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How to Protect Your Investments: Five Simple Tips

Wall Street Fraud — Fri, 18 May 2012 00:41:39 +0000

Investment fraud is thriving in the current economy, as investors seek to recoup losses from the past few years and generate higher yields. To make sure you are not the next victim, investors need to be extra vigilant before and after making investments.

Here are five simple tips for keeping your money safe:

Understand Returns Are Not Guaranteed: The promise of guaranteed returns is one of the biggest red flag for investment fraud because it is impossible to have a risk-free investment. In addition, higher returns generally mean higher risks.

Don’t Invest More than You Are Willing to Lose: Before turning over your hard earned money, it is important to find out find out how you can get your money back and what fees or penalties may be involved. It is also important not to invest your money all in one place.

Keep Good Records: As we have highlighted on this blog, it is important to both read and save any statements, disclosures, sales materials, etc. that you receive in connection with an investment. These may become invaluable should you have a problem down the road.

Report Problems Immediately: If you suspect fraud or other problems with your investments, it is important to report it immediately. You should start with your advisory or brokerage firm, but if your concerns are not addressed, it is important to contact FINRA or your state’s securities regulator.

Hire a Private Attorney: In most cases, it is necessary to take individual action to get your money back. This means hiring an experienced securities fraud attorney.

Source: CNBC

If you have been the victim of investment 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 or negligence, please contact our securities fraud attorneys today for a free case evaluation. Our talented and aggressive legal and professional staff is eager to help you recover your losses.

Is Elder Fraud More Common Than We Think?

Wall Street Fraud — Thu, 17 May 2012 00:38:51 +0000

Unfortunately, elder fraud is likely more common than reports suggest. Victims of elder fraud are often afraid or too embarrassed to admit they have been swindled. This not only leads to lower reporting, but also makes it easier for the fraudster to take advantage of the next victim.

The Federal Trade Commission estimates that 13.5 percent of the adult population is defrauded each year. While this number may seem high, it likely only captures a percentage of the victims.

A recent New York Times article sheds light on how underreported elder fraud may be. It points to the 2011 National Victim Profiling study underwritten by AARP Foundation. It compared 723 fraud victims with a 1,500-member control group to determine why some people are more susceptible to fraud. The survey findings revealed that overall, victims are more interested in persuasion tactics, expose themselves to more sales situations, and are less likely to take prevention actions to protect themselves than the general population.

The study also revealed how big the underreporting problem may be. Members of the study group were culled directly from law enforcement files across the country and were therefore confirmed fraud victims. However, when asked if they’d ever been scammed, only 40 percent answered in the affirmative.

Thankfully, efforts are underway to educate older Americans about fraud and teach them to protect their hard earned money. For specific tips, we invite you to check out our blog posts as well.

If you have been the victim of elder 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.

Hedge Fund Fraud Was a Family Affair

Wall Street Fraud — Wed, 16 May 2012 00:35:00 +0000

While the number of hedge funds has surged in recent years, regulators have largely failed to keep up by increasing oversight. As a result, hedge fund investors are often susceptible to securities fraud.

The Securities and Exchange Commission recently announced the settlement of a hedge fund fraud case involving a father and son. The two reportedly misled investors about the investment strategies and past performance of their funds.

According to the SEC, Gabriel and Marco Bitran raised up to $500 million for eight hedge funds and managed accounts over three years for their companies, GMB Capital Management LLC (now known as Clearstream Investments LLC) and GMB Capital Partners LLC. In order to market the hedge funds, the Bitrans created performance track records showing double-digit annualized return without any down years. They distributed these track records to potential investors in marketing materials, and told investors that they were based on “actual trading with real money.” In reality, the Bitrans knew their representations were false and the track records were based on hypothetical historical investments.

As aptly noted by David Bergers, director of the SEC’s Boston regional office, “The Bitrans solicited investors by touting an impressive track record and a unique investment strategy, and they lied about both.”

The Message for Investors

Depending upon its investment strategy, each hedge fund has its own unique investment risk and must be assessed based upon its own merits. Investors should fully understand the risk in investing in hedge funds and should conduct appropriate due diligence before investing.

If you have been the victim of hedge fund 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.

Investment Fraud Case Proves Scammers Rarely Change Their Stripes

Wall Street Fraud — Tue, 15 May 2012 10:28:08 +0000

David Blech, who was previously convicted of investment fraud in 1998 and barred from the industry, pleaded guilty to two new charges of manipulating stock prices last week. He is also facing a related action by the Securities and Exchange Commission.

The case highlights that it is important to research anyone offering you an investment product and always heed any red flags you may uncover.

According to the SEC, Blech engaged in the most recent investment fraud at various points in 2007 and 2008. He manipulated the stocks of two biotechnology companies, Pluristem Therapeutics Inc. and Intellect Neurosciences Inc., to his own benefit.

The SEC alleges that Blech first opened dozens of nominee accounts at several broker-dealers in the names of his friends and family. He then used the accounts to carry out matched trades in Pluristem’s and Intellect’s stocks. Blech’s activity in these thinly traded securities artificially inflated the stock price of both companies and created the false impression of a liquid market for each company. Blech then used the artificially inflated stock price to sell off his holdings through the nominee accounts, and as collateral for a line of credit he established in his wife’s name.

“Blech tried to rig the market in favor of his own investments and create a mirage of activity in the stocks of biopharmaceutical companies for which he was soliciting investors,” said George S. Canellos, Director of the SEC’s New York Regional Office. “But he seriously misjudged the SEC’s determination to ensure that the securities markets function fairly.” Blech faces 40 years in prison for the criminal charges and hefty financial fines from the SEC.

If you have been the victim of investment 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.

Securities Fraud Litigation: Would You Let a Robot Pick Your Stocks?

Wall Street Fraud — Tue, 15 May 2012 00:27:56 +0000

The Securities and Exchange Commission recently charged twin brothers in connection with an Internet-based pump-and-dump scheme involving a fake “stock picking robot” that purportedly identified penny stocks set to double in price. While the securities fraud may seem unbelievable, the brothers were able to bilk approximately 75,000 investors.

According to an SEC statement, Alexander John Hunter and Thomas Edward Hunter launched the fraud when they were just 16 years old in 2007. They disseminated e-mail newsletters through a pair of websites they created to tout stocks selected by the robot equipped with a complex computer-trading program that was the product of extensive research and development.

Their powers of persuasion were also clearly highly sophisticated—the duo collected at least $1.2 million from investors primarily in the U.S. who paid $47 for annual newsletter subscriptions. Some investors paid an additional fee for the “home version” of the robot software.

The SEC alleges that the brothers created a third website aimed towards penny stock promoters. It boasted, “One email to this list of people rockets a stock price.” The Hunters were in turn paid to send selected penny stock ticker symbols to their subscribers, who were misled to believe that the stock “picks” were the product of the robot.

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.

Securities Fraud Alert: Could Your Investment Account Be Hacked?

Wall Street Fraud — Fri, 11 May 2012 23:35:20 +0000

A Russian national has been arrested for securities fraud, after allegedly hacking into brokerage accounts and executing fraudulent trades. Understandably, this has left many investors questioning the safety of their own brokerage accounts.

Federal prosecutors allege Petr Murmylyuk of Brooklyn was involved in a crime ring that stole about $1 million by electronically breaking into online trading accounts and executing fraudulent transactions. He is charged with conspiracy to commit wire fraud, unauthorized access to computers, and securities fraud.

According to an FBI statement, Murmylyuk worked with others to steal from online trading accounts at Scottrade, E*Trade, Fidelity, Schwab, and other brokerage firms. Members of the ring first gained unauthorized access to the online accounts and changed the phone numbers and e-mail addresses on file to prevent notice of unauthorized trading from going to the victims.

Once the hackers controlled the accounts, they used stolen identities to open additional accounts at other brokerage houses. They then caused the victims’ accounts to make unprofitable and illogical securities trades with the new accounts—referred to in the complaint as the “profit accounts”—that benefitted the hackers.

What Can Investors Do to Protect Their Accounts?

While having an online brokerage account is a convenient way to monitor your investments, it also increases the risk of identity theft. Therefore, it is important for investors to exercise caution. In addition to asking your brokerage firm what steps they take to protect your information, there are precautions that you can takes as well.

Below are a few tips from the Securities and Exchange Commission:

Take Security Precautions. Make sure your computer has the latest anti-virus protection and security patches, and make sure that you access your online brokerage account only on a secure web page using encryption.
Use a Security Token (if available). Using a security token can make it even harder for an identity thief to access your online brokerage account. That’s because these small number-generating devices offer a second layer of security – a one-time pass-code that typically changes every 30 or 60 seconds.
Avoid Public Computers. It’s generally safer to access your online brokerage account from your own computer than from other computers.
Don’t Respond to Emails Requesting Personal Information. Legitimate entities will not ask you to provide or verify sensitive information through a non-secure means, such as email.
Be Smart About Your Password. The best passwords are ones that are difficult to guess. Try using a password that consists of a combination of numbers, letters (both upper case and lower case), punctuation, and special characters. You should change your password regularly and use a different password for each of your accounts.
Be Extra Careful with Wireless Connections. Wireless networks may not provide as much security as wired Internet connections. In fact, many “hotspots” – wireless networks in public areas like airports, hotels and restaurants – reduce their security so it’s easier for individuals to access and use these wireless networks.
Log Out Completely. Closing or minimizing your browser or typing in a new web address when you’re done using your online account may not be enough to prevent others from gaining access to your account information. Instead, click on the “log out” button to terminate your online session.

Finally, it is important to carefully read your brokerage statements every month. If you detect unauthorized transactions in or withdrawals from your brokerage account, it is important to contact your broker immediately. While you are waiting for the firm to investigate, be sure to change your username, password and PIN for the account.

If you have been the victim of stockbroker fraud or negligence, 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.

SEC Alleges UBS Defrauded Mutual Fund Customers

Wall Street Fraud — Thu, 10 May 2012 23:22:27 +0000

The Securities and Exchange Commission recently charged UBS Financial Services Inc. of Puerto Rico and two executives with making misleading statements to investors regarding closed-end mutual funds. UBS Puerto Rico has agreed to settle the SEC’s charges by paying $26.6 million that will be placed into a fund for defrauded investors.

According to the SEC, the firm knew about a significant “supply and demand imbalance” and discussed the “weak secondary market” internally. However, UBS Puerto Rico misled investors and failed to disclose that it controlled the secondary market, where investors sought to sell their shares in the funds.

The SEC further contends that UBS Puerto Rico significantly increased its inventory holdings in the closed-end funds in order to prop up market prices, bolster liquidity, and promote the appearance of a stable market. However, UBS Puerto Rico later withdrew its market price and liquidity support in order to sell 75 percent of its closed-end fund inventory to unsuspecting investors.

“UBS Puerto Rico denied its closed-end fund customers what they were entitled to under the law – accurate price and liquidity information, and a trading desk that did not advantage UBS’s trades over those of its customers,” said Robert Khuzami, Director of the SEC’s Division of Enforcement.

If you have been the victim of mutual fund 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.

Five Social Media Tips for Older Investors

Wall Street Fraud — Wed, 09 May 2012 23:18:31 +0000

The SEC’s Office of Investor Education and Advocacy recently issued an Investor Bulletin to provide older investors who use social media with a few tips to help them avoid investment fraud. Given that more seniors are flocking to social media and using it as a tool to research investments, we want to highlight five of the most important tips.

1. Look Out for Red Flags. Common signs that an investment opportunity may be fraudulent include offers that seem too good to be true, promises of “guaranteed” returns with little or no risk, and pressure to invest right now.

2. Be Wary of Unsolicited Offers. If you see a new post on your wall, a tweet mentioning you, a direct message, an e-mail, or any other unsolicited – meaning you didn’t ask for it and don’t know the sender – communication regarding a so-called investment opportunity, you should exercise extreme caution.

3. Watch on for Affinity Fraud. An investment pitch made through an online group of which you are a member, or on a chat room or bulletin board catering to an interest you have, may be an affinity fraud.

4. Check Your Privacy and Security Settings on Social Media Sites. Seniors should be mindful of the various features on these websites that can help protect privacy. Understand that unless you guard personal information, it may be available not only to your friends, but for anyone with access to the Internet – including fraudsters.

5. Ask Questions. Be skeptical. Never judge a person’s integrity, or the merits of an investment, without doing thorough research on both the person selling the investment and the investment itself.

While social media can provide many benefits, it also provides another avenue for fraudsters to target investors. Therefore, seniors should exercise caution when using social media as part of their investment process.

If you have been the victim of investment 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.

Morgan Keegan Securities Fraud Lawsuit Revived

Wall Street Fraud — Tue, 08 May 2012 23:03:22 +0000

A federal appeals court has revived a Securities and Exchange Commission lawsuit accusing Morgan Keegan & Co of fraudulently misleading investors about the risks of auction-rate securities. As a result, investors will have a second chance to recover their losses.

As Reuters reports, the 11th U.S. Circuit Court of Appeals ruled that a federal district judge in Atlanta erred in finding that the alleged misrepresentations made by Morgan Keegan brokers were not material. It remanded the case back to the district court for more proceedings.

The SEC alleges that Morgan Keegan misrepresented the investment product’s risks, including by telling customers that the debt carried “zero risk” or was “just like a money market” fund.

Last June, U.S. District Judge William Duffey in Atlanta found that Morgan Keegan had adequately disclosed the risks. He also said the SEC must show more than “a few isolated instances of alleged broker misconduct” to hold Morgan Keegan responsible.

However, the 11th Circuit concluded otherwise. It found that “the brokers’ misleading statements and failure to disclose the known liquidity risk of auction-rate securities could have been viewed by the reasonable investor as having significantly altered the total mix of information made available.”

The panel also said Morgan Keegan, having known that more auctions were failing in late 2007 and early 2008, was not excused by having given customers “general cautionary language” about the debt on the back of its trade confirmations.

If you have been the victim of stockbroker 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.

Unsuitable ETFs Lead To Heavy Fines for UBS, Wells Fargo, Citigroup, and Morgan Stanley

Wall Street Fraud — Mon, 07 May 2012 02:33:54 +0000

As expected, the Financial Industry Regulatory Authority (FINRA) has sanctioned several leading firms for selling leveraged and inverse exchange-traded funds (ETFs) without reasonable supervision and for not having a reasonable basis for recommending the securities. Citigroup Global Markets, Inc; Morgan Stanley & Co., LLC; UBS Financial Services; and Wells Fargo Advisors, LLC were fined more than $7.3 million and are required to pay a total of $1.8 million in restitution to certain customers who made unsuitable leveraged and inverse ETF purchases.

FINRA sanctioned the following firms:

Wells Fargo – $2.1 million fine and $641,489 in restitution
Citigroup – $2 million fine and $146,431 in restitution
Morgan Stanley – $1.75 million fine and $604,584 in restitution
UBS – $1.5 million fine and $431,488 in restitution

Brad Bennett, FINRA Executive Vice President and Chief of Enforcement, said, “The added complexity of leveraged and inverse exchange-traded products makes it essential that brokerage firms have an adequate understanding of the products and sufficiently train their sales force before the products are offered to retail customers. Firms must conduct reasonable due diligence and ensure that their representatives have an understanding of these products.”

FINRA found that from January 2008 through June 2009, the firms did not have adequate supervisory systems in place to monitor the sale of leveraged and inverse ETFs, and failed to conduct adequate due diligence regarding the risks and features of the ETFs. As a result, the firms did not have a reasonable basis to recommend the ETFs to their retail customers.

According to FINRA, brokers also made unsuitable recommendations of leveraged and inverse ETFs to some customers with conservative investment objectives and/or risk profiles. Each of the four firms sold billions of dollars of these ETFs to customers, some of whom held them for extended periods when the markets were volatile.

For more on the investment risks associated with ETFs, please check out our previous posts.

If you have been the victim of stockbroker 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.