New York Securities Fraud Lawyers Blog

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EMPLOYEE RECOVERY $2M FOR A WHISTLEBLOWING TRADER

INVESTOR RECOVERY $7.2+M FOR PONZI SCHEME VICTIMS

INVESTOR RECOVERY $3.9M FOR TAX SHELTER FRAUD VICTIMS

BROKER PONZI SCHEME $7.4 MILLION

FAILURE TO SUPERVISE $4+ MILLION

BROKERAGE THEFT $3.8 MILLION

PONZI AT MAJOR FIRM $4+ MILLION

FAILED PRODUCT 28 EXPUNGEMENTS

WHISTLEBLOWER AWARD MAX 30% BOUNTY

NO ACTION INSIDER TRADING CASE

NO ACTION EMBEZZLEMENT CASE

NO ACTION MARKET MANIPULATION

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New York Securities Fraud Lawyers Blog

REIT Investment on the Rise – But Is That a Good Thing?

October 1, 2013 | Malecki Law Team

As reported recently by the Wall Street Journal, investment in non-traded Real Estate Investment Trusts (“REITs”) is at an all-time high and poised to continue to rise. Some estimates anticipate more than $18 billion to be invested in non-traded REITs by the end of this year.

Solicited with the prospect of annual yields of more than 6%, income-seeking investors have had their hard-earned savings steered into non-traded REITs, oftentimes without a complete disclosure of the risks involved. Many brokers and financial advisors pitch REIT investments to their retirement and near-retirement aged customers, emphasizing the perceived “safety” of real estate investment coupled with the higher than normal annual yield, but do not fully explain the associated risks and bloated commissions (as high as 15% in some cases).

What many investors are not told is that because these investments are not publically traded, while the REIT itself may report to them a specific value for their shares, the actual value of their investment may not be readily available – and could even be 10-20% lower if sold on secondary markets. This discount is often caused by the illiquidity of the investment. In other words, sellers are forced to sell for less than what they paid in order to get out of the investment (also called liquidating the investment).

Criminal Charges Filed Against SAC Capital Adisors

August 2, 2013 | Malecki Law Team

As has been widely reported, Criminal charges were filed against SAC Capital Advisors LP, with accusations that the hedge-fund firm is guilty of a decade long “scheme” of insider trading. In total, prosecutors charged SAC Capital and its business units with a total of four counts of securities fraud and one count of wire fraud. The charges come after a multiyear investigation by the FBI, prosecutors, and the SEC. The government is also accusing former SAC portfolio manager, Richard Lee, of conspiracy to commit securities fraud. The indictment comes only a short time after SAC agreed to a $616 million settlement of insider-trading charges.

Civilly, prosecutors are looking to have SAC and any of its affiliated corporate entities surrender all of their assets. SAC manages some $14 billion in assets, a majority of which does not come from outside investors.

In a separate civil action, the SEC is seeking a lifetime ban for Steven A. Cohen, who started SAC twenty-one years ago with roughly $20 million of personal funds, from managing client money. Mr. Cohen has not been charged criminally but denies any allegation of wrongdoing. Before the financial crisis of 2008, SAC held over $16 billion in assets and reportedly charged some of the highest fees in the business – 3% annually on the total investment, plus as much as 50% of whatever profits the firm generates.

Maxwell B. Smith Sentenced for Running a New Jersey Ponzi Scheme: Investors Should Look to His Brokerage Firm for Relief

June 12, 2013 | Malecki Law Team

Maxwell B. Smith was sentenced to serve the next seven years in federal prison for operating a $9 million Ponzi scheme. Maxwell sold investments as a fund that made loans to nursing homes. Smith had previously plead guilty to several counts of mail fraud as well as money laundering.

It is believed that Smith was employed as a financial professional at several financial firms in New Jersey, where he provided financial advice to his clients, many of whom may have lost money to his Ponzi scheme, Health Care Financial Partners (“HCFP”), purportedly a fund with hundreds of millions of dollars in assets. Investors even received a prospectus guaranteeing 7.5% to 9% per year, tax free. Investors could buy bonds in amounts ranging from $25,000 to $300,000.

Investors may not know that broker-dealers, like the ones that it is believed registered Mr. Smith, have a duty to supervise their employees. As a result, in situations like these, investors may be entitled to recover against the financial firms that employed the financial advisor for failing to supervise their employee.

LPL Reportedly Under Fire From State Regulators

April 1, 2013 | Malecki Law Team

The broker-dealer LPL, Linsco Private Ledger, has been in the news a lot recently – for all the wrong reasons. LPL was even recently featured in The New York Times for its frequent “tangles” with state and federal regulators.

LPL is the nation’s fourth largest brokerage firm, with more than 13,000 brokers who currently service over 4 million customers. LPL attracts brokers from other brokerage firms by reportedly paying a higher percentage of the commissions generated directly to the broker – roughly 80% at LPL versus as low as 15-25% elsewhere. While this model can be very lucrative for well-minded brokers, this model can also attract deceitful brokers who do not have their clients’ best interests in mind and seek to skirt the law.

LPL’s network of brokers is very spread out by brokerage firm standards, with many brokers operating out of an office of only one or two individuals – versus other brokerage firms which may have up to several hundred brokers under one roof.

Jenice Malecki to Appear Tonight on The Willis Report on Fox Business

March 26, 2013 | Malecki Law Team

Jenice Malecki of Malecki Law will be appearing on Fox Business News tonight, March 26, 2013 between 6pm and 7pm.

Ms. Malecki will be appearing on The Willis Report to discuss the recent Rasmussen Reports that indicate 50 percent of Americans want the government to break up the country’s big banks. The report also found that only 23 percent of Americans oppose such a breakup, with 27 percent remaining undecided.

Critics have said that the size of several US banks are a threat to the country’s economy. This notion became widely known during the recent recession as “Too Big To Fail.” The US Attorney General recently made a shocking revelation that some banks are even too large to even prosecute effectively.

Jenice Malecki to Appear on Fox Business News on March 21, 2013 at 5pm – Topic: SEC Digging Into Fund Fees

March 20, 2013 | Malecki Law Team

Jenice Malecki of Malecki Law will be appearing on Fox Business News tomorrow, March 21, 2013, at 5pm.

If you have suffered losses in an investment with a hedge fund or other financial adviser, it is your right to consult with an attorney to explore your rights. Contact the securities lawyers at Malecki Law for a free consultation.

Jenice Malecki of Malecki Law Speaks with the Wall Street Journal About “Ending Up In Arbitration”

March 20, 2013 | Malecki Law Team

Securities attorney Jenice Malecki spoke recently with Wealth Management at wsj.com‘s Caitlin Nish about what makes a strong investor claim against a broker and the steps that lead up to brokers having to defend themselves in arbitration.

To watch the video click here.

Investors who have lost money because of bad advice, unsuitable investment recommendations and misconduct by their financial advisor may seek to recover their losses through arbitration.

Regulators Consider High-Frequency Trading as Potentially Wash Sale Transactions

March 20, 2013 | Malecki Law Team

The Wall Street Journal reported on March 18, 2013 that U.S. Regulators, including the Commodity Futures Trading Commission (CFTC) and the Financial Industry Regulatory Authority (FINRA) are reviewing trading of high-frequency firms to determine if they are engaging in prohibited transactions, such as “wash” trades. The Article stated that the Regulators are reviewing records of primarily two exchanges, the CME Group, where the majority of wash trades have occurred, and the InterncontinentalExchange, Inc.

The Article identified that regulators are concerned that the exchanges do not have appropriate systems in place to identify or stop wash trades, especially in light of recent technical glitches leading to pronounced losses, including the Knight Capital Group and Facebook debacles in 2012.

Wash trades are when the same party places bids and asks for the same security, which causes there to appear increased activity in the security, which may affect its value, causing gains or losses to other investors who may be legitimately interested. In this way, a market participant manipulates the price of the security, prompting other participants to enter the market.

FINRA Fines Ameriprise and its Clearing Firm $750,000 For Failing to Supervise Jennifer Guelinas

March 19, 2013 | Malecki Law Team

The Financial Industry Regulatory Authority, (FINRA) issued a news release on March 4, 2013 announcing that it had fined Ameriprise Financing Services, Inc. and its affiliated clearing form American Enterprise Investment Services, Inc. $750,000 for failing to have reasonable supervisory systems in place to monitor wire transfer requests. In the News Release, FINRA disclosed that its investigation was related to Ameriprise’s former registered representative Jennifer Guelinas, who apparently converted approximately $790,000 over four years from two of her clients by forging wire requests that paid in to accounts she controlled.

According to the News Release, Ameriprise failed to detect several “red flags,” including that Ms. Guelinas submitted forged wire requests from a customer’s account to an account that appeared to be under her control. FINRA further disclosed that on at least three occasions where Ameriprise initially rejected wire requests, they were then accepted on either the same day or another day after simply being resubmitted by Ms. Guelinas. The News Release stated that Ameriprise also accepted one request after it had begun to investigate Ms. Guelinas, and accepted another wire transfer request that was submitted by Guelinas after she was terminated, though the firm recognized its mistake in time before the money was accessed.

FINRA Rules require that securities firms have and enforce reasonable supervisory procedures in place to monitor each registered representative’s conduct to ensure that they are acting in compliance with securities laws. According to the News Release, Ameriprise did not have adequate reasonable supervisory procedures in place. The FINRA News Release stated that Ameriprise had already paid full restitution to the two customers for losses in their accounts.

Citigroup Reportedly Agrees to Settle Class Action For $730 Million

March 19, 2013 | Malecki Law Team

It has been reported that New York based Citigroup has agreed to pay $730 million to settle claims that it misled investors with respect to nearly 50 bond and preferred stock offerings over a period of more than 24 months between 2006 and 2008. The investors’ claims were said to be based on misleading statements from the bank over Citigroup’s exposure to mortgage backed securities, its loss reserves, and the credit quality of some of its held assets.

Before the settlement can be finalized, it must be approved by the US District Court in Manhattan. If approved, it would be the second largest financial crisis related settlement to date – trailing only Bank of America’s $2.43 billion settlement related to its purchase of Merrill Lynch. According to the Wall Street Journal, Citigroup claimed to have done nothing wrong and stated that it settled to avoid the trouble and costs of extended litigation.

This is just one more of many such settlements that have resulted from the financial crisis, totaling billions of dollars that have been returned to investors. Just last year, it was reported that Citigroup paid $590 million to settle allegations by investors that it misled shareholders about other problems in 2007 and 2008. Wachovia and Bank of America, among others, have also been reported to have recently reached settlements in excess of $500 million with investors.