Investment Fraud Lawyer Blog

In an encouraging sign to those who despair about investors receiving full justice in a compulsory arbitration process financed by the brokerage industry, a California FINRA panel last month (December 2009) awarded compensatory damages of $319,798 to a 96-year old investor as well as treble damages of $959,394 under the California Elder Abuse Act.

Continue reading "FINRA Arbitration Panel Metes Out Harsh Punishment for Elder Fraud" »

The increasing number of senior citizens has resulted in an increase in the number of corrupt financial advisors looking to make a commission by persuading trusting seniors to buy unsuitable financial products, such as variable annuities, and engage in other inappropriate financial strategies, according to a July 2009 article in Trial magazine by Ingrid M. Evans and David L. Cheng, called “Protecting seniors from financial abuse.”

Continue reading "Financial Abuse of Senior Citizens is a Growing Problem but Remedies are Available" »

"What's up, Doc?" It may not sound like the start of a very effective sales pitch, but when Radical Bunny LLC (no relation to Bugs) talked, people listened, according to a recent article by John Emswhiller in the Wall Street Journal entitled "SEC Sues Four Over Real-Estate Deal." At least 900 investors placed over $197 million with Radical Bunny in connection with a purported Phoenix commercial real estate venture. The Securities and Exchange Commission (SEC) says the money was funneled to Mortgages, Ltd., which made short-term, high-interest loans to real estate developers that were building malls, office parks, condominiums, and other projects. When the commercial real estate bubble burst, and the borrowers defaulted, Mortgages, Ltd, Radical Bunny, its principals and investors were left holding a big, empty bag. Bankrutptcy filings ensued, as did enforcement actions by the SEC against Radical Bunny and its principals. Mortgages, Ltd.'s chief executive committed suicide.

Continue reading "SEC Cracks Down on Phoenix Investment Fraud" »

Authorities prosecuting more perpetrators of financial fraud and those convicted face increasingly stiff prison sentences, report Bruce Kelly and Sue Asci in their July 26 article in InvestmentNews entitled “Criminal convictions, jail time on rise for financial fraudsters.” Alabama has obtained felony convictions in 25 cases involving financial fraud with 20 more cases pending, according to Joseph Borg, Director of the Alabama Securities Commission and former President of the North American Securities Administrators Association (NASAA). “Convictions are up, and sentences are also lengthier,” says Denise Voigt Crawford, Texas Securities Commissioner. Texas convicted 13 people of financial crimes in 2008, has convicted 10 so far this year, and expects that number to at least double by year end, added Ms. Crawford.

Continue reading "Elder Fraud Cases Lead to More Criminal Prosecutions" »

Last year, the Securities and Exchange Commission issued a rule that brought Equity Index Annuities within its regulatory jurisdiction and provided greater investor protection. Previously, those insurance products were not considered to be securities subject to SEC regulation. The SEC rule was challenged in court by a group of insurance companies. A federal court of appeals ruled that the SEC does have the authority to regulate Equity Index Annuities, but it ordered the SEC to reconsider the rule’s effect on the economy, reported Sara Hansard in her July 26 article in InvestmentNews entitled “SEC’s EIA rule may resurface.” While it is not under a deadline to do so, some observers expect that the SEC will complete is assessment and reissue the rule pretty quickly, rather than asking the court of appeals to reconsider its ruling.

Continue reading "Insurance Companies Try to Thwart SEC Oversight of Equity Indexed Annuities" »

Investors who purchased variable rate annuities with guaranteed minimum returns may be surprised to learn that the guarantee is not necessarily guaranteed. Under some contracts, it is possible for the insurer who wrote the annuity to cancel the guarantee or significantly reduce its payout.

Continue reading "Variable Rate Annuities with Guarantees? - Check the Fine Print" »

There have been various developments over the past several weeks which investors may consider relevant in allocating their resources or evaluating alternatives that are available to them. Some of the more significant developments include, but are not limited to, the following:

• The Dow Jones Industrial Average opened the week at 8269 and, on Monday, soared 235 points.

• On Tuesday, the Dow Jones Industrial Average lost 29 points.

• On Wednesday, the Dow Jones Industrial Average fell 53 points.

• On Thursday, the Dow Jones Industrial Average dropped another 130 points.

• On Friday, the Dow Jones Industrial Average slipped 15 points and closed the week at 8277.

Continue reading "Page Perry's Market Monitor - May 22, 2009" »

Certain states have recently proposed legislation requiring additional penalties for financial firms/advisors targeting seniors in scams. In addition, some states are staging undercover “stings,” sending investigators to the “free lunch seminars” that seem to be a breeding ground for scams. These seminars are often billed as “educational;” however, in many cases, seniors may experience a “hard sell” of investments which are inappropriate for their individual needs, or be given misleading information about an investment’s merit.

Continue reading "States Are Acting to Deal with Financial Frauds Aimed at Seniors" »

On May 13, 2009, the U.S. Securities and Exchange Commission (“SEC”) approved a rule change that requires brokers to disclose alleged sales practice violations made by a customer against a securities broker in the body of a civil lawsuit or arbitration claim, even if that broker is not named as a defendant or respondent. The SEC received a total of 1,654 comment letters on the proposed rule change. Approximately 1,451 of the letters were “form letters” from financial advisors and insurance agents (who sell insurance products such as variable annuities) opposing the change.

Continue reading "Regulators Require Financial Firms to Provide More Public Disclosure Regarding Customer Complaints" »

Tax time is an excellent time for investors to evaluate their investments, to determine whether their investments have been appropriately handled, and to reevaluate their investment objectives and risk tolerance. Taxpayers or their accountants have assembled and are reviewing (or have already reviewed) a number of financial documents in preparation for the filing of income tax returns. Investors should carefully review the status of their investments and their asset allocation to determine whether these items are in accordance with their objectives and status in life.

Continue reading "Now is the Best Time to Review your Investment Portfolio" »

Desperate people often resort to desperate measures to meet their needs. In many cases, however, these situations become catastrophic for trusting investors who give custody of their money to criminals, reports Russell Grantham of the Atlanta Journal-Constitution, Sunday, April 12, 2009, Business, in an article entitled “Desperation Feeds Rising Rates of Fraud.”

Continue reading "Financial Scams Are Becoming More Common as the Economy Deteriorates" »

An Atlanta attorney is under investigation by the FBI for allegedly operating a Ponzi scheme that defrauded approximately 100 victims from various states out of more than $30 million. The victims, who are from Georgia, Florida, Texas, Missouri, and South Carolina, invested anywhere from a few thousand dollars to more than a million dollars with Robert Price Copeland, doing business as Robert P. Copeland, P.C., Axiom Development Group, Inc., We Buy, Inc., HBV Services, Inc., and other entities.

Continue reading "Financial Advisors May Have Legal Exposure in Atlanta Ponzi Scheme" »

Representatives of the North American Securities Administrators Association (NASAA) requested federal funds to enhance their regulation and enforcement of state securities laws in testimony before the House Financial Services Committee on March 20, 2009. Delaware Securities Commissioner James Ropp, while touting state enforcement efforts, said that additional resources were needed during the economic downturn in order to "help vulnerable investors looking to recover their losses." Among other things, Ropp suggested deputizing state securities attorneys to serve as special prosecutors for complex securities cases and strengthening penalties for those who commit securities fraud, especially against seniors. Ropp also suggested increasing opportunities for fraud victims to seek compensation through private actions.

Continue reading "State Securities Regulators: An Essential Component of Investor Protection" »

The Financial Industry Regulatory Authority (“FINRA”) is facing an explosion of arbitration claims in the wake of recent financial frauds, reported Marcia Coyle in the March 30, 2009 edition of Law.com. Many of the claimants and potential claimants are elderly victims of securities fraud perpetrated by brokerage firms they trusted.

Continue reading "Securities Arbitration Claims Explode" »

Ameriprise Financial Services, formerly known as American Express Financial Advisers, has been cited and fined by regulators extensively in recent months for so-called "selling-away violations." Selling-away occurs when a financial adviser sells a client an investment product that has not been vetted and approved by the brokerage firm. Because they have not been subjected to a rigorous investigation, these products often turn out to be highly risky and sometimes outright scams like ponzi schemes. Regulators have fined Ameriprise for failing to properly supervise the activity of sales persons who have sold the unapproved products. The firm also faces significant exposure to defrauded investors as a result of these situations.

Continue reading "Unapproved Investments Cause Ameriprise Big Problems" »

Investors owning variable annuities should carefully review their investments from several perspectives. Investors should evaluate the risks that they have been exposed to in the past and consider whether they wish to continue being exposed to such risks in the future. This is particularly important for variable annuity investors, many of whom sought a relatively safe haven from market volatility.

Continue reading "Variable Annuities Warrant Close Scrutiny" »

Just as a falling tide can reveal shipwrecks, a falling market can reveal financial industry abuses of investors. Thus, while certain recent investor losses may be attributable to market conditions, many recent losses are attributable to Wall Street’s excesses and failures to provide the professional services promised.

Continue reading "Many Investors Discover That It's Not "Just the Market"" »

Following a year in which stocks have dropped by more than 40%, brokers and insurance salesman are aggressively pushing the Equity Indexed Annuity (EIA) as an investment by which an investor can participate in the upside of the stock market without any exposure to the downside. As a smart investor, you shouldn't fall for this sales pitch because it is not true.

The Securities and Exchange Commission has recognized the abusive sales practices and confusing nature of these products. It recently passed a rule requiring strict regulation of EIAs.

Continue reading "Don't Fall into the Equity Indexed Annuity Trap" »

Recently many investors in variable annuities have experienced unanticipated losses. Since some people purchase variable annuities based on the assumption that they are immune to market fluctuations, many have learned the hard way that, like mutual funds, variable annuities invested in equity "sub-accounts" can lose significant value. However, if a variable annuity is sold to a customer with a promise of safety or without adequate disclosure of risk, the customer may have valid legal claims for fraud or misrepresentation.

Continue reading "Is Your Variable Annuity Safe ?" »

Many investors who purchased supposedly “principal protected” structured notes and “return optimization securities” issued by Lehman Brothers have compelling legal claims. While these investors are unsure whether they will recover any of their principal in the Lehman bankruptcy according to Eleanor Laise of the Wall Street Journal in a November 11, 2008 article entitled “Another ‘Safe’ Bet Leaves Many Burned”, many such investors have claims against the brokerage firms that sold these investments.

Continue reading "Structured Notes Issued by Lehman, Freddie and Fannie Leave Conservative Investors Burned" »