Articles Tagged with financial

AdobeStock_762441-1-300x225If you were recommended a long term care insurance policy by your financial advisor, and that policy has lapsed, you might be able to recover the premiums paid against the brokerage firm who recommended it. Many brokers recommended long-term care insurance policies with promises and representations that the premiums would not change or fluctuate much. In reality, many of the policies purchased had premiums that have skyrocketed in recent years. This means many of the people who were recommended these policies can no longer afford the payments on the premium. This means despite paying tens of thousands of dollars for years, these policies are now worthless. The brokerage firms who peddled these products had a duty and obligation to disclose all material risks, including the fact that the premiums would skyrocket in price. Some of the major policies pedaled by financial advisors at firms like Merrill Lynch, Morgan Stanley, and UBS were Geneworth, Penn Treaty and John Hancock Policies. Many of these policies have now lapsed. In other instances the insurance companies refused to pay out legitimate claims.

If you were recommended long term insurance policies by your financial advisor and these policies have a lapse please contact our Chicago-based securities fraud law firm at 312. 332. 4200 for a no-cost review by an attorney as to whether these losses can be recovered.


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AdobeStock_112465076-1-300x164Stoltmann Law Offices is investigating Michael Crowe, a former financial advisor with Securities America in Mesa, Arizona. Crowe was alleged to have solicited an investor to invest $50,000 in Simply Smart Homes, LLC, which was purported to invest in and flip residential property. Richard Smart, who ran Smart homes, had several tax liens against him in Utah, and the company had defaulted on at least two loans. Securities America allegedly did not give Crowe permission to sell investments in Simply Smart Homes, yet he did anyway. This is against securities laws. To find out how you may be able to sue Securities America for Michael Crowe losses, please call 312-332-4200 today. We are securities attorneys based in Chicago, Illinois and we sue firms in the FINRA arbitration forum on a contingency fee basis. The call is no-cost and no-obligation. Brokerage firms like Securities America have a duty to reasonably supervise their brokers in order to make sure that they do not do anything outside securities laws. If the firm does not, it can be held liable for losses. Crowe was also registered with Verus Capital Partners in Mesa. He was subject to two financial compromises, according to public records.

Investors who were recommended the Direxion Energy Bull 3X ETF (ERX) by their financial advisor may have an actionable claim to recover those investment losses. Financial advisers under FINRA Conduct Rules have an obligation to recommend suitable, appropriate investments. The suitability of the transaction is governed by factors like the clients, age, net worth, actual investment objectives, future earnings potential and other related topics. Brokers are also obligated to perform due diligence on various investments before recommending them. Unfortunately, many of the financial advisers who recommended the Direxion Energy Bull 3X ETF (ERX) made a grossly unsuitable and inappropriate recommendation. The investment sought results of 300% of the performance of the Energy Select Sector Index. The fund creates long positions by investing at least 80% of its assets in the securities that comprise the Energy Select Sector Index and/or financial instruments that provide leveraged and unleveraged exposure to the index. It is therefore non-diversified. These financial instruments include: futures contracts; options on securities, indices and futures contracts; equity caps, floors and collars; swap agreements; forward contracts; short positions; reverse repurchase agreements; exchange-traded funds; and other financial instruments. This was therefore a highly volatile security that simply wasn’t appropriate or suitable for most investors. If you’d like a free review by an attorney as to whether ERX losses can be recovered through a contingency fee FINRA arbitration action or lawsuit, please call us in Chicago at 312.332.4200.

The Securities and Exchange Commission and its Chair, Mary Jo White, announced a new program for reducing “undue” risk in the $63 trillion asset management business on Thursday. The industry is comprised of 11,000 investment advisors and more than 10,000 mutual funds registered. Assets under management for most of the largest firms have doubled since 2004. White unveiled a three-part plan for increasing oversight of the industry and reducing “undue” risk to investors. “We are now embarking on a new period of regulatory change, driven by long-term trends in the industry and the lessons of the financial crisis,” White said. The SEC will improve data to determine risk levels and the requirements will be expanded and updated. It will also ensure that registered funds can identify and address risks to newer investment products such as exchange traded funds (ETFs) and derivatives. Finally, the SEC will make sure that brokerage firms have a plan for moving client assets to safety, in case of another financial crisis.

A federal jury awarded crime writer Patricia Cornwell nearly $51 million Tuesday in her lawsuit against her former financial management company, Anchin, Block & Anchin LLP, and a former principal in the firm. The author claimed that Anchin, Block & Anchin LLP was negligent in handling her finances and cost her millions in losses or unaccounted for revenue. The firm defended the negligence and breach of contract claims by arguing she spent money like a drunk sailor and she was overly demanding. This will likely lead to additional claims against Anchin, Block and Anchin given the amount of publicity this large verdict is likely to secure. To read a story on the case, please see the following link:

In an effort to manage conflicts of interest more efficiently at brokerage firms, Financial Industry Regulatory Authority (FINRA) recently proposed closer monitoring of broker compensation practices, and the evaluation of new financial products.

FINRA initiated a review of 14 firms to evaluate certain financial incentives including, commission-based compensation, which could lead to conflicts of interest between the broker and the client. Commission-based compensation could motivate a broker to recommend certain financial products that may be unsuitable investments. One of FINRA’s objectives is to collect information about the regulation that the firms have in place in order to prevent brokers from acting on behalf of their own interests rather than focusing on their client’s needs. Additionally, FINRA’s evaluation reviewed the procedures and controls firms have in place for their brokers in order to prevent them from making unsuitable investment recommendations for clients.

Based in this review, FINRA will determine whether broker dealers are implementing proper controls at their firms in order prevent conflicts of interest. If dealers are not in compliance FINRA will evaluate policies in order to identify, manage and mitigate conflicts of interest, according to Reuters.

Dougherty & Co. was fined by the Financial Industry Regulatory Authority (FINRA) $50,000 for serving as an underwriter for 54 issuers with which it had ongoing “blanket” financial advisory agreements. The fine is the largest of its kind in recent years. It was one of the largest violations of Municipal Securities Rulemaking Board Rule on the activities of financial advisors. The rule (Rule G-23) is designed to avoid the conflict of interest that would exist if a muni securities professional were to act as both a municipal advisor and underwriter on the same issue. The underwriter’s primary role is to purchase or arrange for the placement of securities in an arms-length transaction with an issuer and underwriter. A dealer that has a municipal advisory relationship with an issuer is prohibited from acquiring any portion of issue from that client either directly or indirectly. FINRA found that the firm was only compensated as an underwriter for the issuances it carried out with the 54 issuers during the review period. The SEC recently brought a similar case against Central States Capital Markets, a Kansas-based municipal advisory firm and three of the firm’s employees. FINRA found that the firm and its employees breached their fiduciary duty to their client after serving as financial advisor for the unidentified issuer in a muni transaction and selecting a broker-dealer where the employees also worked, to underwrite the bonds.

We are investigating former financial advisor Dante DeMiro and his employer’s supervision of him. Recently, DeMiro has pled guilty to three counts of bank fraud and two counts of wire fraud and he received a 10 year prison sentence. Demiro ran a classic ponzi scheme defrauding dozens of investors over at least a three year period of time. Ultimately, his employer was obligated to supervise his activities. If it failed to do so, his employer brokerage firm could be liable for the losses his clients sustained.

AdobeStock_9577728-1-300x200Johnny Depp is accusing his financial advisors of fraud and negligence in a $25 million lawsuit filed in Los Angeles Superior Court last month. His former advisors, Joel and Rob Mandel, brothers with the Management Group, filed a countersuit against the actor. Allegedly, Depp spent more than $2 million per month despite warnings from his advisers that he was living beyond his means, according to the countersuit. He bought 14 homes and a 150 foot luxury yacht and paid over $3 million to fire author Hunter S. Thompson’s ashes out of a cannon. Depp accused the advisors of breach of fiduciary duty and other negligent practices leading to debts over $40 million. According to his lawsuit, the brother took $28 million in contingency fees with no written agreement, loaned $10 million of his money without his consent or knowledge and cost him $6 million by failing to pay his taxes on time. His suit states that the Management Group “engaged in years of gross mismanagement, self-dealing and at times, actual fraud.” The Mandels argue that Depp owes them $560,000 in unpaid fees including a 5% commission for an upcoming film and payments on a company credit card. Depp retained new financial advisors in March of this year.

According to a recent InvestmentNews article, the Securities and Exchange Commission (SEC) has stated that it will crack down on those firms that hire brokers with disciplinary histories. The SEC’s Office of Compliance Inspections and Examinations announced on Monday that it will pay particular attention to firms that hire advisers with rogue backgrounds to ensure that those brokers are being properly supervised. This new crackdown could make it more difficult for brokers with shady pasts to find work in the business. Firms are already required to have risk procedures in place, but this will make sure the firms can identify the potential harm, develop a plan to decrease risk and implement and carry out that plan. To do so, the SEC intends to conduct examinations of broker-dealers that employ or contract with supervised persons that have a history of disciplinary events. The exams will focus on evaluating the effectiveness of advisers’ compliance programs, supervisory oversight practices, and disclosures to clients and prospective clients, particularly relating to th

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