LINN Energy (“LINE”) Loss Recovery

If you suffered losses in Linn Energy (LINE or LNCO) you may be entitled to recovery of those losses.  Please call 1-866-817-0201 for a free consultation with a lawyer about loss recovery.

LINN Energy stated on March 16, 2016 that bankruptcy protection through the courts may be unavoidable.  This will leave many investors who have invested their life savings in LINN looking to change their retirement plans and their financial outlook. For many of these investors LINN Energy was never a suitable investment, and this fact may give the individuals the right to recover their losses.

While some investors may call it “LINN” and others refer to it as “LINE,” all investors can agree that investors should not be responsible for the losses in LINN Energy to the extent that the investment was procured by fraud or negligence.

Brokerages that allow the sale of unsuitable investments are responsible for the ultimate losses sustained by their investors.  Brokers and financial advisors have a duty to only sell suitable investments to investors. To be suitable, the investment must be consistent with the wants and needs of the investor.  LINN Energy is, and has always been, a speculative investment.  Unless you are a speculative investor and could afford to gamble on high risk investments LINN Energy was unsuitable for you.

The list of people for whom LINN would be unsuitable and entitled to reimbursement includes, but is not limited to, any one of the following:  conservative to moderate investors; investors reliant upon investments for income; individuals reliant upon their savings; unsophisticated investors; individuals not understanding the risks of limited partnerships; individuals who could not afford to risk the amounts invested in LINN: and individuals who would have difficulty re-earning the funds invested in LINN if the investment were completely lost.

The recommendation to invest in LINN can be the result of either negligence or fraud.  Speculative investments often pay a higher commission and give brokers incentive to recommend investments that are not in the best interest of their investors.  Irrespective, the broker’s or financial advisor’s employer is responsible for losses as the result of unsuitable recommendations.

379335_544495705568117_1587447150_nThe risk surrounding LINN are many and not just from the falling oil market.  The potential tax consequences for its investors if LINN were to restructure some of its debt will also impact the value of the investment.

When debt is restructured, debt that is forgiven is, for tax purpose, treated as income. Since LINN is an LLC, the tax liability belongs to the investors holding Linn shares.  This will further increase the losses of those holding LINN shares if they must pay tax on the income of LINN.

LLCs are popular because income is only taxed once, unlike regular corporations where the income of the corporation is taxed and the resulting dividends are also taxed.  While the single taxation is popular because it means less taxation of income when things are good, the downside is that investors are responsible for the tax the LLC cannot pay when things are bad.  That can accelerate the decline of an LLC when industry challenges, such as a decrease in the price of oil, occur.

This is all in addition to the likely losses that shareholders would feel from that restructuring and oil prices that may not rise above $40 per barrel in the near future.

Please call for more information. The Law Offices of Jeffrey Pederson has represented investors with suitability claims in FINRA arbitrations across the country.  Most representations done on a contingency basis.

For a detailed description on the rise and fall of Linn:  http://www.oilandgas360.com/rise-fall-linn-energy/

 

Aequitas

If you have suffered losses with Aequitas please call 1-866-817-0201 to speak to a lawyer for a free consultation.

The sudden and stunning collapse of Aequitas Capital Management continues to unfold. The alternative investment’s platform is under investigation by both the SEC and Consumer Financial Protection Bureau. Nearly $600 million was bet on a diverse array of subprime lending strategies.

This bet was done with the funds of the Aequitas investors.  It’s unclear how much, if anything, they’ll recover.

Complicit in this matter are the financial advisors recommending this investment.  The investment was reliant upon such financial advisors for funding the investment.  It appears that the due diligence in the investment by some financial advisors, required to be completed by financial advisors, was substantially insufficient.   The financials of Aequitas evidence existing and ongoing financial weakness.

Aequitas suffered a debilitating cash shortage that has forced it to terminate 80 of its 125 workers. It has defaulted on payments due to investors. It has confirmed in letters to customers it is considering bankruptcy filings.

The SEC and the Consumer Financial Protection Bureau have launched separate investigations of the company. Brian Rice and Scott Gillis, two of the company’s six senior partners, resigned in recent weeks. The company’s general counsel just quit. As did Gillis, the CFO.  Gillis was the second Aequitas chief financial officer to depart in less than a year.

UDF Losses

The FBI on Thursday, February 18, 2016 raided the Grapevine, TX, in suburban Dallas, offices of large real estate investment trust, United Development Funding IV (“UDF”).  Allegations have circulated that investors have suffered losses at UDF as the result of Ponzi activity.  Shares of UDF on that day toppled 54% before trading was stopped.

If you invested in UDF, you have rights and should call 1-866-817-0201 for a free consultation with a lawyer.

FBIUDF has seen its stock price fall 81% in the past two months after a hedge fund alleged it was operating for years like a Ponzi scheme.

“The FBI is lawfully present and conducting law enforcement activity” at the UDF offices, said FBI spokeswoman Allison Mahan.

UDF has previously defended itself saying that the Ponzi charges are untrue and that it is the victim of individuals spreading rumors in hopes of shorting the REIT.   Claiming in a filing with the Securities and Exchange Commission that the REIT was the victim of this type of securities trading scheme known as a “short and distort.”  However, UDF also disclosed in December that it had been the subject of a fact-finding investigation by the SEC since April 2014.

The FBI’s presence at UDF headquarters further decimated the company’s share price, which fell  Thursday, February 18, to $3.20 per share after the FBI activity at company headquarters was reported. As recently as two months ago, UDF shares were trading at $17.20.

UDF IV had total assets of $684 million, the vast majority of which, $513.2 million, were notes receivable, according to its quarterly report from November. Notes receivable for related parties was $69.6 million, according to the report.

Earlier this month, hedge fund manager Kyle Bass revealed that he was shorting UDF. “UDF is using new investor money to pay existing investors,” he wrote. “UDF Management is misleading investors and is preying on ‘Mom and Pop’ retail investors.”

UDF investors should speak with an attorney to know their rights.

 

Sources for this report include Investmentnews.com and Wsj.com.

 

Caldwell International Securities

If you suffered losses at Caldwell International Securities, please call 1-866-817-0201 and request to speak to an attorney concerning this investigation.

Caldwell International Securities and a variety of its representatives were named respondents in a FINRA complaint alleging that the firm, by and through one or more of its registered representatives and principals, put profits before customers, growth before compliance and subterfuge before transparency. The complaint alleges that the firm’s culture of non-compliance led to serious sales practice, supervisory and reporting violations at its home office and multiple branches.

The representatives alleged to be involved are Greg Allen Caldwell (CRD #2816295, Austin, Texas), Alex Evan Etter (CRD #2981742, Old Tappan, New Jersey), Alain J. Florestan (CRD #2818942, Queens Village, New York), Lennie Simmons Freiman (CRD #1007506, Fischer, Texas), Paul Joseph Jacobs (CRD #4658235, Austin, Texas), Richard Andrew Lee (CRD #2768039, West Nyack, New York), Lucas Dylan Lichtman (CRD #5542092, Fort Lee, New Jersey) and Richard Lim (CRD #4949289, Clark, New Jersey).

Etter, Florestan, Lee, Lichtman, and Lim made unsuitable recommendations of an active trading investment strategy to their customers despite the fact these representatives failed to understand the risks of the investment strategy being recommended, or the impact the staggering commissions and fees generated by this active trading investment strategy would have on their customers’ accounts. These representatives had no reasonable basis to recommend such a strategy to their customers. As a result of the recommendation of an unsuitable active investment trading strategy, customer accounts suffered more than $1.1 million in realized trading losses while paying over $1 million in commissions and fees.

The firm is liable for the unsuitable recommendations of an active trading investment strategy made by Etter, Florestan, Lee, Lichtman and Lim under the doctrine of respondeat superior because each representative was an agent of the firm acting within the scope of his duties when he engaged in this misconduct. The firm, acting by and through its formerly registered representatives, made unsuitable recommendations involving inverse and/or leveraged ETFs without a reasonable basis for believing these investments were suitable for their customers.

The complaint also alleges that the firm, Caldwell, Freiman and Jacobs failed to establish and maintain a system to supervise the activities alleged that was reasonably designed to achieve compliance with applicable securities laws and regulations and NASD/ FINRA rules. The firm, Caldwell, Freiman and Jacobs failed to monitor for, detect and, when detected, investigate multiple instances of potential misconduct by the firm’s brokers involving unsuitable active trading investment strategies, unsuitable ETFs, discretionary trading without written authorization and excessive trading/churning in multiple customer accounts across multiple branches of the firm. In addition, the firm, Caldwell, Freiman and Jacobs failed to implement a reasonable supervisory system to adequately review trades for unsuitable recommendations, such as ETFs, and to adequately monitor whether the firm’s representatives understood the risks and benefits of the active trading investment strategy they were recommending, nor did the firm monitor whether the representatives had done any due diligence on the recommended active trading investment strategy.

This grossly inadequate supervisory system resulted in many firm customers suffering significant losses and paying staggering commissions and fees. The firm, Caldwell, and Freiman failed to establish and maintain a system to supervise the firm’s activities that was reasonably designed to achieve compliance with applicable securities laws and regulations and NASD/FINRA rules and/or the firm’s WSPs in multiple other ways. The firm, Caldwell, and Freiman failed to place representatives on heightened supervision, review all electronic correspondence to and from customers, identify and report customer complaints received, and apply right of reinvestment/right of reinstatement fee waivers, resulting in overcharges of $107,367.08 to customers’ accounts. The complaint further alleges that the firm, Caldwell, Freiman and Jacobs failed to establish, maintain and enforce WSPs to supervise its business that were reasonably designed to achieve compliance with applicable securities laws and regulations and NASD/FINRA rules. The firm did not establish, maintain and enforce written procedures to supervise its representatives’ recommendations of active and aggressive trading investment strategies to many of its customers in multiple branches. The firm failed to establish, maintain and enforce written procedures to ensure that reduced sales charges were applied for mutual funds where applicable in accordance with the fund’s right of reinvestment/right of reinstatement provisions. In addition, the complaint alleges that the firm, Freiman, Jacobs, and Etter failed to identify customer complaints and none of these complaints were reported to FINRA. The firm failed to report to FINRA statistical and summary information regarding written customer complaints from three branches as required. Moreover, the complaint alleges that the firm willfully violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-10 by charging customers misleading and/or discriminatory miscellaneous fees in several transactions.  Furthermore, the complaint alleges that the firm, acting by and through Freiman, failed to log into the FinCEN system and conduct any of the required searches of its accounts and systems to determine whether it maintained any accounts for persons appearing on FinCEN’s 314(a) request list. The complaint also alleges that Florestan and Lim willfully failed to timely update their Forms U4 to disclose judgments against them. The complaint further alleges that Florestan failed to timely respond to requests from FINRA for documents and information during the course of its investigation of the firm’s branch activities.

 

Investigation of Jeffrey Risinger

If you were an investor with Jeffrey Risinger at any time or more recently with PIN Financial, please call 1-866-817-0201 (toll-free). 

NYSE pic 1Financial industry regulators have permantly barred Risinger, a Fishers broker alleged to have participated in a Ponzi scheme, from working in the financial brokerage industry thus prohibiting Risinger from ever again working in the securities industry in any capacity. The sanction follows  claims Risinger and two others operated a multimillion-dollar Ponzi scheme.

Risinger is also the subject of a civil suit filed by the U.S. Securities and Exchange Commission (SEC) concerning alleged fraudulent representations made to investors.  He has also recently been terminated from his employment at PIN Financial.

FINRA said its action resulted from Risinger’s refusal to provide on-the-record testimony related to the allegations. The case, which is ongoing, alleges the Risinger and his two accomplices raised $15 million from 80 investors in 2013 and 2014 to fund farm operating loans. When loans soured, the perpetrators repaid old investors with new investor money, the SEC said, creating a classic Ponzi scheme.

Carmel-based Veros Partners principal Matthew D. Haab and former stockbroker Tobin J. Senefeld are the other defendants.

Information for this post has come in part from the Indianapolis Business Journal.

Financial Advisor Liability for Investment Loss

investingstockphoto 1This page tracks some cases of investment financial advisor fraud we are following.  Please call 1-866-817-0201 toll-free for a confidential and free consultation concerning questions of potential liability of a financial advisor or financial advisory firm.

Jeffrey Pederson has represented investors in Alabama, Arizona, Arkansas, California, Colorado, Connecticut , Florida, Hawaii, Massachusetts, Montana, New Jersey, New Mexico, New York, North Carolina, Minnesota, Missouri, North Dakota, Rhode Island, Texas, Utah, and Wyoming, in FINRA arbitration actions against securities brokerage firms for unsuitable investments.

Larry Werbel

Larry Werbel was indicted this week on charges that he participated in a scheme to defraud at least 100 investors of more than $15 million, federal prosecutors said.   If you believe you may have been a victim of Werbel please call toll-free 1-866-817-0201. 

Werbel, owner of Evolution Partners Wealth Management, and formerly of Summit Brokerage and LPL Financial was one of several brokers who recruited investors for shares of a shell company called VgTel Inc., with the false representation of high dividends, according to a news release from the U.S. Attorney’s Office for the Southern District of New York. In reality, the shares were being sold and bought by shell companies that the accused schemers owned in an effort to artificially inflate the price, the release states.

Prosecutors say of the $15 million invested, more than $9 million went into the pockets of Werbel and others involved in the scheme. Werbel found investors and pushed them to buy $3 million in shares for VgTel, prosecutors claim. In return, he received more than $300,000 in illegal payments.

The FBI arrested Werbel, 67, at his home in Solon, Ohio on Wednesday, January 6, 2016. He was released after appearing in front of Magistrate Judge Greg White in Cleveland. His bond is set at $100,000.

He is charged with conspiracy to commit securities fraud, securities fraud, conspiracy to commit wire fraud, wire fraud, investment adviser fraud and making false statements to federal officers.

Colorado LPL REIT Investors

LPLIf you are a Colorado investor with LPL and invested in a Real Estate Investment Trust (REIT)please call 303-300-5022 within the Denver Metro area or 1-866-817-0201 state and nation-wide toll-free for a free consultation concerning your rights.

The Colorado Division of Securities, part of the Department of Regulatory Agencies (DORA), today signed a final Consent Order with LPL Financial LLP in connection with an investigation of LPL’s failure to implement an adequate supervisory system regarding its sale of non-traded REITS and LPL’s failure to enforce its written procedures regarding the sale of non-traded REITS.

Under the terms of the order, LPL agreed to remediate losses for all non-traded REITS sold by the firm from January 1, 2008 through December 31, 2013 in violation of prospectus standards, state concentration limits or LPL’s own guidelines. LPL agreed to retain an independent third party to review and verify its executed sales transactions for violations during this period, believed to be more than 2,000 nationwide. LPL will make offers of remediation to affected investors in Colorado upon completion of the third-party review.  Additionally, LPL may have responsibility for REITs sold outside the defined time period.

The order also requires LPL to pay to Colorado a fine of $40,183.94, representing Colorado’sColorado pro-rata share of a $1.425 million settlement resulting from a multistate investigation of the firm by a task force of state securities regulators formed by the North American Securities Administrators Association (NASAA), of which the Colorado Division of Securities is a member.

“This investigation is representative of the important investor protection role the Division of Securities serves in safeguarding investors throughout Colorado,” said Securities Commissioner Gerald Rome.

The investigation concluded that LPL, through its agents, sold non-traded REITS in excess of the REIT’s prospectus standards, various state concentration limits or LPL’s Alternative Investment Guidelines. The investigation also found that LPL failed to implement a supervisory system that was reasonably designed to achieve compliance with state law.

For more on Colorado stockbroker fraud and negligence see the following: http://www.jpedersonlaw.com/blog/colorado-stockbroker-fraud-and-negligence-blog/

 

Barclays Capital Mutual Fund Violations

NYSE pic 2The Financial Industry Regulatory Authority (FINRA) announced on December 29, 2015 that it has ordered Barclays Capital, Inc. to pay more than $10 million in restitution, including interest, to customers for mutual fund-related suitability violations. These suitability violations relate to an array of mutual fund transactions including mutual fund “switches.”  This is the exchanging of one mutual fund for another, cause a new commission to be incurred and for usually little added benefit for the investor.  Additionally, the firm failed to provide applicable breakpoint discounts to certain customers. Breakpoint discounts are the discounts that mutual fund investors should receive for buying a certain quantity of mutual funds.  Barclays was also censured and fined $3.75 million.

NASD, the predecessor to FINRA, in its Notices to Members 94-16 and 95-80 remind broker-dealers of their obligation to ensure that any recommendation to switch mutual funds be evaluated with regard to the net investment advantage to the investor. FINRA noted that “switching among certain fund types may be difficult to justify if the financial gain or investment objective to be achieved by the switch is undermined by the transaction fees associated with the switch.”

If you have encountered such conduct by Barclays please call 1-866-817-0201.

Frederick Monroe of Voya and Capital Financial

Stock handcuffsIf you invested with stockbroker Frederick Monroe, formerly of Voyal and Capital Financial, please call 1-866-817-0201 for a free consultation.

Frederick Monroe of Queensbury, NY, and senior vice president financial advisor while formerly employed with Voya Financial and Capital Financial Planning, pleaded guilty to a multiple of financial offenses in state court Albany, NY.  His sentencing will be February 16, 2016.

Monroe is accused of running a Ponzi scheme where he would have investors draft checks to him personally purportedly for a series of retirement investments.  The funds would then be used to pay other investors and personal expenses of Monroe such as mortgage payments.

The criminal activity stretched from 2002 until May 2015.  He stole approximately $1 million from investors seeking to save money for their retirement.

The criminal complaint stated that Monroe “admitted that he did not reinvest the monies as promised, but instead used investor monies to return principal to earlier investors, to pay personal expenses and to maintain the social and professional lifestyle to which he became accustomed.”

The sentence for Monroe is anticipated to be between 3 and 16 years.

Our firm has help investors victimized by similar crimes obtain financial recovery.   Please call the number above for a free consultation.