Articles Tagged with UITs

If you or someone you know invested money with Richard Shotz, a former broker with Morgan Stanley, you may be able to recover your investment losses on a contingency fee basis in the Financial Industry Regulatory Authority (FINRA). According to a Letter of Acceptance, Waiver and Consent (AWC) with FINRA, Mr. Shotz was accused of engaging in an unsuitable pattern of short-term trading of unit investment trusts (UITs) in 486 customer accounts. Shotz allegedly repeatedly recommended that the customers purchase UITs and then sell these products well before their maturity dates. The majority of them had maturity dates of at least 24 months and carried sales charges. Shotz continually recommended that his customers sell their UIT positions less than a year after purchase. The average holding period for these was 143 days. On 1,200 occasions, Shotz recommended that his customers use the proceeds from the short-term sale of a UIT to purchase another UIT with identical investment objectives. For this, he was suspended from the industry for four months and fined $7,500.

A broker must take into account a customer’s age, net worth, investment objectives and investment risk tolerance before recommending or selling an investment and must do his due diligence on the product. If he does not, his brokerage firm may be liable for losses on a contingency fee basis. UITs are not suitable for every customer because they can be illiquid and risky investments. You may be able to bring a claim against Morgan Stanley for not reasonably supervising its brokers.

Richard Shotz was previously registered with Raymond James in St. Petersburg, Florida from July 1987 until February 1994, Citigroup Global Markets in Ormond Beach, Florida from February 1994 until September 2008, Morgan Stanley & Co. Inc. in Ormond Beach from August 2008 until June 2009 and Morgan Stanley in Ormond Beach from June 2009 until October 2015. He is currently registered with Wells Fargo in Daytona Beach, Florida and has been since October 2015. He has five customer disputes against him, alleging misrepresentations, unsuitable investments, and other things, all against securities laws and internal firm rules. This is according to his public, online BrokerCheck report with FINRA.

According to an Order with the Financial Industry Regulatory Authority (FINRA), Jeffrey Dragon, while registered with Berthel, Fisher & Co., as a broker, allegedly violated securities laws. Mr. Dragon was accused of recommending and engaging in short-term unit investment trust (UIT) trading in 19 accounts belonging to 12 of his customers. This occurred over a two-year period between 2013 and 2014. Over the two-year period, Dragon’s UIT trading in the customer’s accounts involved a total of 666 UIT purchases in 84 UITs, of which 73 were offered by Guggenheim Funds Distributors. His recommendations for the customers were to purchase UITs during their initial offering periods, liquidate them before the end of their term, usually after holding them for six months or less and using the proceeds from this liquidation to purchase other UITs, thereby incurring new sales charges.

In one instance, Dragon recommended that an 81-year-old customer make 177 separate UIT purchases during the two-year period. Of those, four positions were held for four days or fewer, 76 additional positions were liquidated 60 or fewer days after purchase, another 89 positions were liquidated between 61 and 90 days after purchase, only four positions were held for longer than 120 days and zero were held for longer than 294 days. Another 84 year-old client was recommended 82 UIT purchases, with similar holding periods. Only 20 of the UIT positions that resulted from the purchases were held for longer than one year or to termination. For this misconduct, Mr. Dragon was suspended from associating with a FINRA member in any capacity for 21 months and fined $5,000.

A broker must only recommend and sell those investments that are safe for his clients. He does so by doing his due diligence on every investment and by taking into account his customer’s net worth, age, sophistication and risk objectives. If he does not, his brokerage firm may be liable for losses. In this case, many of Mr. Dragon’s clients were elderly and the UITs were not suitable for them. Nor did he hold them for long enough. This resulted in losses for the customers. Berthel, Fisher may be sued in the FINRA arbitration forum on a contingency fee basis for losses.

Elaine LaCerte, a former Morgan Stanley broker in Colorado Springs, Colorado, was suspended from the industry by the Financial Industry Regulatory Authority (FINRA). Ms. LaCerte was accused of engaging in an unsuitable pattern of short-term trading of Unit Investment Trusts (UITs) in over 100 customer accounts. “In connection with these accounts, LaCerte repeatedly recommended that the customers purchase UITs and then sell these products well before their maturity dates. In addition, on more than 100 occasions, LaCerte recommended that her customers use the proceeds from the short-term sale of a UIT to purchase another UIT with identical investment objectives. LaCerte’s recommendations caused the customers to incur unnecessary sales charges, and were unsuitable in view of the frequency and cost of the transactions.” This was according to her complaint. LaCerte was banned from the industry for six months and fined $5,000 because of this misconduct. This was against securities laws and internal firm rules.

Elaine LaCerte, also known as Elaine Diones and Elaine Diones Helzer, was previously registered with Diones & Company from July 1986 until March 1987, F&G Securities from February 1987 until December 1987, Merrill Lynch in New York, New York from December 1987 until March 1995, Morgan Stanley in Purchase, New York from March 1995 until January 2005, Citigroup Global Markets in Colorado Springs, Colorado from January 2005 until June 2009 and Morgan Stanley in Colorado Springs from June 2009 until August 2016. She has four customer disputes against him, alleging misrepresentation with respect to the purchase of a municipal bond, and misrepresentation with respect to an investment risk, among other things. She has been suspended and is not currently registered as a broker. This is according to her online record with FINRA.

AdobeStock_78306447-1-300x199According to a Decision filed with the Financial Industry Regulatory Authority (FINRA), Glenn Robert King was accused of excessively trading customer accounts and exercising discretion in customer accounts without written consent or approval. He also allegedly made fraudulent misrepresentations or omissions when he sold unit investment trusts (UITs) to customers and allegedly engaged in unsuitable short-term trading of UITs and closed-end funds. All of these things are against securities laws. He allegedly sold 44 UITs to seven customers and excessively traded the accounts of four customers. During the time period, April 2008 to March 2011 and January 2013 to December 2014, King was registered with Royal Alliance Associates. Excessive trading, also known as churning, is a particularly egregious transgression and results in unnecessary fees for the client and generates large commissions for the broker. If you or someone you know lost money with Glenn King, please contact our law firm in Chicago, Illinois for a free consultation with one of our attorneys. The call to us is free with no obligation and we take cases on a contingency fee basis only.
According to FINRA public records, King was registered with Thomas James Associates, Dean Witter Reynolds, Citigroup, Royal Alliance Associates in Lakewood, New Jersey from January 2005 until June 2011, Saxony Securities, Garden State Securities and Buckman, Buckman & Reid. He has 20 customer disputes against him, four of which are currently pending. He is currently not registered within the industry.

AdobeStock_112181284-1-300x200Stoltmann Law Offices is investigating Jericho, New York-based Cadaret Grant & Company broker Lee Rosenberg who has been accused of recommending unsuitable investments in variable annuity and mutual fund products. He also was accused of failing to follow instructions in connection to investments in mutual funds, unit investment trusts (UITs) and other products. UITs are redeemable securities issued for a specified term, and investors are entitled to receive a proportionate share of the UITs net assets on redemption or at termination. UITs involve expenses such as sales charges, creation and development fees and operating expenses, which are typically charged against its portfolio of assets. These investments are not suitable for all investors, and a broker must determine that by taking into account the investors net worth, age and portfolio. If he does not, his brokerage firm can be held liable for investment losses on a contingency fee basis.
Lee Evan Rosenberg was previously registered with Home Life Insurance Company, Nathan & Lewis Securities and Cadaret, Grant & Company in Boca Raton, Florida and Jericho, New York. He continues to be registered with Cadaret, Grant in Both locations and has been since February 1990. He has four customer disputes against him, one of which is currently pending. Please call our Chicago-based securities law firm today at 312-332-4200 to find out how to sue Cadaret, Grant for losses. The call to us is free with no obligation. We sue firms in the arbitration forum.

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