While “volatility-linked ETPs are generally short-term trading products that degrade significantly over time and should not be used as part of a long-term buy-and-hold investment strategy,” some Wells Fargo representatives believed that “the products could be used as a long-term hedge on their customers’ equity positions in the event of a market downturn.” In summary, FINRA found that Wells Fargo failed to institute a reasonable system to supervise solicited sales of volatility-linked ETPs.

FINRA makes it clear that “volatility-linked ETPs” are complex products that could be misunderstood and improperly sold by registered representatives,” and has issued Regulatory Notice 17-32 to member firms reminding that heightened supervision is required regarding these products. Susan Schroeder, Executive Vice President of FINRA’s Department of Enforcement stated that member firms “soliciting sales of volatility ETPs should already be well aware of the unique risks that they pose” and explained that “FINRA’s Regulatory Notice 17-32 is intended to further educate the industry so that member firms can assess their own practices and take appropriate remedial action if necessary.”

Wells Fargo accepted the findings of FINRA while neither admitting nor denying the charges.

Most investors seek out brokerage firms because they don’t have the requisite knowledge about investing and investment products and want confidence in how their money is invested. However, it is clear that not all registered representatives have adequate knowledge of the products that they recommend to their clients. If you are concerned about your investments and have suffered losses, please contact The Doss Firm, LLC at (855) 534-4581 for a free consultation to determine if you may have a legal remedy to recover your losses. Please visit our website at www.dossfirm.com for more information about our firm.

As outlined by FINRA, a “UIT is an investment company that offers units in a portfolio of securities that terminates on a specific maturity date, often after 15 or 24 months. UITs impose a variety of charges, including a deferred sales charge and a creation and development fee, that can total approximately 3.95 percent for a typical 24-month UIT. A registered representative who repeatedly recommends that a customer sell his or her UIT position before the maturity date and then “rolls over” those funds into a new UIT causes the customer to incur increased sale charges over time, raising suitability concerns.”

It was discovered by FINRA, that hundreds of representatives for Morgan Stanley “executed short-term UIT rollovers, including UITs rolled over more than 100 days before maturity, in thousands of customer accounts” during a period from January 2012 to June 2015. FINRA found that representatives’ sales were not adequately supervised, and that Morgan Stanley did not provide sufficient guidance to Morgan Stanley supervisors on how to review UIT transactions to discover unsuitable short-term trading. Furthermore, FINRA determined that Morgan Stanley did not have adequate training regarding UITs or a supervisory system in place to detect short-term UIT rollovers.

Susan Schroeder, FINRA Executive Vice President and Head of Enforcement, explains that “Due to the long-term nature of UITs, their structure, and upfront costs, short-term trading of UITs may be improper and raises suitability concerns. Firms must adequately supervise representatives’ sales of UITs –including providing sufficient training –and have in place a system to detect potentially unsuitable short-term UIT rollovers.”

Are your investments suitable for your financial goals and risk tolerance? Have you suffered losses that you did not anticipate and feel as though your broker did not adequately explain the risks associated with your investments? Contact The Doss Firm, LLC at (855) 534-4581 for a free consultation to discuss your legal rights.

During their investigation, FINRA discovered that over a period of 8 years J.P. Morgan had failed to timely fingerprint 2,000 of its non-registered associated persons which prevented them from discovering whether such persons would be disqualified from employment with the firm. Furthermore, it was learned that the firm was limiting its screening of non-registered associated persons to convictions relating to federal banking laws and other crimes on a list J.P. Morgan created internally. Again, pursuant to federal law, however, J.P. Morgan was supposed to have screened for all felony convictions and for disciplinary actions taken by financial regulators. Unfortunately, in total, J.P. Morgan failed to appropriately screen approximately 8,600 non-registered persons in the appropriate manner.

J.P. Morgan neither admitted nor denied the FINRA allegations, but did consent to the entry of the findings by FINRA.

Before making any decisions to retain a brokerage firm or FINRA-registered broker, investors should conduct a search using FINRA’s BrokerCheck. There is no charge to use this service and it can be invaluable in learning about the disciplinary history, or lack of, for the broker or firm.

If you have suffered investment losses, you may want to consider whether the losses were as a result of wrongful conduct perpetrated by the firm or broker. Our firm is willing to provide you with a free consultation to discuss your investment losses and potential for recovery. Please visit our website www.dossfirm.com for more information or contact us directly at (855) 534-4581.

Having seen the devastation up close for many years, Mr. Doss wanted to help alleviate as much of it as possible.  “Wouldn’t it be a good if we could help investors before they became victims,” he said.

Mr. Doss helped create the PIABA Foundation and has led the organization as its President to fulfill its mission of educating and protecting investors.  Mr. Doss and the PIABA Foundation then collaborated with the Alliance for Investor Education (AIE) in producing a National Investor Town Hall Meeting on October 29 in San Diego that SAC blogged about.  Mr. Doss also co-authored a book entitled “The Investors Guide to Protecting Your Financial Future,” and a short documentary entitled “Trust Me.”  The video uses the inability of government to prevent repeated financial collapses as a starting point for learning how investment fraudsters operate and what investors can do to protect themselves.  The video features the accounts of two actual investment fraud victims and commentary by several investor attorneys.

The Town Hall, book and video were a great success from all accounts.  The promotional video marketing the event received 75,000 views on social media.  Said SAC, “We’ve heard of AIE before.  It may become a force in the field of investor education, if this Town Hall concept catches interest.”  That is the Plan!

Foerster allegedly perpetrated this fraud over a 14 year period from 2000 to 2014 while he was associated with three different brokerage firms.  Foerster was associated with Raymond James & Associates, Inc. from February 2013 to June 2014; Morgan Keegan & Company, Inc. from February 2008 to February 2013; and Citigroup Global Markets, Inc. d/b/a Smith Barney from July 1997 to February 2008.

In 2014, the Financial Industry Regulatory Authority (FINRA) barred Foerster from the securities industry due to allegations that he was running a Ponzi scheme.  Foerster was terminated by Raymond James in 2014 after he admitted that he had misappropriated client funds.

Our attorneys have represented investors in securities arbitrations for over 25 years.  If you believe you have been defrauded by Claus Foerster, we would like to speak with you.  We will assess your case and make a recommendation at no charge.  Our cases are typically handled on a contingent fee basis, in which the attorneys’ fee is an amount equal to one-third of the amount recovered.

These firms have a history of regulatory violations and customer complaints:

• The Financial Industry Regulatory Authority (“FINRA”) has fined and/or reprimanded IMS Securities Inc. twice for failure to supervise and once for allowing a registered representative to sell securities in Texas without being licensed in Texas.
• In 2014, FINRA fined Berthel Fisher and Affiliate, Securities Management & Research, $775,000 for supervisory failures related to sales of non-traded REITs and leveraged and inverse ETFs.
• Centaurus Financial Inc. has been sanctioned by regulators for supervisory failures and other violations on multiple occasions. Centaurus Financial Inc. has been a named respondent in at least seven (7) FINRA arbitrations which awarded a combined total of over $2.9 million in favor of investor claimants.
• VSR Financial Services, Inc. has also been sanctioned by regulators for supervisory failures and other violations on multiple occasions. VSR Financial Services, Inc. has been a named respondent in at least six (6) FINRA arbitrations which awarded a combined total of at least $676,964 in favor of investor claimants.

Shares of United Development Funding IV are down over 81% in the last 12 months.  Our attorneys have represented investors in securities arbitrations for over 25 years.  If you have suffered losses in any United Development Funding REIT, we would like to speak with you.  We will assess your case and make a recommendation at no charge.  Our cases are typically handled on a contingent fee basis, in which the attorneys’ fee is an amount equal to one-third of the amount recovered.

An investment in a public non-traded REIT is essentially an investment in in an illiquid start-up real estate company that must accumulate assets quickly and is subject to significant risks. Such an investment is unsuitable for most investors.  Non-traded REITs are typically sold to unsuspecting retail (“mom and pop”) investors who are seeking yield in the low-interest rate environment.  They get pitched to investors by financial advisers who are incentivized to sell non-traded REITs by getting paid outsized commissions from the company.

Shares of UDF IV were initially sold through a securities brokerage firm named Realty Capital Securities, LLC (“RCS”), as the Dealer Manager of the securities offering, and possibly through various other Soliciting Dealers – securities brokerage firms that may have been retained by RCS to sell shares of UDF IV.  RCS reportedly raised over $1 billion from retail investors and was paid commissions and fees for selling UDF IV to retail investors.

UDF IV has since used that money to provide liquidity for UDF I and UDF III, and now UDF V is being used to provide liquidity to UDF IV, according to a Business Insider article by Julia La Roche that can be found at http://businessinsider.com/short-seller-report-on-united-development-funding-reit-2015-12.

As previously noted, shares of United Development Funding IV collapsed 55% to $3.20 per share on Thursday, February 18, before trading was halted.  Our attorneys have represented investors in securities arbitrations for over 25 years.  If you have suffered losses in any United Development Funding REIT, we would like to speak with you.  We will assess your case and make a recommendation at no charge.  Our cases are typically handled on a contingent fee basis, in which the attorneys’ fee is an amount equal to one-third of the amount recovered.

What investors need to know is this.  Class actions lawsuits are designed to take a large group of investors with very small losses and aggregate them into a single lawsuit.  At the end of the process, the recovery is typically small.  There is another, better path for investors with significant losses, and that is filing a securities arbitration claim against the brokerage firm that sold the investment.

Investment advisers, brokers and their firms have a legal duty to understand and communicate to investors all the material facts about an investment, including the risks, before the investment is made.  In other words, they have a duty not to misrepresent or fail to disclose any important facts before the investment is made.  In addition, they have a duty not to recommend an investment that is unsuitable for the investor based on the investor’s investment objective, risk tolerance and time horizon.  If any of these duties is breached, and losses occur, the investor has a compelling claim to recover those losses in arbitration.

Our attorneys have represented investors in securities arbitrations for over 25 years.  If you invested in UDF IV, we would like to speak with you.  We will assess your case and make a recommendation at no charge.  Our cases are typically handled on a contingent fee basis, in which the attorneys’ fee is an amount equal to one-third of the amount recovered.

F-Squared’s AlphaSector strategies belong to a group of managed account strategies known as ETF managed portfolios.  According to Morningstar, in the typical ETF managed portfolio, more than 50% the assets are invested in exchange-traded funds.  Money managers like F-Squared package portfolios of ETFs into investment strategies to meet a variety of investment objectives.

Appealing to thousands of individual investors who were burned by the 2008-2009 market declines, F-Squared held out its algorithm-driven AlphaSector investment strategies as a way to manage risk in volatile financial markets.  However, the SEC accused F-Squared of presenting false and misleading performance numbers in its advertising and marketing materials, and also charged its co-founder and ex-CEO, Howard Present, with making false and misleading statements to investors.

F-Squared took in more than $28 billion in assets.  Investment advisor firms, such as Wells Fargo Advisors, that used its AlphaSector strategies had a legal duty to conduct “due diligence” – that is, to take reasonable steps to investigate the “too good to be true” performance numbers put out by F-Squared – before recommending and using them in investors’ portfolios.

The Doss Firm, LLC is currently investigating F-Squared’s AlphaSector strategies, including its flagship AlphaSector U.S. Equity (Premium), as well as the investment advisors that sold them to investors.  If your investment portfolio contained any of the AlphaSector strategies, we would like to talk with you.

The SEC charged CR Intrinsic with insider trading in November 2012, alleging that one of the firm’s portfolio managers Mathew Martoma illegally obtained confidential details about the clinical trial.

The SEC’s complaint alleged that CR Intrinsic and Dr. Gilman tipped Martoma with safety data and eventually details about negative results in the trial about two weeks before they were made public in July 2008. Martoma and CR Intrinsic then caused several hedge funds to sell more than $960 million in Elan and Wyeth securities in a little more than a week.

In an amended complaint filed March 15, 2013, the SEC added S.A.C. Capital Advisors and four hedge funds managed by CR Intrinsic and S.A.C. Capital as relief defendants because they each received ill-gotten gains from the insider trading scheme.

Redemption requests are considered by the Apple REIT entities on a quarterly basis and June 23, 2011 was the deadline to submit redemption request forms to David Lerner for the current quarter. This week, investors began receiving letters from David Lerner providing information on how much of their investment they are going to receive this quarter. The results are as follows:

Apple REIT 6 – 11.88%
Apple REIT 7 – 11.08%
Apple REIT 8 – 6.28%
Apple REIT 9 – 38.34%

These results are disappointing and extremely harmful to seniors who are not in a position financially or health-wise to wait a few years to possibly receive all of their investment back. Investors who are over-concentrated in Apple REITs (e.g. more than 10% of your portfolio) likely have a valid legal claim against David Lerner to attempt to recover damages suffered as a result of the firm making unsuitable investment recommendations and for concealing material facts from investors, including but not limited to concealing the true share prices of these investments. By continuing to represent investors that the share price was $11 when in fact it was not, David Lerner concealed the truth from investors and contributed to the run on the bank and the low redemption percentages. In many cases, Apple REITs were sold by David Lerner brokers as safe investments that are 100% liquid after three years from the date of purchase. Clearly, that did not turn out to be the case.

In exchange for coming forward and cooperating with the SEC, the SEC will provide levels of protection to individuals who were involved in the scheme but now wish to turn in their co-conspirators or the individual running the scheme. The whistle-blower may even avoid an SEC suit as a result of their cooperation with the SEC. Further, there is a proposal to even provide the whistle-blower with a reward, a percentage of what is recovered, for coming forward and providing key information which leads to the prosecution of individuals like Madoff.

Although rewarding wrongdoers, who become whistleblowers, may seem distasteful, unfortunately this may be extremely important in the efforts to bring down powerful fraudsters and their schemes. The protection from a lawsuit and monetary reward, encourages individuals to come forward, when likely they would not otherwise. Further, as Khuzami pointed out “cooperator’s testimony allows [the SEC] to act more quickly — find out where the bank accounts are located and increase our chance of returning money to investors.” Finally, Khuzami reminded us that “the earlier you shut down a case, the less victims there are. Tomorrow’s victims will not materialize.”

The IRS initiated a similar whistle-blower provision four years ago, which has apparently significantly increased the number of multimillion-dollar prosecutions of individuals who cheat the tax system.

Another way to stop a scam is for the victims to come forward when they suspect a fraud. If you believe that you may be a victim of an investment scheme, contact our office for a free consultation regarding your legal rights and possible means to recover losses. Please also visit our website www.dossfirm.com.

Specifically, the SEC alleges that these men disseminated misleading information to investors misrepresenting the hedge funds’ investment returns and overstating the values of the funds by as much as $160 million. These misrepresentations were alleged to have been made in account statements, offering materials, and newsletters prepared by the Moodys. The SEC claims that the Moodys did not independently verify the figures given them by Nadel and failed to notice and/or appreciate the multiple red flags which should have caused them to more carefully review the information given them by Nadel. It should be noted that Nadel was charged with fraud last year by the SEC and his assets were frozen by an emergency court order.

Glenn Gordon, the Associate Director of the SEC’s Miami Regional Office, sums it up by stating that the Moodys “abdicated their responsibilities to investors and ignored warning signs that should have alerted them to the fraud that was occurring all around them.”

The SEC is seeking permanent injunctions against the Moodys, financial penalties for their acts, and to require the Moodys to disgorge any illegal gains. At this time, without any admission of guilt, the Moodys have agreed to permanent injunctions, preventing future securities fraud violations and they have agreed to not associate with any investment advisor for a period of five years.

Investors justifiably rely on information given them by their investment adviser. If the investment adviser provides misleading information, which causes damage to the investor, the investor may have a legal means to recover their losses. If you believe that you may be a victim of investment fraud, contact our office for a free consultation. You may also visit our website, www.dossfirm.com, for additional information.

The SEC alleges that the Hansons had a sales force of at least 45 “consultants” that promised yearly returns to investors of between 8 and 30 percent. The consultants allegedly boasted that the investments were safe and were in a diversified portfolio including treasury bills, foreign currency, and precious metals. However, the SEC claims that the investment funds were not invested as promised and that the majority of the funds went into very risky private investments and were also used to pay commissions to the consultants, pay personal expenses, and to other investors in prior failed business ventures operated by the Hansons.

It is also alleged by the SEC that the Hansons, 61 and 62 respectively, used their knowledge and experience to appeal to elderly investors, and caused these investors to “make all the wrong decisions with their retirement savings.”

The United State District Judge granted the SEC’s request to freeze the assets of the Hansons’ and granted the SEC’s request for other emergency relief on behalf of the investors on September 3, 2009. The defendants consented to the asset freeze and have agreed to settle the SEC’s charges. They have agreed to permanent injunctions and disgorgement of profits. Additionally they have agreed to financial penalties which will be determined at a later date.

The Commodity Futures Trading Commission (CFTC) also filed charged against the defendants. Further, the U.S. Attorney has entered into a plea agreement with Sidney Hanson where he has plead guilty to securities fraud, mail fraud and promotion of money laundering. The agreement requires that Mr. Hanson face a minimum of 12-year prison sentence.

It is unfortunate that there are individuals who will prey on retirees who have saved their whole lives for retirement. These folks often are not employed or are close to retirement and do not have the time or the means to recover their losses. If you feel as though you have been a victim of investment fraud, you may have a legal claim and a potential avenue for recovery. If you would like to discuss your legal rights, please do not hesitate to contact our firm. Furthermore, if you would like additional information on investment fraud please visit our Investor Resource Center at www.dossfirm.com.

This case names Nicholas Cosmo, former owner of Agape World, Inc. as the individual who perpetrated the fraud. Federal authorities charged Cosmo with investment fraud for allegedly promising investors that they were investing in high-interest loans and then using investor funds to trade in commodities futures instead.

Interestingly, Cosmo served two years in prison after admitting in 1997 that, while a licensed stockbroker, he mislead investors and forged documents. Cosmo’s broker’s license was revoked and he was barred from associating with any members of the National Association of Securities Dealers. Despite his prior troubles, in 2004, Cosmo was owner of Agape which promoted its business as a provider of bridge loans to commercial borrowers.

The Plaintiffs’ attorney in this lawsuit contends that Bank of America ignored banking compliance standards and should have filed suspicious activity reports in light of the fact that $400 million was being run through numerous Bank of America accounts held by a convicted felon. It is further suggested by Plaintiffs’ attorney that this case will serve to highlight the role of financial institutions in assisting Ponzi schemes.

The lawsuit also alleges that Bank of America did not intervene when investor money was commingled or wired to commodities futures brokerages. Further, it is alleged that Bank of America failed to intervene when some of the investors’ funds was used to pay off Cosmo’s personal expenses.

In total, the complaint states that Bank of America housed 13 accounts used by Cosmo and his brokers in the Ponzi scheme.  The complaint also alleges that some of the brokers employed by Cosmo had criminal records as well.

It is hoped that this suit does serve to highlight the fact that fraudsters are generally not acting alone when perpetuating a fraudulent investment scheme. They often use financial institutions in various ways to further the fraud.  These financial institutions should have better internal monitoring systems which would expose individuals engaged in fraudulent schemes. They are often in the best position to discover the fraud, or even better to prevent the fraud from occurring.

It is said that the settlement resolves claims that Morgan Stanley failed to appropriately supervise these brokers, which allowed the brokers to allegedly mislead employees of Eastman Kodak Co. and Xerox Corp. into taking early retirement and investing retirement funds with them. The Financial Industry Regulatory Authority (FINRA) says that $3 million will serve as a fine for the alleged misconduct and the remaining $4.2 million will provide restitution to the 90 individuals who took early retirement in reliance on Morgan Stanley’s brokers’ advice.

A FINRA regulator says that in total at least 184 people were affected financially by the misconduct.  The regulator also stated that Morgan Stanley has settled with 101 individuals, besides the 90 mentioned above who will receive restitution.

According to WHEC-TV News 10, of Rochester, NY, one of the victims was Richard Patrick, who had worked at Kodak for 32 years before retiring early and accepting a retirement package.  Patrick says that he trusted Kazacos with $380,000 in 1998.  Kazacos had told Patrick that he would never lose the initial investment and that he could, in fact, draw 10% of his investment a year without invading the principal, Patrick says. However, by 2003, Patrick’s account held only $7000.

According to FINRA, Kazacos and Isabella made approximately $15.4 million in gross commissions during the time which the misconduct occurred. FINRA says that Kazacos has been permanently barred from the securities industry, pursuant to a settlement made by Kazacos with FINRA. As for Isabella, he has not settled with FINRA and a disciplinary complaint will be heard before a FINRA hearing panel.