Articles Tagged with U.S.

Vanguard Natural Resources, LLC acquires and develops oil and natural gas properties in the United States.  It owns properties, and oil and natural gas reserves primarily located in 10 operating basins.  This fund was heavily sold to investors in the U.S. and has sustained an almost complete loss and now trades less than $1 a share.  Many of the purchasers of VNR may have actionable claims against their brokjers for fraud, unsuitable investment recomneations and other related actions.  Please call us to ehar all of your options.

The Securities and Exchange Commission’s (SEC) Atlanta office is conducting an inquiry into Global Ministries Foundation and the 2011 sale of $12 million worth of bonds to purchase the Warren and Tulane apartments. The apartments are allegedly infested with roaches and caked with sewage. The ministry owns two municipal bond financed low-income apartment complexes. The trustee, Bank of New York Mellon Corp, sued Global Ministries in May and won the appointment of a receiver after the bonds defaulted. Two months earlier, in March, the U.S. Department of Housing and Urban Development cut off rent subsidies for more than 1,000 residents that backed the bonds and relocated them because of health and safety violations. Subsequently, the bonds defaulted.

Richard Hamlet, a Baptist minister, ran GMF, which built a 10,500 unit low-rent real estate empire with money raised in the municipal-bond market. In 2011, GMF issued $12 million in bonds through Memphis Health, Educational and Housing Facility Board, to finance the purchase of Warrant and Tulane in an area where as many as 40 percent of the families live in poverty. The SEC has since told the receiver to preserve documents created on or after June 1st, 2010, concerning the bond issue.

According to a recent InvestmentNews article, Fidelity Investments suspended sales of MetLife Inc.’s retail variable annuities, as their sales fell by almost 40% in the second quarter of this year. MetLife’s retail variable annuity sales were down 39% year-over-year in the second quarter, primarily due to the sales suspension by Fidelity. In 2015 alone, MetLife was the number eight seller of variable annuities, with more than $7 billion in total sales. In February, Fidelity suspended the sales of MetLife products in the Growth and Income Annuity and the Accumulation Annuity. This was because the insurer announced in January that it was planning a separation of its U.S. retail unit, which provides variable annuities. This uncertainty over the potential sale or initial public offering of the business led to its decision to stop the sales. MetLife had $1.1 billion in variable annuity sales in the second quarter, compared to $1.9 billion in the same quarter in 2015. Insurers have seen industry-wide variable annuity sales slide over the past several years. Total first-quarter sales were at their lowest in 15 years, due mainly to market volatility. Sales are expected to continue to go down as new regulation comes into effect next year. Please call our securities law firm today to speak to an attorney. 312-332-4200.

Raymond James is in trouble again. The brokerage firm agreed to pay almost $6 million related to charges connected to Jay Peak, a ski resort in northern Vermont. Regulators are saying that the ski resort violated state laws, and that two businessmen misused $200 of $350 million of investor funds. Owner Ariel Quiros and CEO William Stenger, are accused of taking advantage of immigrants seeking permanent residency in the country through a U.S. Citizenship and Immigration Service program for investors. They were investing in Limited Liability Partnerships, and were told that their investments would be used with Jay Peak. Instead, Quiros and Stenger used $200 million of that money in other ways that were not permitted. Raymond James Financial and Raymond James & Associates were charged with allegedly enabling the scheme through lax supervision.

Vermont’s Department of Financial Regulation accused Raymond James of supervisory failures related to the investments. Raymond James also failed to obtain adequate documentation that Quiros had the authority to open at least four margin accounts at the firm. Another registered representative at Raymond James permitted Quiros to transfer $13 million of the funds to purchase Jay Peak “despite written instructions that investor funds were not to be used for that purpose.” Raymond James is forced to pay the receiver $4.5 million in order to reimburse possible claims by investors, another $200,000 to Vermont’s Department of Financial Regulation for the investigation cost and $1.25 million to the state as an administrative penalty. The alleged wrongdoing occurred at a Raymond James branch office in Miami, Florida. FINRA claimed that Raymond James was fined a combined $16 million for “widespread failures” in their anti-money laundering program in May. At the time, it was the largest penalty that the regulator has ordered for that type of infraction.

The U.S. Securities and Exchange Commission (SEC) sued a United Kingdom man accused of hacking into the online brokerage accounts of U.S. investors. Idris Dayo Mustapha allegedly placed unauthorized stock trades and hacked into accounts to buy more than $5 million in stocks of little-known companies in April and May. He also sold his own personal stocks at the same time. This cost his nine victims $289,000, while he made at least $68,000. Mustapha was charged with securities fraud.

Recently, the U.S. Securities and Exchange Commission (SEC) charged Wall Street-based brokerage firm, Albert Fried & Co. with failing to sufficiently evaluate or monitor customers’ trading for suspicious activity. Albert Fried allegedly failed to file Suspicious Activity Reports (SARs) with regulators over five years, despite read flags tied to its customers’ high-volume liquidations of low-priced securities. On a given day, the trading in one security exceeded 80% of the overall market volume. At other times, customers stocks were traded in companies that were delinquent in their regulatory filings or involved in questionable penny stock promotional campaigns. Andrew Ceresney, director of the SEC’s Division of Enforcement said: “Albert Fried & Co. ignored numerous instances when customer trading activity should have triggered the firm to file SARs. Brokerage firms must take their anti-money laundering responsibilities seriously so they can serve as a line of defense against misconduct and market risks.” Albert Fried agreed to pay a $300,000 penalty to settle the charges.

London-based research firm Fideres Partners LLP suggests that the process of pricing and selling new corporate bonds may be inaccurate. Corporate bonds’ price in the days after their issuance may hint to a systemic underpricing by major dealers, according to the Fideres report, published last week. The firm estimates that the underpricing of new debt may have cost U.S. companies as much as $18 billion in extra interest in bonds issued between 2010 and 2015 by pulling up their borrowing costs at a time when benchmark interest rates were at low levels. Companies have been racing to sell new bonds to take advantage of low interest rates. The banks who sell these bonds may underprice new bonds in order to make sure they end up in the portfolios of large buy and hold investors who are seen as more reliable. The concessions on new issues may also arise as investors and bankers need to be compensated for the extra risk of holding corporate credit as opposed to safer securities, such as government debt.

A U.S. grand jury is investigating whether employees at Goldman Sachs Inc. misled bondholders concerning securities issued by the brokerage firm that were Malaysian government funds. Employees at Goldman Sachs may have had reason to believe that some of the proceeds from bond deals done for the fund, were actually being used for purposes other than their intended. Federal authorities are also exploring whether Goldman’s hiring practices violated U.S. anticorruption laws. Goldman’s top former banker in Southeast Asia, Tim Leissner, was suspended for allegedly violating firm policies. Leissner left the firm last month. While employed there, Leissner allegedly advised the fund on three acquisitions and arranged the sale of three bonds valued at a total of $6.5 billion that brought in $650 million for the firm. 1MDB officials allegedly directed Goldman to wire proceeds from the deal to the fund’s account at a small, Swiss private bank. This is an unusual proceeding, as private banks don’t typically receive transfers of that size. Goldman then underwrote the offering, buying $3 billion up front at a slight discount. Goldman made nearly $300 million in fees from the bond sale. It was meant to fund the construction of a new financial center in Kuala Lumpur to be named after the father of the Malaysian Prime Minister. 1MDB allegedly moved half of the money into overseas mutual funds and the remainder for paying down debt and for working capital. If you invested in 1MDB, please call our Chicago-based securities law offices for a free consultation with an attorney to discuss your options of suing Goldman Sachs for losses in the arbitration forum on a contingency fee basis.

The Financial Industry Regulatory Authority (FINRA) is expecting a massive wave of arbitration claims against brokers and their brokerage firms in the coming months, thanks to bad energy investments. Because of the huge drop in oil prices, many of the cases being discovered are ones in which an adviser put too much of a client’s money into energy investments that turned out to be basically worthless as U.S. oil prices collapsed. Many of the customers are elderly and too much of their portfolios were put into risky oil and gas investments. And adviser must take into account if the investment is suitable for the client or not, and age, net worth, investment objectives and risk tolerance play large factors in determining this. Many advisers put much of their client’s money into oil and gas and energy investments, because the commissions were high. Now, with oil prices tumbling, it is a very bad situation for those whose portfolio was concentrated in the resources. High-yield default rates in the energy sector are expected to spike to 20% this year from about 7% at the end of 2015, and less than 1% in December 2014, according to Fitch ratings. The trailing 12 month default rate among exploration and production companies will jump even higher by the end of 2016, to between 30% and 35%, also Fitch estimates.

Another issue investors could see is that many do not become aware of the extent of their losses until they receive their year-end statements from their broker, or around the month of April. This could very well solidify the fact that analysts are predicting many more arbitration claims in the coming month and months ahead. Some client’s money was concentrated almost exclusively in oil and gas investments and these individuals are expecting to be hit especially hard. Some of the investments include: Linn Energy, AmeriGas Partners and British Petroleum, among others. Linn Energy, in a filing with the Securities and Exchange Commission (SEC) on Tuesday stated that a Chapter 11 bankruptcy filing may be “unavoidable.” This means serious trouble for investors. Call us today if you have experienced losses with Linn Energy or other oil and gas or energy investments. We may be able to help you bring a claim against your brokerage firm to recover your money.

Today, the U.S. Securities and Exchange Commission (SEC) charged a Wells Fargo unit and the Rhode Island Economic Development Corp with civil fraud stemming from a bond offering for 38 Studios, a now-bankrupt video game company. The bond offering was for 38 Studios, and the SEC claimed that the agency defrauded investors in order to finance the startup company, which was founded by former Boston Red Sox pitcher Curt Schilling. The $75 million bond was intended to spur economic development and create jobs, according to the SEC.

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