UBS Investor Loss Recovery

UBSIf you are an investor with UBS suffering losses in investments made between 2011 and 2014 you may be entitled to a recovery.  Please call 1-866-817-0201 for a free consultation.

As reported by Rueters, UBS Group AG has agreed to pay more than $15 million to settle U.S. Securities and Exchange Commission (SEC) charges that its failure to properly train brokers led to customers buying hundreds of millions of dollars of unsuitable securities.

The SEC said on Wednesday that UBS from 2011 to 2014 sold about $548 million of “reverse convertible notes,” derivatives tied to individual stocks, to more than 8,700 retail customers who were relatively inexperienced and unsophisticated.

These notes, with mouthfuls of names as Trigger Phoenix Autocall Optimization Securities and Airbag Yield Optimization Securities, were sold to people of modest means, often with low risk tolerances, and included some retirees, the SEC said.

“UBS dropped the ball,” SEC enforcement chief Andrew Ceresney said in a statement.

Gregg Rosenberg, a UBS spokesman, in a statement said the Swiss bank was pleased to settle. It did not admit wrongdoing.

UBS’s payout includes a $6 million civil fine, $8.23 million of improper gains and about $798,000 of interest.

The case is part of a years-long crackdown by the SEC, the Financial Industry Regulatory Authority (FINRA) and other regulators to stop banks and brokerages from selling products that retail and even professional customers may not want, need or understand.

According to the SEC, UBS’s notes were designed to offer attractive yields with a lessened risk of loss.

But Ceresney said on a conference call that UBS’s training focused on describing the “potential upside” from the various products, not their volatility.

Recovery of ARCP Losses

If you have suffered losses in ARCP, please call 1-866-817-0201 to speak to an attorney about potential recovery of your losses.

guy in handcuffsThe Department of Justice and the Securities Exchange Commission on September 8, 2016 charged the former chief financial officer of American Realty Capital Properties Inc., (“ARCP”) a large traded REIT now known as Vereit Inc., with overstating the financial performance of the company by purposefully inflating a key metric used by analysts and investors to assess ARCP.

According to the SEC’s complaint, ARCP’s former CFO, Brian S. Block and then chief accounting officer Lisa McAlister devised a scheme to manipulate the calculation of the REIT’s adjusted funds from operations, or AFFO, a non-GAAP measure used when the company provided earnings guidance.

Block was arrested Thursday morning on conspiracy, securities fraud, and other charges at his home in Hatfield, Pa., according to a statement from the U.S. Attorney’s Office for the Southern District of New York.

McAlister pled guilty on June 29, 2016 to one count of conspiracy to commit securities fraud and other offenses, including one count of securities fraud, one count of making false filings with the SEC, and one count of making false statements in a matter within the jurisdiction of the executive branch of the U.S. government. The securities fraud and false filings charges each carry a maximum prison term of 20 years. The conspiracy and false statements charges each carry a maximum prison term of five years.

Jeffrey Pederson, PC represents investors in the recovery of investment losses through fraud and mismanagement.  Most cases resolve by means of FIRNA arbitration.

Information for this post obtained from Investmentnews.com.

Shamrock Asset Management

If you were invested in F-Squared or AlphaSector while with Shamrock Asset Management, please call Pederson Law for a free consultation.  The toll-free number is 1-866-817-0201.

Shamrock Asset Management is a Dallas, Texas investment adviser.  Advertisements made by Shamrock and its advisers inappropriately inflated the investment returns of certain investments.  As a result, Shamrock received a cease and desist order from the SEC.  The relevant parts of the order are as follows:

“From July 2011 through October 1, 2013, in reliance on F-Squared’s false statements, Shamrock’s AlphaSector advertisements falsely stated that: (a) assets had been invested in the AlphaSector strategy from April 2001 to September 2008; and (b) the track record had significantly outperformed the S&P 500 Index from April 2001 to September 2008.

“In fact, no client assets had tracked the strategy from April 2001 through September 2008. In addition, F-Squared miscalculated the historical performance of AlphaSector from April 2001 to September 2008 by incorrectly implementing signals in advance of when such signals actually could have occurred. Shamrock took insufficient steps to confirm the accuracy of F-Squared’s historical data and other information contained in the materials. In addition, Shamrock did not obtain sufficient documentation that substantiated F-Squared’s advertising claims in the materials.

“As a result of this inaccurate compilation of historical data by F-Squared, Shamrock advertised the AlphaSector strategy by using hypothetical and back-tested historical performance that was inflated substantially over what performance would have been if FSquared had applied the signals accurately. 4. As a result,

“Shamrock violated Section 206(4) of the Advisers Act and Rule 206(4)-1(a)(5) thereunder by publishing, circulating, and distributing advertisements that contained untrue statements of material fact. Shamrock likewise did not make and keep true, accurate and current records or documents necessary to form the basis for or demonstrate the calculation of the performance or rate of returns that it circulated and distributed, as required by Section 204(a) of the Advisers Act and Rule 204-2(a)(16) thereunder.”

Brian Candler and Ari Financial

Please call 1-866-817-0201 to speak to a lawyer if you suffered losses with Brian Candler or Ari Financial.  Ari Financial of Overland Park, Kansas and Candler of Leawood, Kansas have recently resolved regulatory actions against them concerning failures in the review and supervision of the investments sold.  Some of these investments were ultimately revealed to be Ponzi schemes, such as the investments in Bridgeport Oaks.  The regulatory settlement can be found at the following link.

Invest photo 2In summary, Ari Financial submitted an Offer of Settlement in which the firm was censured, fined $7,500 and, for a period of one year, must file with FINRA’s Advertising Regulation department all retail communications that the firm intends to permit its registered representatives to use or distribute at least 10 business days prior to use.  Candler was censured, fined $2,500, suspended from association with any FINRA member in any capacity for 10 business days, and suspended from association with any FINRA member in any principal capacity for 10 business days, to be served after the completion of the suspension in any capacity.

Without admitting or denying the allegations, the firm and Candler consented to the sanctions and to the entry of findings that Candler failed to conduct reasonable due diligence regarding a private placement that the firm sold directly to retail investors. The findings stated that as a result, the firm lacked a reasonable basis to believe that the private placement was suitable for any investor. The offering was later discovered to be a Ponzi scheme, and customers who purchased interests lost their collective investment principal of approximately $560,000.

The findings also stated that as a result of deficiencies in its supervisory system, the firm failed to identify and prevent the dissemination of misleading and imbalanced advertising and sales materials by registered brokers, and failed to ensure that the offering materials prepared and distributed contained sufficient and accurate disclosures. The findings also included that the firm failed to document the written approval of the advertising and sales material it used, and the first and last dates of use. FINRA found that Candler provided medallion signature guarantees for numerous pre-signed securities assignment forms without having the forms signed in his presence or otherwise verifying their authenticity Moreover, despite providing signature guarantees for numerous securities transfers, ARI and Candler had not previously established any supervisory system or written procedures for the firm’s medallion signature guarantee program.

Candler did not establish a supervisory system for the firm’s medallion signature guarantee program. Following the receipt of a complaint that Candler improperly provided signature guarantees in connection with certain securities transfers, he established deficient written supervisory procedures (WSPs) governing the firm’s activities as a guarantor. FINRA also found that the firm and Candler failed to retain and review certain securities business-related communications to and from its registered representatives, and failed to establish appropriate escrow accounts for contingent offerings. The firm’s WSPs did not include appropriate provisions to ensure that its standards regarding communications with the public were implemented and followed, and Candler did not enforce the WSPs that required it to preserve all business email. In addition, FINRA found that although the firm had WSPs that generally addressed the supervision of its private placement activities, they were often insufficiently tailored to the nature of its business and amounted to a supervisory system that was not reasonably designed to achieve compliance with the applicable laws and regulations.

David B. Tysk of Ameriprise Investment Loss

If you suffered investment loss with David B. Tysk please call 1-866-817-0201 for a free consultation.

David Tysk, financial advisor for Ameriprise in Eden Prairie, MN, was fined $50,000 and
suspended from association with any FINRA member in any capacity for one year. The
Invest photo 2NAC affirmed the findings in the OHO decision and increased the sanctions. The sanctions
were based on findings that Tysk altered computer notes of customer contacts after the
customer complained about the suitability of a recommendation.

The findings stated that Tysk knew or should have known the importance of customer-related notes in the event of complaints. Tysk’s concealed alterations of his notes did not comply with the clear import of the document-retention policies in his member firm’s code of conduct. Tysk failed toinform the firm of the alterations when he provided a copy of the notes to be produced in discovery during an arbitration proceeding.

The customer became suspicious of the notes and requested further discovery to determine whether the notes had been altered after he lodged his complaint with the firm. Tysk and his firm opposed the requests. In a meeting to prepare for the arbitration hearing, Tysk finally disclosed to the firm that he had altered the notes. At the conclusion of the arbitration hearing, the firm and Tysk were sanctioned for violating arbitration discovery rules.

A copy of the NAC decision can be found at the following link.

Kenneth J. Daley of Merrill Lynch Improper Conduct

Kenneth James Daley with Merrill Lynch in Glenwood Landing, NY entered into a settlement agreement with FINRA in August 2016.  Pursuant to the terms of this agreement, he was barred from association with any FINRA member, which is any brokerage firm, in any capacity. Without
admitting or denying the findings, Daley consented to the sanction and to the entry of
findings that he concealed his improper receipt of funds from a customer.  The funds were paid
in connection with purported profits in an account of his member firm. The findings stated
that the customer contacted Daley about providing him with money to allow him to benefit
by sharing in the profits in her account with Daley’s firm. The customer wrote Daley a check
for $2,500 drawn from her cash management account with the firm. Daley immediately
contacted the customer because he was concerned that his firm would learn of the deposit,
which he knew to be prohibited. In order to avoid detection by the firm, Daley instead
provided the customer with his personal banking account details for an account he held at another financial institution and informed her that she could directly deposit funds related
to purported profits in her account with the firm to his personal checking account. As a
result, the customer deposited to Daley’s personal bank account eight additional checks,
each of which was drawn off of her non-firm bank account. In total, the customer gave
Daley $29,000 in connection with purported profits in her account, all of which Daley used
for personal expenses. Throughout this time period, Daley knew he was prohibited from
accepting such payments.

The findings also stated that Daley used his personal cell phone to text message customers.
Daley was prohibited from text messaging with customers unless done through an
approved firm platform. The findings also included that Daley submitted an annual firm
attestation falsely attesting that in the prior 12 months he had not used text messaging
with any customer. As a result, Daley prevented the firm from discharging its supervisory
responsibilities with respect to the review of his electronic communications and caused the
firm to fail to maintain such communications as required under FINRA and Securities and
Exchange Commission (SEC) rules.

FINRA found that Daley recommended that the customer purchase units of a non-traditional, leveraged crude oil exchange-traded fund (ETF) without having a reasonable basis to do so. On Daley’s recommendation, the customer purchased 5,000 units for a principal amount of $41,850. Daley did not liquidate the position until after the customer had experienced losses.

The AWC can be found at the following link.

Business Development Co. (BDC) Losses

The Law Offices of Jeffrey Pederson, PC is investigating business development company losses (BDC) in an effort to help investors.  Please call 1-866-817-0201 for a free consultation with a lawyer.  Investments causing concern include, but are not limited to, the following:

  • Carey Credit Income Fund;
  • CNL Corporate Capital Trust; and
  • Sierra Income Corporation
  • Franklin Square Energy and Power Fund;
  • HMS Income Fund;
  • Nextpoint Capital Fund;

Brokerage sales of such investments are required by FINRA, the regulatory agency overseeing securities brokerage firms, to have greater disclosure on customer statements due to the illiquidity of the investments and high commissions of these BDC products.  Such a  combination often leads to fraud in the sale of such products by securities firms.

So concerned is FINRA about the potential for abuse in the sale of BDC investment products that FINRA recently conducted a year long exam of member firms concerning the disclosures made concerning these investments.  The exam also focused on due diligence in the recommendation of such investments, and the suitability of such investments being sold less sophisticated or risk adverse investors.

Investors suffering losses in such investments may have recourse, but time limitations can make recovery more difficult if investors do not act quickly.  Please call the number above for more information.

Investor Recovery of Breitling Energy Losses

Investors in Breitling Energy may have lost their investment but are not without recourse to recover their losses.  The misdeeds and mismanagement of Breitling Energy are things that the investor’s brokerage should have spotted if sufficient due diligence was done.  Investors seeking more information can call toll-free 1-866-817-0201 for a free consultation.

guy in handcuffsThe thinly veiled fraud was recently exposed by the SEC that reasonable investigation should have exposed previously.  The Breitling Energy fraud includes interlocking companies, bad science, fake financials and an massively effective public relations campaign that turned a tech entrepreneur with a shaky record, Breitling CEO Chris Faulkner, into the “Frack Master.”

But the complaint implies that the scheme that took years of planning and execution, but basic components of the fraud were easily discoverable, such as the background of Faulkner and the tens of millions of dollars stolen by Faulkner.

The SEC account starts in 2009 when Faulkner ran a website data hosting company. At that point, “he had never managed, run, operated, or even worked in an oil-and-gas business.”

Despite this, many brokerage firms either ignored this information or failed to uncover such an important piece of information for its investors.

The Law Offices of Jeffrey Pederson, PC has helped investors recover losses for the failure of due diligence by securities brokerage firms.  Please call the number above for more information.

For more information on the Breitling Energy fraud see the following link.

Investors with Bonanza Creek Losses

Bonanza Creek has suffered deep declines lately but investors purchasing Bonanza Creek as part of their moderate to conservative portfolio may have recourse.  Please call 1-866-817-0201 for more information.

Shares of Bonanza Creek Energy were battered Wednesday, July 13, after the Colorado oil and gas producer disclosed it had hired a financial specialist to help it explore alternatives, including a restructuring.

Bonanza Creek, said it had retained Perella Weinberg Partners, a New York firm known for working with financially troubled companies to avoid bankruptcy or planning for bankruptcy.

The market didn’t react well to the news. Shares of Bonanza Creek, which closed at $2.28 on Tuesday, plunged to as low as $1.14 before crawling back to end trading Wednesday at $1.44 a share, a 36.8 percent decline.

Shares of the company had traded above $60 in August 2014, a few months before Saudi Arabia said it would no longer limit its production to support prices. That set off a steep descent in oil prices from above $100 a barrel to briefly under $30 when Iranian producers re-entered the market, forcing prices down even further.

Oil is now back around $45 a barrel. But lenders are reducing the credit they are willing to extend to producers given the lower value of their oil and gas reserves.

Bonanza Creek said in late May that the amount it could borrow under its credit agreement was cut from $475 million to $200 million. That was a problem because the company had borrowed $288 million, leaving it with a deficit of $88 million.

Bonanza Creek, like many petroleum producers, initially turned to the equity markets to help it stay afloat. The company raised more than $200 million in a secondary offering back in February 2015 to investors willing to pay $26 a share.

The Denver Post of July 14, 2016 provided information for this post.

Churchville Ponzi Scheme, Investment Fraud

If you were a victim of the Ponzi scheme or other investment fraud of Rhode Island investment adviser Patrick Churchville please call 1-866-817-0201.

Churchville has agreed to plead guilty to criminal charges for orchestrating a $21 million Ponzi scheme, according to a statement from the U.S. Attorney’s Office.

Stock handcuffsAside from that scheme, Churchville, 47, also committed investment fraud when he used $2.5 million of investor funds to help purchase his home and failed to pay more than $820,000 in personal federal income taxes, according to the statement.

Churchville, the owner and president of ClearPath Wealth Management, will plead guilty to five counts of wire fraud and one count of tax fraud.

Churchville is also a party in a civil case brought by the Securities and Exchange Commission (“SEC”) in May 2015.

Between 2008 and 2011, Mr. Churchville invested approximately $18 million of client money in JER Receivables, although by June 2010 he had become aware that ClearPath had been defrauded by that company, according to the statement.

Instead of notifying his clients of the losses, Churchville,  paid them with money obtained from new investors, misappropriating around $21 million of investor funds in the process, the statement alleges. To help carry out his scheme, he told investors JER Receivables was producing high rates of return, according to the statement.