudulently withdrawn from a trust account of a child suffering from cerebral palsy.

As we discussed in a previous blog post, the fraud began with a trust account that was established for the benefit of a child suffering from cerebral palsy. The trust account was funded by the proceeds of a $3 million medical malpractice settlement, which were used to buy an annuity. The annuity was supposed to pay the child a minimum of $3,990 a month.

Thomas was a vice president of Harbor Financial Services, a subsidiary of Harbor Bank. After meeting the child’s mother, also the trustee, at Harbor Bank in December 2001, he established complete control over the child’s trust account, which was moved to the Harbor Bank.

Although the annuity payments averaged $6,287.53 per month, Thomas disbursed only $1,000 to $1,500 a month from the trust account to the mother for the care of the child. He withdrew the remaining monthly balance by obtaining the mother’s signature on blank withdrawal slips, and deposited the funds into his personal bank accounts. Over the course of the fraud scheme, Thomas withdrew $756,963.98 from the trust account.

According to prosecutors, this was not the only investment fraud the financial advisor perpetrated. While employed as a financial advisor by Wells Fargo Advisors, LLC, Thomas fraudulently withdrew $75,000 from an account held by an elderly Wells Fargo customer. The money was later used to pay Thomas’ personal credit card bills.

If you have been the victim of annuity fraud, we may be able to help you recover your losses. Contact us today at 215-839-3953 for a free consultation.

At Wall Street Fraud, we are dedicated to offering assistance to those who have been hurt by improper corporate or investment practices.

If you have been the victim of stock brokerage fraud, securities fraud, mutual fund fraud, stockbroker fraud, annuities fraud, or any other type of investment fraud, please contact us today for a free case evaluation. Our talented and aggressive legal and professional staff is eager to help you recover your losses.

With interest rates projected to remain low until at least late 2014, the North American Securities Administrators Association (NASAA) is warning investors to be on the lookout for fraudulent investments promising higher yield or returns.

According to NASAA, state securities regulators are worried that individuals who depend on fixed income investments, particularly seniors, may be enticed to trade their slower growing but safe investments for riskier alternatives, without fully understanding the potential consequences.

“Investors running away from low yields on fixed investment products risk stumbling into the arms of unscrupulous salespeople promising low risk and high returns,” said Jack E. Herstein, NASAA President and Assistant Director of the Nebraska Department of Banking & Finance Bureau of Securities. “Don’t chase the offer of high yield or returns into a dead-end investment.”

“When evaluating any investment, it pays to remember that risk and reward go together,” Herstein said. “Anyone promising high yield or high returns with little or no risk should be approached with a high degree of skepticism.”

Therefore, before purchasing any investment, NASAA reminds investors to ask the following questions: 

• Are claims made for the investment realistic? Use common sense and get a professional, third-party opinion when presented with investment opportunities that seem to offer unusually high returns in comparison to other investment options.
• Has the seller given you written information that fully explains the investment? Request written information that fully explains the investment, such as a prospectus or offering circular. The documentation should contain enough clear and accurate information to allow you or your investment adviser to evaluate and verify the particulars of the investment.
• Are the seller and investment licensed and registered in your state? Call your state or provincial securities regulator to find out. If they are not, they may be operating illegally.

If you have been misled regarding the risks associated with an investment product, we may be able to help you recover your losses. Contact us today at 215-839-3953 for a free consultation.

At Wall Street Fraud, we are dedicated to offering assistance to those who have been hurt by improper corporate or investment practices.

If you have been the victim of stock brokerage fraud, securities fraud, mutual fund fraud, stockbroker fraud, annuities fraud, or any other type of investment fraud, please contact us today for a free case evaluation. Our talented and aggressive legal and professional staff is eager to help you recover your losses.

Apparently, David Lerner did not get FINRA’s message the first time. Despite a disciplinary complaint against his firm, David Lerner Associates Inc., Lerner continued to improperly sell illiquid real estate investment trusts to unsuspecting investors, according to the regulator’s amended complaint.

As we detailed in an earlier blog post, FINRA filed a complaint last spring alleging that Lerner provided misleading performance figures for Apple REITs and implied that future investments could be expected to achieve similar results. The amended filing goes after Lerner personally and focuses on statements Lerner allegedly made to investors following FINRA’s initial action.

According to the new complaint, David Lerner “continues to solicit thousands of customers to purchase Apple REIT Ten without performing adequate due diligence.”

“Between at least April 28, 2011, and Nov. 17, 2011, [the firm and Mr. Lerner] have made false, exaggerated and misleading claims regarding the investment returns, market values, performance and prospects of the closed Apple REITs to over 1,000 customers” during at least four investment seminars, FINRA contends.

As detailed in the complaint, the REITs were characterized, as “investments that sophisticated investors such as Warren Buffett would buy.”

FINRA also alleges that Lerner took steps to counter the negative press created by the regulator’s initial complaint. According to the amended filing, Mr. Lerner “sent letters to over 50,000 [Lerner] customer households that contained exaggerated, false or misleading statements.”

As demonstrated by this case and others, investors should be extremely cautious about investing in nontraded REITs. As we mentioned last week, nontraded REITs were one of several products on FINRA’s watch list for 2012.

Source: Investment News

If you have been the victim of REIT-related fraud, we may be able to help you recover your losses. Contact us today at 215-839-3953 for a free consultation.

At Wall Street Fraud, we are dedicated to offering assistance to those who have been hurt by improper corporate or investment practices.

If you have been the victim of stock brokerage fraud, securities fraud, mutual fund fraud, stockbroker fraud, annuities fraud, or any other type of investment fraud, please contact us today for a free case evaluation. Our talented and aggressive legal and professional staff is eager to help you recover your losses.

Earlier this month, a Nevada investor was awarded a $1.38 million securities arbitration award against Banc of America Securities, now Merrill Lynch. The money represents all the money Bobby Hayes lost on a complex security, as well as accrued interest, lawyers’ fees, and other costs.

Like many scorned investors, Mr. Hayes’s ordeal has understandably shaken his faith in the securities industry. As reported by the New York Times, Mr. Hayes said he told his broker that he wanted a low-risk investment when he was sold a collateralized loan obligation known as Lyon Capital Management VII in July 2007.

“I was a trusting client, and it was like a bad dream,” Mr. Hayes said. “I had a lot more assets in the bank, and it was unfathomable to me that they would deliberately do this to even a small depositor.”

According to an expert witness who testified at the arbitration, the security Hayes was sold was the opposite of low-risk. In fact, the loans purchased over previous months were losing value even before the security was formed. However, Banc of America Securities sold the investment as if the loans still carried the same value from months earlier.

According to Hayes’s attorneys, the securities were already essentially worthless on the day they were sold. Because of the way losses are distributed in these instruments, the loans in the pool had to decline only by one-half of 1 percent before Mr. Hayes’s investment would be wiped out. The entire security was liquidated at a loss of around $75 million about 16 months after it was sold.

While he has been able to recoup his losses, Mr. Hayes said he is still angry. “I no longer trust any financial institution,” he added.

If you have been sold unsuitable securities, we may be able to help you recover your losses. Contact us today at 215-839-3953 for a free consultation.

At Wall Street Fraud, we are dedicated to offering assistance to those who have been hurt by improper corporate or investment practices.

If you have been the victim of stock brokerage fraud, securities fraud, mutual fund fraud, stockbroker fraud, annuities fraud, or any other type of investment fraud, please contact us today for a free case evaluation. Our talented and aggressive legal and professional staff is eager to help you recover your losses.

The Financial Industry Regulatory Authority recently released its regulatory and examination priorities for 2012. As detailed in the letter, the regulator is concerned that the volatile economy will continue to put investors at risk for unsuitable products that promise high returns.

“FINRA is informing its examination priorities against the economic environment that investors have faced since 2008, as these circumstances have steadily contributed to conditions that foster an increased risk of aggressive yield chasing, inappropriate sales practices, unsuitable product offerings, and misappropriation and fraud,” according to the letter.

The following products are on FINRA’s watch list:

• Residential- and commercial-mortgage-backed securities,
• Nontraded real estate investment trusts,
• Municipal securities,
• Exchange-traded funds that use synthetic derivatives and significant leverage, Variable annuities,
• Structured products,
• Private placements, and
• Life settlements.

With respect to monitoring broker’s conduct, FINRA indicated that it “remain[s] concerned about firms’ charging retail investors hidden, mislabeled or excessive fees.” Finally, the agency stated it will be cracking down on brokers who enhance their balance sheets by taking on excessive debt or manipulating their assets and liabilities.

Source: Investment News

At Wall Street Fraud, we are dedicated to offering assistance to those who have been hurt by improper corporate or investment practices.

If you have been the victim of stock brokerage fraud, securities fraud, mutual fund fraud, stockbroker fraud, annuities fraud, or any other type of investment fraud, please contact us today for a free case evaluation. Our talented and aggressive legal and professional staff is eager to help you recover your losses.

Goldman Sachs Group Inc. is facing a securities lawsuit claiming it defrauded investors regarding a 2006 offering of securities backed by risky mortgage loans. Last week, it was certified as a class action led by the Public Employees’ Retirement System of Mississippi.

The class-certification is a win for investors because it will allow them to share resources, which can cut costs, and can lead to larger recoveries than if investors are required to file individual lawsuits.

As reported by Reuters, investors allege that they lost money in the GSAMP Trust 2006-S2, a $698 million offering of certificates backed by second-lien home loans made by New Century Financial Corp, a now defunct California subprime mortgage lender.

The Mississippi fund contends that the GSAMP offering documents were false and misleading, specifically alleging that Goldman’s boilerplate disclosures failed to reveal how New Century had disregarded its own underwriting standards and used inflated appraisals. It further blames Goldman’s poor due diligence for the bank’s failure to detect these deficiencies when it bought New Century’s loans and packaged them into securities.

As we have reported on this blog, Goldman is just one of several banks facing investor lawsuits over misrepresentations related to mortgage-backed securities. Goldman was previously forced to pay $550 million to settle U.S. Securities and Exchange Commission fraud charges over a collateralized debt obligation it sold, Abacus 2007-AC1 CDO.

If you were misled regarding mortgage-backed securities, we may be able to help you recover your losses. Contact us today at 215-839-3953 for a free consultation.

At Wall Street Fraud, we are dedicated to offering assistance to those who have been hurt by improper corporate or investment practices.

If you have been the victim of stock brokerage fraud, securities fraud, mutual fund fraud, stockbroker fraud, annuities fraud, or any other type of investment fraud, please contact us today for a free case evaluation. Our talented and aggressive legal and professional staff is eager to help you recover your losses.

The Financial Industry Regulatory Authority (FINRA) has filed a complaint against Charles Schwab & Company. The regulator has charged the firm with violating FINRA rules by requiring its customers to waive their rights to bring class action lawsuits.

FINRA’s complaint charges that in October 2011, Charles Schwab amended its customer account agreement to include a provision requiring customers to waive their rights to bring or participate in class actions against the firm. Schwab sent the amended agreements to nearly 7 million customers.

As noted in the complaint, “The class action waiver will likely lead millions of Schwab customer who have received the account agreement to incorrectly believe they do not have the ability to bring or participate in class actions against Schwab.”

As detailed by FINRA, the agreement also included a provision requiring customers to agree that arbitrators in arbitration proceedings would not have the authority to consolidate more than one party’s claims. The complaint charges that both provisions violate FINRA rules concerning language or conditions that firms may place in customer agreements.

FINRA’s complaint has requested an expedited hearing because Schwab’s conduct is ongoing, as the firm has continued to use account agreements containing these provisions in opening more than 50,000 new customer accounts since October 2011.

We will, of course, keep you updated.

At Wall Street Fraud, we are dedicated to offering assistance to those who have been hurt by improper corporate or investment practices.

If you have been the victim of stock brokerage fraud, securities fraud, mutual fund fraud, stockbroker fraud, annuities fraud, or any other type of investment fraud, please contact us today for a free case evaluation. Our talented and aggressive legal and professional staff is eager to help you recover your losses.

As we discussed last week, the Financial Industry Regulatory Authority operates the largest securities-related dispute resolution forum in the world. Generally, arbitration panels are comprised of three people, one of which is an “industry” arbitrator who works in or is associated with the financial industry.

However, a new program that allows defrauded investors to exclude industry insiders from arbitration panels is gaining in popularity. According to Investment News, more than three-quarters (76%) of investors chose the all-public option from the start of the program in February 2011 through Jan. 26 of this year. That figure was up from a 54% opt-in rate during a 27-month pilot program, according to FINRA. Many in the industry believe the new program is popular with investors because it alleviates long-standing concerns of bias by industry panelists.

Do Investors Have Greater Success Under the New Program?

While the all-public program is certainly attracting investors, there is no definitive answer regarding if they are faring any better.

Of 49 pilot program awards issued by all-public panels, investors were awarded damages in 26 of 40 cases, or 65% of the time, according to FINRA. Of the additional 23 pilot program awards that were issued by panels with one nonpublic arbitrator, investors obtained relief 13 times (a 62% success rate).

Under the standard arbitration system, win rates were lower. In 2009, arbitrators awarded damages to investors in 49% of cases; in 2010, the win rate was 48%. Nonetheless, FINRA said that the current data are insufficient to derive any definitive conclusions about whether all-public panels tend to favor investors.

As securities fraud attorneys, we will be monitoring the success of this program very closely.

If you have been the victim of securities fraud, we may be able to help you recover your losses. Contact us today at 215-839-3953 for a free consultation.

At Wall Street Fraud, we are dedicated to offering assistance to those who have been hurt by improper corporate or investment practices.

If you have been the victim of stock brokerage fraud, securities fraud, mutual fund fraud, stockbroker fraud, annuities fraud, or any other type of investment fraud, please contact us today for a free case evaluation. Our talented and aggressive legal and professional staff is eager to help you recover your losses.

The Financial Industry Regulatory Authority (FINRA) Investor Education Foundation and the National Football League (NFL) have announced that they are working together to teach incoming NFL players how to spot and avoid investment fraud. As we have frequently discussed on this blog, professional athletes are common targets for unscrupulous investment professionals looking to take advantage of their wealth and status.

The program is designed to teach incoming NFL players how to choose the right financial professional, including how to do a background check. Participants will also learn about the risks of taking on debt. As detailed by FINRA, understanding the psychological tactics and how they can be used against investors can help players avoid becoming victims of con artists.

“The FINRA Foundation’s partnership with the NFL is a team effort to ensure that players who are starting their professional careers don’t become victims of investment fraud,” said Gerri Walsh, President of the FINRA Investor Education Foundation. ” NFL players have been targeted in the past and the presentations and resources that we are providing will give players and their families the knowledge and tools they need to make smarter financial decisions.”

No matter who you are, if you have been the victim of a stock scam, we may be able to help you recover your losses. Contact us today at 215-839-3953 for a free consultation.

At Wall Street Fraud, we are dedicated to offering assistance to those who have been hurt by improper corporate or investment practices.

If you have been the victim of stock brokerage fraud, securities fraud, mutual fund fraud, stockbroker fraud, annuities fraud, or any other type of investment fraud, please contact us today for a free case evaluation. Our talented and aggressive legal and professional staff is eager to help you recover your losses.

Many of us use our email accounts to correspond with everyone in our lives, from our college roommate to our broker. Unfortunately, email hacking is becoming a growing problem. While in some cases it is a mere annoyance, in more serious breaches, it can lead to identity theft and even investment losses.

According to FINRA, it has received an increasing number of reports involving investor funds being stolen by fraudsters who first gain access to the investor’s email account and then email instructions to the firm to transfer money out of the brokerage account. Therefore, one of the first steps you should take if your email account has been compromised is to notify your brokerage firm and other financial institutions.

To warn investors about the potential financial consequences of a compromised email account, FINRA has issued an Investor Alert. It offers the following tips should your email get hacked:

• If your email account gets hacked—or if for any reason you think that your personal financial information has been stolen—immediately contact your brokerage firm and other financial institutions, including credit card issuers, to notify them of the problem. You should also notify the credit bureaus to put a fraud alert on your file.
• Check your brokerage account for unauthorized transactions—especially withdrawals or wire transfers to an account that is not yours—and ask the firm to investigate if you find any. It will take time to determine what happened, and the firm will likely need your help in identifying anyone who might have access to your account.
• In the meantime, be sure to change your username, password and PIN for your financial accounts—and also change your password to your email account.

At Wall Street Fraud, we are dedicated to offering assistance to those who have been hurt by improper corporate or investment practices.

If you have been the victim of stock brokerage fraud, securities fraud, mutual fund fraud, stockbroker fraud, annuities fraud, or any other type of investment fraud, please contact us today for a free case evaluation. Our talented and aggressive legal and professional staff is eager to help you recover your losses.