Investment Fraud Lawyer Blog

Federal and state regulators are investigating a widespread practice of brokers targeting seniors at “free lunch” seminars.  Regulators warn that such seminars are among the top investment scams for 2007.  Seniors and persons who may or may not be contemplating retirement are lured by complimentary meals, often at upscale hotels, restaurants, golf courses and retirement communities, and promised “educational” information with no sales pitches.  All too often, however, the brokers use the occasion to pitch unsuitable investments and retirement strategies, including cashing in their pensions, reinvesting the proceeds, retiring early, and living on the substitute paycheck from their investments that never materializes.

This is “a problem that can have absolutely devastating consequences for a large proportion of our population,” said Mary Shapiro, Chief Executive Officer of the Financial Industry Regulatory Authority (FINRA), and Chairman of the FINRA Investor Education Foundation, in an interview.

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On September 5, 2007, the United States Senate Special Committee on Aging held a hearing on Advising Seniors About Their Money:  Who Is Qualified- and Who Is Not? Senator Kohl from Wisconsin began the hearing by stating that the purpose of the hearing was to examine the growing national problem of poorly trained senior investment specialists and take the first step in much needed reform. He also stated that an investigation conducted by this committee had found that many seniors are losing their retirement income and savings by placing their trust in so-called “advisors” who in many cases may not deserve that moniker.  

The hearing focused on the controversial “Certified Senior Advisors” because the Senate investigation found that these advisors often have little to no education and no experience in extremely complicated financial matters and investment products such as equity-indexed annuities.  Senator Kohl stated that seniors should be able to trust the people who invest their money.  They should not be worried that the title after their advisor’s name is often times scarcely more than a marketing ploy and one that is not earned through a rigorous educational or financial training.

Among those who gave testimony were Christopher Cox, SEC Commissioner, Joseph Borg, the Alabama Securities Commissioner, and Lori Swanson, Attorney General from the State of Minnesota.  These regulators provided suggestions as to how annuity sales practices could be improved industry wide and advocated for the insurance companies that issue these policies to seniors to take responsibility for their agents.

Continue reading " Senate Holds Hearing On Controversial “Certified Senior Advisor” Titles And Allianz Life Insurance’s Annuity Sales Practices " »

According to an AP press release, a former investment broker in Ohio and Maryland has been accused by the Justice Department of helping the founder of an investment fund manipulate the stock price of Duluth, Ga.-based logistics company Innotrac Corp. to assist his client, David Dadante, and the IPOF Fund that Dadante controlled.

Stephen J. Glantz, 54, of Chagrin Falls, Ohio, and Phoenix, Md., was charged Tuesday with securities fraud and making false statements.  The Justice Department alleges that from August 2002 through November 2005, Glantz helped Dadante accumulate nearly 4.2 million shares of Innotrac, with a large portion purchased on margin, according to the charges. Margin involves borrowing money to purchase securities and using those securities as collateral. If convicted, Glantz could receive up to 20 years in prison for the securities fraud and five years for false statements.

Dadante, 53, of South Euclid, Ohio, pleaded guilty Aug. 16 to securities fraud and is scheduled to be sentenced on Nov. 1 in U.S. District Court.  According to an SEC complaint last year, Dadante raised about $50 million from at least 110 investors. He is accused of using new investor money to pay guaranteed returns to previous investors and taking millions of dollars for his own use. Prosecutors have said Dadante lost about $28 million through bad trades.

Based on the press release, it appears that this alleged fraudulent scheme was nothing more than a Ponzi scheme that undoubtedly cost many investors their life savings.  While in many instances, victims of Ponzi schemes do not ever recoup their losses, Page Perry, LLC has helped investors navigate their way through these unfortunate situations.  In some instances, solvent companies or individuals are involved in these scams and victims may be able to recoup some or all of their losses.   

Most retired investors trust and rely on a financial professional to manage their retirement assets. Many people do not know that, because of this trust relationship, financial professionals owe their customers a fiduciary duty to act in their best interest and to recommend investments that are appropriate for their investment needs. If financial professionals breach their fiduciary obligations by giving inappropriate financial advice, they and their firm may be held liable to their customers for the damages caused by the bad advice.

In recent years, many telephone company retirees have elected to take the lump sum payout option over the traditional pension. Many retirees elected the lump sum option based on the advice of trusted financial professionals who recommended the lump sum because it purportedly would provide the retiree with higher monthly retirement income and the opportunity to grow the investment with little or no risk. In truth, in many cases, the financial professional improperly recommended the lump sum option solely because it was the only way that his or her firm could gain control of the retirement assets and generate commissions.

Continue reading " Attention AT&T, Verizon, Bell Atlantic, BellSouth Employees and Retirees: Telephone Company Employees Are Targets For Unscrupulous Brokers " »