Tag Archives: Cetera

George Merhoff Loss Recovery

Investors of George Merhoff, a broker and advisor with Cetera Advisors, can call 1-866-817-0201 for a free initial consultation with an attorney concerning loss recovery.  All consultations are confidential and representations done on a contingent basis, where attorney fees paid from the ultimate settlement or judgment.

Merhoff, a securities broker located in Oregon, has been the subject of approximately 16 lawsuits in the past two years.  These lawsuits concern the recommendation of unsuitable securities.  Merhoff sold a significant amount of oil and gas investments to his investors over the last six years.  Oil and gas investments are inherently speculative.

The sale of unsuitable securities is not only a negligent action, but also a form of fraud.  The payout to the broker/advisor from these investments are generally higher.  This gives the broker or advisor an incentive to omit from the investor the high level of risk that these investments pose.

Suitability violations exist anytime a recommended investment is inconsistent with the wants 7crude-oil-pumps-power-transmission-elementsand needs of an investor.  FINRA, the regulator overseeing financial advisors and securities brokers, prohibits the recommendation of unsuitable securities.  These rules also require that the advisor or broker to “know the customer.”  This means that the advisor or broker must know the wants and needs of his investors, along with that investor’s tolerance for risk and objectives for the account.

Since the oil and gas investments are speculative investments that are inherently volatile, they would not be suitable investors indicating that they can afford to take significant risk with the funds.  The investments would not be suitable for investors looking to receive regular income from their investments or take only moderate risk.

Oil and gas investments of particular interest include Linn Energy (“LINE” or “LNCO”), PennGrowth and Teekay Partners.  Also of interest are investors investing in REITs or utilizing margin loans on the recommendation of Merhoff.

 

Steepener Note Losses, Investors Capital or Trident Partners

FINRAInvestors Capital Corp., a Cetera subsidiary, agreed to pay $1.1 million to settle Finra charges that it recommended unsuitable short-term trades in complex products to clients including steepener notes.  Trident has agreed to pay a $50,000 fine.  We currently have suit filed against ICI for Steepener note sales and other actions of James “Jim” Ignatowich.

For more information, call 1-866-817-0201.  Initial consultation with an attorney is free and confidential.

Letters are currently being sent to investors asking them to settle for a small amount of money.  Investors should speak to an attorney before doing this action because the amount may be too small and the accepting of the settlement may waive rights for additional funds.

Financial advisers are required to sell only suitable investments to their investors.  A suitable investment is not only one that is consistent with the objectives and risk tolerance of an investor, but is also investments that are not so complex that the investor cannot appreciate the risk.

Finra’s complaint against Investors Capital revolved around recommendations for unsuitable investment trusts and steepener notes in the accounts of 74 clients.

Two Investors Capital representatives recommended short-term unit investment trust transactions with upfront sales charges ranging from 250 to 350 basis points in the customers’ accounts, according to a Finra letter of acceptance released on Monday.

Finra also charged that Investors Capital lacked adequate supervisory policies.  Brokerage firms are required to have supervisory procedures to ensure the sale of only suitable investments.  However, at Investors Capital the representatives’ behavior as to the recommendation of only suitable investments went unchecked from June 2010 to September 2015.

The clients involved in unsuitable UIT trading lost more than $240,000, according to Finra.

Finra notes that one 58-year-old client with a long-term growth account objective purchased and sold nearly 65 of the unit investment trusts, almost all of which had two-year maturity dates, in a 2.5 year period with an average holding period of three months. On at least 58 occasions, proceeds of the sale of one unit investment trust in this client’s account were used to purchase another, resulting in a loss of $50,728 in that client’s account.

Between April 2011 and December 2012, FINRA alleges that Investors Capital representatives also recommended short-term trades of “steepener” notes, which are long-term bets on the shape of the yield curve, in an unsuitable manner. The recommendations led to 63 customers suffering about $126,000 in losses.

Details of this settlement were described in the October 6, 2016 edition of Financial Adviser Magazine.

Many of the investments were sold by .  He has recently come under regulatory scrutiny, and was banned from the industry, for securities law violations whereby he was attempting to sell investments with disregard suitability, misleading investors, and violations of the “do not call” list.

Jeffrey Pederson is a private attorney who represents investors in suits concerning securities brokers and securities brokerage firms.

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.

Variable Annuity Fraud

We help investors who believe that they are victims of variable annuity fraud.  Variable annuity fraud has always been a frequent trick of brokers looking to put their own interests ahead of their investors (often by selling to those approaching retirement which is generally an unsuitable recommendation).  The investments pay an extremely high commission and the investments are only suitable for a small section of the investing public.  This fraud hit a new low last week.

As reported in http://www.investmentnews.com/article/20140313/FREE/140319954, the Securities and Exchange Commission Thursday, March 13, 2014, filed charges against a group of brokers in a scheme wherein investors used variable annuities to wager on the lives of the terminally ill.

The brokers in question were Michael A. Horowitz of Los Angeles and Moshe Marc Cohen of Brooklyn, N.Y.

The brokers allegedly obtained the personal health and identification data of the dying patients through fraud, marking them as annuitants on variable annuity contracts that he had marketed to wealthy clients, according to the SEC’s complaint.  Under false pretenses, the brokers allegedly received their employers’ approval to sell the annuities.  The motivation with this plan, as with most fraudulent sales of variable annuities was the commission.  Variable annuities pay as large of a commission as just about any investment product that you can purchase through a securities brokerage.  The brokers reaped approximately $1 million in commissions from their sale, the SEC claimed, with Mr. Horowitz obtaining more than $300,000 and Mr. Cohen became unjustly enriched to the tune of more than $700,000.

If you have lost money with these or any other brokers you believe may have defrauded or mismanaged you portfolio call 303-300-5022.