Investors Topics

Post-Brexit Drop In The Market: Should It Raise Concerns For Investors?

June 24, 2016 | Malecki Law Team

The Dow Jones dropped more than 600 points today in response to the Brexit vote. This was reportedly the its eighth-largest point loss ever. Meanwhile, the S&P 500 dropped more than 70 points today. Certain financial company stocks dropped significantly as well. Among them were Barclays, which dropped more than 20% and RBS who saw a 27% decline. The financial sector as a whole reportedly had its worst day since 2011 dropping 5.4%.

While all of this may make the evening news more interesting to watch, the concerns on many people’s minds are undoubtedly, “How will this affect me and my portfolio?” Especially with baby-boomers retiring each and every day, retirement portfolio losses so close to one’s retirement could be unrecoverable.

One of the first things to look at to see if your portfolio was significantly affected would be to examine at your exposure to the UK and your exposure to the financial sector.

BROKER REPORT: Former Legend Securities Financial Advisor Walter Marino

May 26, 2016 | Malecki Law Team

The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Walter Marino. Mr. Marino is currently employed and registered with Lincoln Investment, a broker-dealer, working out of the Dix Hills, New York office, according to his publicly available BrokerCheck, as maintained by the Financial Industry Regulatory Authority (FINRA).

Per his BrokerCheck report, Mr. Marino was previously employed by Legend Securities from 2002 to August 2015, when he was discharged after the “Firm discovered what [Mr. Marino] represented as a non-replacement [variable annuity] sale was in fact a replacement.” Prior to his employment and subsequent termination from Legend Securities, Mr. Marino left Brill Securities in 2001 by “voluntary resignation” amid allegations of unauthorized trading activity and disregarding a customer’s investments, according to BrokerCheck.

Currently, according to BrokerCheck records, it appears Mr. Marino is a registered broker in Connecticut, New Jersey, New York and South Carolina.

Interesting Findings About Elderly Fraud by FINRA and AARP; Jenice Malecki Speaks About Elder Financial Fraud on Community Television Show

May 16, 2016 | Malecki Law Team

A recent study by Stanford University psychologists with participation of FINRA and AARP, concluded that financial fraudsters trigger and evoke strong emotions in elderly people to try and get them to hand over money. According to the study, inducing strong emotions in older adults (ages 65-86), whether positive or negative, increased their susceptibility to falsely advertised messages and fraud. The findings suggest that older adults are likely to spend or give away their money based on the emotional state they were experiencing rather than perceived credibility of the messages they are receiving. According to FINRA, this study is a major advance on understanding how elder fraud works and since money and investing is an emotional decision, it is critical to manage emotional states to avoid becoming a victim of fraud.

Malecki Law continues to champion the rights of vulnerable elderly people who have been victimized by financial fraudsters. Last week, Jenice Malecki spoke about elder financial fraud with David Lesch on BronxNet TV’s segment Today’s Verdict. Watch Ms. Malecki speaking about instances of how elder fraud works and can be avoided here: http://www.bronxnet.org/index.php?option=com_hwdvideoshare&task=viewvideo&Itemid=59&video_id=7353

Recently Ms. Malecki was also seen speaking about Elder Financial Exploitation on Wealth Management’s segment Case In Point with Bill Singer http://wealthmanagement.com/estate-planning/elder-financial-exploitation

Trust Funds: Potential Playground for Abusive Financial Advisors

May 9, 2016 | Malecki Law Team

Trust Funds are an especially susceptible vehicle for fraud committed by FINRA registered stock brokers and financial advisors. Two of the primary issues in such cases are “conflict of interest” and “breach of fiduciary duty.”

Trust funds can be created for a wide variety of reasons. Frequently, though, they are used as a means to afford an orderly transfer of wealth to a younger generation. They can offer a whole host of benefits that would make a trust fund the preferred choice over an outright gift. For example, the recipient/beneficiary may be very young, and the trust could afford some level of control or stability to prevent the beneficiary from squandering the money. Another reason may be certain tax advantages offered by the trust structure that would not be available in an outright give.

Regardless of the reason or reasons for its creation, a trust is going to need a trustee. The trustee is the party responsible for overseeing the trust and managing its assets. While trusts can hold different types of assets, they frequently contain securities, like as stocks and bonds. Therefore, such trusts would, by necessity, involve brokerage accounts. In that case, clients will oftentimes look to their stockbroker/financial advisor to put on a “second hat” and serve as trustee. The logic being “I already trust him/her with my money so why not let them be the trustee.” However, this is where significant problems can be created.

New Study Finds Financial Fraudsters Who Evoke Emotions May Be Able to Bilk More Money from Senior Investors

May 6, 2016 | Malecki Law Team

New research shows that getting senior-aged investors to exhibit heightened emotions may cause those investors to more easily part with their hard-earned savings and retirement proceeds, according to a New Release published by the Financial Industry Regulatory Authority (FINRA).

The research was made possible with funding from the AARP Fraud Watch Network and the FINRA Investor Education Foundation. In the study, Stanford University Psychologists found that inducing emotions in older adults increased their intention to buy falsely advertised items, according to the News Release. As reported, the study was conducted on younger adults and older adults, with both groups were induced to exhibit excitement or anger before watching advertisements known to be misleading. According to the Release, the young adults group tended to believe advertisements based on their believability, and not subjective emotional states, while older adults tended to believe the misleading advertisements based only on their emotional states.

One researcher was quoted as noting “Whether the con artist tries to get you caught up in the excitement of potential riches or angry at the thought of past and future losses, the research shows their central tactic is the same and just as effective… Cons are skilled at getting their victims in to a heightened emotional state where you suspend rational thinking and willingly hand over your hard earned money to a crook.”

New Fiduciary Rule to Protect Retirement Investments

April 8, 2016 | Malecki Law Team

This week, it has been reported that the Department of Labor proposed tougher laws after issuing new regulations requiring financial advisors and brokers managing 401k and retirement accounts to act in the best interest of their clients. These rules were proposed a year ago and after deliberating on it for a year, the White House has finalized these tougher requirements. However, it might be a year before these rules go into effect.

An academic study commissioned by the White House revealed that “conflicts of interest” in financial investing was costing Americans about $17 billion a year in retirement savings. Although brokers are required to only recommend “suitable” investments under the current “suitability standard”, they can push a more expensive product that pays a higher commission than a cheaper fund that would be equally appropriate for that investor.

The new rule fiduciary rule is aimed to at reducing fees and commissions that erode retirement savings and hold brokers to higher standards. It will cast a wider net on who is subject to the fiduciary standard.

New Study Reveals: 7% of Financial Advisers Are Guilty of Misconduct. How Safe Are You?

March 21, 2016 | Malecki Law Team

In February 2016, academics Mark Egan, Gregor Matvos and Amit Seru at the University of Minnesota and University of Chicago business schools released a report titled “The Market for Financial Adviser Misconduct” on financial advisers in the United States. The report reveals how rampant securities fraud and broker misconduct is throughout the country. For the purpose of the study, these academics have analyzed the full set of disclosures of approximately 10% of employees in the finance and insurance sectors between 2005 and 2015, and taken in to account customer complaints, arbitrations, regulatory actions, terminations, bankruptcy filings and criminal proceedings. Based on this study, 7% of advisers were reported to have engaged in misconduct. The actual unreported cases may add to this number.

Here at Malecki Law, it is our mission to protect individuals who have been victimized by unscrupulous brokers. Here are some excerpts highlighting the important findings from this study:

According to the report, prior offenders are five times more likely to repeat their misconduct as compared to an average adviser. Approximately one-third of advisers with misconduct reports are repeat offenders. That is why we encourage all investors to investigate their broker on FINRA’s BrokerCheck

Customer Complaints Against Broker John T. Keyser

February 26, 2016 | Malecki Law Team

The securities fraud attorneys at Malecki Law would like to hear from investors who have complaints against John T. Keyser of Dawson James Securities in Florida. In the past, Keyser has been the subject of a FINRA suspension and customer dispute, as well as an outstanding tax lien. Since 1986 he has been at 16 brokerage firms, including 3 that were expelled from the industry. His current firm has 7 regulatory and 1 arbitration disclosure. Two other firms he has worked with had a combined 30 regulatory & 9 arbitration disclosures on BrokerCheck.

According to FINRA’s BrokerCheck, there were customer dispute cases against him in 2010, 2006, and 2002. Further, as per FINRA’s BrokerCheck, in 2010 there were allegations made against him for churning, intentional and negligent misrepresentation, unsuitability, breach of fiduciary duty, and unauthorized trading, seeking damages for $650,000. As per BrokerCheck, the firm and Keyser denied the wrongdoings and refuted the allegations. FINRA’s BrokerCheck shows that in 2006 there was another customer dispute against him, alleging that a stop loss order had not been executed timely to cover his client’s position. The same FINRA site reveals that in 2002, there was an unauthorized trading complaint made against him, demanding damages of 80,000.

There are other disclosure events, regulatory investment and judgement liens, against his records on BrokerCheck, one of which resulted in NASD suspending his license for failure to pay an arbitration award, which was resolved upon award payment. It is noteworthy that on BrokerCheck several Florida firms Mr. Keyser has worked for in the past have been expelled by FINRA including Sterling Financial Investment Group and Barron Chase Securities.

FINRA Bars Chicago Broker George E. Johnson Over Allegations of Fraud and Stock Manipulation

February 24, 2016 | Malecki Law Team

The Financial Industry Regulatory Authority (FINRA) has announced that it barred broker George E. Johnson from the securities industry for allegedly engaging in manipulation of stock trading, and for committing fraud. FINRA also imposed a 6-month suspension against a second broker, Joseph Mahalick, and a 2 year suspension against a supervisor, Christopher Wayne. All three individuals are reported to have worked at the time for the brokerage firm Meyers Associates, L.P. out of the firm’s Chicago, Illinois office. Mr. Johnson has been working for and was registered by Newport Coast Securities, Inc. from April 2013.

FINRA’s Order stated that during May 2012, Mr. Johnson manipulated the market for the common stock of IceWEB, Inc. (OTCBB: IWEB) by soliciting customers to buy the stock while also soliciting other customers to sell at increasingly higher and artificially inflated prices and frequently effecting matched orders among his own customers. Before and during this time, FINRA’s Order set forth that Mr. Johnson distributed to his clients misleading research and sales materials concerning IWEB, and failed to disclose material information.

The Order alleged that Mr. Johnson first became involved with IWEB when his employer acted as a placement agent for the company, and that he continued to recommend the stock to his clients through private placements and in the open market, despite the company having years of financial issues. At the time, IWEB stock was valued at around .12/share, and the Order alleged that Mr. Johnson solicited purchases and sales in the stock to artificially increase the share price to .17/share, allegedly for the purpose of earning placement agent business from IWEB to earn substantial placement fees.

Highland Funds Energy Master Limited Partnerships Post Significant Losses

February 16, 2016 | Malecki Law Team

The New York securities and investment fraud attorneys at Malecki Law are interested in hearing from investors in Highland Funds’ series Energy Master Limited Partnerships (MLPs).

Highland Funds’ four Energy MLPs have declined by approximately 23% in the year to date, per Morningstar. These funds include:

Highland Energy MLP C (HEFCX)