Investment Fraud Lawyer Blog

It is no surprise that retirees are often the targets of investment scams. But it is a surprise that the scammers are often empathy-challenged senior citizens themselves, and that is surprising. Attorneys and advocates for the elderly are reporting an increase in the number of elder scams perpetrated people their age, according to an article in Bloomberg BusinessWeek, “Senior Swindlers: A Sucker Retires Every Minute.”

Continue reading "Senior Citizens are Increasingly Targeted by Swindlers Who are Often Senior Citizens" »

A recent USA today article highlights the fact that investment scams usually increase when there is an economic downturn. The article refers to The North American Securities Administrators Association’s recently released list of Top 10 Investor Traps: The list and discussion points, which are located at http://www.nasaa.org/nasaa_newsroom/current_nasaa_headlines/13048.cfm are as follows:

Continue reading "NASAA's Top Ten Investment Scams for 2010" »

Scams will always be with us but they are especially plentiful when traditional investments like stocks and bonds are not doing well, according to John Waggoner of USAToday in his August 5, 2010 article, “Investment Scams Thriving.”
"It's pretty bad out there," Texas Securities Commissioner Denise Voigt Crawford was quoted as saying. The primary victims are those trying to make up losses in their 401(k) plans and stock portfolios, she added.

Continue reading "Regulators Report that Investment Scams are on the Rise" »

According to a recent article in InvestmentNews and a recently filed court exhibit, securities regulators were concerned about Medical Capital’s lack of audited financial information five years before Medical Capital Holdings Inc.'s private-placement financings imploded and wiped out $1.1 billion in investors' cash.

Continue reading "Red Flags Concerning Medical Capital Notes Existed as Early as 2004" »

In response to recent concerns over high-risk private offerings such as Medical Capital and Provident Royalties, the Financial Industry Regulatory Authority (FINRA) has issued a Notice to Members (NTM-10-22) that reminds brokerage firms of their obligations to investigate private placements before allowing their representatives to sell those investment products. However, FINRA only regulates registered broker-dealers, and many such offerings are recommended or sold by financial advisory firms that are not FINRA-registered.

Continue reading "Problems Involving Private Offerings Escalate" »

The large number of bank failures over the past two years has resulted in big financial losses for investors owning stock in those banks. In most cases, failed banks are taken over by the FDIC, which arranges for the operations to be assumed by another bank -- free of the liabilities of the failed bank. While most account holders’ deposits are safe because they are insured against loss by the FDIC, those who invested in the bank are typically left holding stock that is now worthless. In some cases, shareholders have the option of legal action to recover their losses.

Continue reading "Investors Have Sustained Huge Losses Investing in Small Banks" »

HighTower Advisors LLC, a high-profile, high-pedigree investment advisory firm, has been dogged by a series of investor and business lawsuits that could threaten its distinguished reputation, according to a recent article by Bruce Kelly in InvestmentNews.

Continue reading "Is HighTower Advisors All That It Claims To Be?" »

The SEC’s civil lawsuit filed on April 22, 2010 against Roy Dixon, Jr. and his allegedly fraudulent private equity fund Onyx Capital Advisors, LLC, serves to illustrate an important point about dealing with registered securities salespersons such as Mr. Dixon: their employing brokerage firms often are unable or unwilling to detect the alleged fraudulent conduct of their representatives. Mr. Dixon was employed by a licensed brokerage firm during the period of his alleged fraud, but that did not stop it from occurring. In fact, being a licensed representative of a licensed firm often gives a representative a “halo” or imprimatur of trust that can facilitate the fraud.

Continue reading "SEC Action Against Private Equity Fund Onyx Capital Advisors May Expose Brokerage Firm to Significant Legal Claims" »

In today’s low-interest-rate environment and with investors rightly suspicious of stock and bond investments, investment scams are flourishing. Investors should pay attention to the warnings of state securities regulators, whose list of Top 10 Investor Traps is featured on CNBC.com’s American Greed.

Continue reading "Beware of These Investment Scams" »

The Atlanta Journal-Constitution reported today that an Atlanta hedge fund manager is being sued for fraud by investors who contend that he diverted money for personal use and falsified financial statements to hide the theft. This is just one example of the problems that can arise when investors – particularly those who are unsophisticated – invest in hedge funds. Though similar to mutual funds in that they pool investors’ money to invest in a variety of financial instruments, they are generally not required to register with the Securities and Exchange Commission (SEC). Hedge funds typically issue securities in “private offerings” that are exempt from SEC registration requirements because they can only be offered to a limited number of accredited investors.

Continue reading "Have You Lost Money in a Hedge Fund?" »

Private placement offerings (also known as Reg D offerings), such as Medical Capital Holdings Inc. and Provident Royalties LLC, have devastated unsuspecting investors. Such offerings, as well as the unscrupulous broker-dealers who pushed them, have wound up in the crosshairs of state securities regulators. See “Cracking Down on ‘Private Placement’ Investments,” March 27, 2010, Wall Street Journal, by Jane J. Kim.

Continue reading "The Hammer is Coming Down on Private Placement (Reg D) Offering Scams" »

New concerns have risen over investors being misled about the facts and risks of private placement offerings (Reg D offerings) often recommended by financial advisers in smaller towns that are outside the financial industry mainstream. While misrepresentations about high-risk private offerings are by no means limited to small towns, small town residents with nest eggs have been disproportionately victimized by unscrupulous offerings.

Continue reading "Many Investment Scams Target Small Town Investors" »

Life settlements - buying rights to senior citizens' life insurance policies - is a risky gamble that should be avoided by most investors, according to Leslie Scism and Larry Light in their Feb. 6 Wall Street Journal article, "Grim Risks of Reaping Death’s Rewards.“

Continue reading "Life Settlement Investments Carry Big Risks" »

Life settlement companies are soliciting independent broker-dealers to sell private placements of securities (Reg D offerings) based on life insurance policies, according to a recent InvestNews article by Darla Mercado.

Continue reading "Beware Private Placements (Reg D Offerings) Investing in Life Settlement Policies" »

As reported in recent articles in Investment News, after the SEC filed fraud charges against Medical Capital Holdings Inc, the Financial Regulatory Authority indicated that it has “a number of investigations under way involving the allegations of wrongdoing arising from the sale of these ‘Reg D’ private placements.” Regulation D refers to the securities regulation that governs the sale of private-placement investments that don’t have to be registered with regulators.

Continue reading "Medical Capital Debacle Puts Private (Reg D) Offerings under the Microscope" »

Recently released figures show that colleges across the nation suffered a 19 percent decline in their endowments in 2009. Some school endowments have reported even steeper declines, including Georgia Tech (26%), the University of Georgia Foundation (23%), and Emory University (21%). While the financial markets as a whole experienced a significant downturn in 2008, the stock market began rebounding in early 2009 and many investment portfolios have since regained much of their value—but not all. According to an article in the Atlanta Journal Constitution, Emory has had to cut its expenses by $50 million a year and eliminated 500 administrative positions, despite having one of the richest endowments in the country. Smaller schools with more modest endowments are in a more precarious position, because a single bad investment may threaten the very survival of the institution.

Continue reading "Have College Endowment Funds Been Victimized by Unscrupulous Brokers?" »

The Massachusetts Securities Division recently filed a complaint against Securities America related to its private offerings of Medical Capital Notes. The collapse of the Medical Capital investments has left investors nationwide in the hole to the tune of about $1 billion.

Continue reading "Evidence Against Securities America Mounts in Medical Capital Cases" »

Investors’ problems with private investments and Reg D offerings appear to be growing at an alarming pace. According to a recent InvestmentNews article by Sara Hansard (“Finra to get tough on Red D offerings,” Dec. 13, 2009), FINRA says it is “getting tough” and plans to file regulatory actions against brokerage firms involved in selling private-placement offerings next year. “We have a number of investigations under way involving allegations of wrongdoing arising from the sales of these Regulation D private placements,” James Shorris, executive vice president and executive director of enforcement at FINRA, was quoted as saying in the article.

Continue reading "Wrongdoing in Reg D Offerings and Other Private Investments Becomes a Growing Concern" »

Private investments (Reg D offerings) are exposing investors to significant risks and regulators are fighting to get the situation under control. In a recent article in Investment News, Saras Hansard reported that state securities regulators are making progress toward their goal of regaining authority to regulate these private offerings. Congress preempted that authority by enacting the National Securities Market Improvement Act of 1996. However, state securities regulators have complained that the NSMIA increases the potential for fraudulent private placement offerings. Observers have criticized that decision, believing that state securities regulators are in the best position to deal with private placement offerings.

Continue reading "The Dangers of Private Investments (Reg D Offerings) Grow " »

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 10,310 and, on Monday, the market jumped 35 points.

• On Tuesday, the Dow Jones Industrial Average surged 127 points.

• On Wednesday, the Dow Jones Industrial Average dropped 19 points.

• On Thursday, the Dow Jones Industrial Average tumbled 87 points.

• On Friday, the Dow Jones Industrial Average rose 23 points and closed the week at 10,389.

Continue reading "Page Perry's Market Monitor - December 3, 2009" »