Articles Posted in Mutual Funds

Chicago-based Stoltmann Law Offices represents investors who’ve suffered losses from dealing with financial advisors who recommended investments linked to Russia with inappropriate risk for their clients. Financial advisors sometimes ignore the political risk of the investments they are selling at great peril to their clients. Case in point was the recent massive devaluation of Russian bonds that resulted from Vladimir Putin’s invasion of Ukraine, which triggered a punitive wave of sanctions from the U.S. and European Union.

Certain Russian bond prices were cut to zero after the country’s invasion of Ukraine. That was also bad news for investors in those bonds, who were forced to add more cash to margin brokerage accounts since the securities could no longer be used as collateral. Further, Moody’s the credit rating agency, cut Russia’s credit rating to Ca, which is one step above full default.

The Swiss wealth manager UBS “is calling on some investors to add either cash or securities to their portfolio after cutting the lending value of some Russian bonds to zero, people with knowledge of the matter said,” according to Yahoo Finance. Here’s more bad news for UBS clients and holders of certain Russian bonds: “UBS may liquidate the securities at market value for those clients that can’t meet the additional requirements, the people said, asking not to be identified as the matter is private.”

Chicago-based Stoltmann Law Offices is investigating financial advisors who switch clients into more expensive mutual funds that trigger unnecessary fees. Brokers often like to switch clients’ assets from one mutual fund class into another. Although they pitch these “trades” as more profitable for investors, they are making more money in fees and commissions.

FINRA, the federal securities industry regulator, has settled charges with two broker-dealers “for years of poor supervision of short-term mutual fund trades.” According to Investment News, on Dec. 22, FINRA “penalized Emerson Equity $1.7 million. A week later, FINRA hit an Advisor Group broker-dealer, Triad Advisors, with $705,000 in penalties, also for poor supervision of sales of the LJM Preservation & Growth Fund, an alternative mutual fund that closed in 2018.”

Emerson ran into problems from 2015 to 2020, Investment News notes, “when the firm and its CEO and founder, Dominic Baldini, failed to put into place a variety of systems to monitor short-terms trades of mutual fund Class A and Class B shares. Such systems would have enabled the firm to comply with FINRA’s suitability rule.”

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