Stockbroker Fraud: FINRA’s warning on Non-Traded REITs
Non-Trade REITs Make Stockbroker Fraud a Snap
There’s been a rocky road and loss of faith in the stock market for a while now. With interest rates at an all time low, investors are looking for a better return on their investment. One of those higher yield investments is the real estate investment trust (REIT). There are two types of REIT, the publicly registered exchange traded REIT and the publicly registered non-traded REIT. While investing in a non-exchange REIT does not guarantee you will end up the victim of investment fraud, there is a lot of room for stockbroker fraud to occur.
Stockbroker Fraud and REITs – That’s How They Getchya!
There are several differences between non-traded and exchange REITs that make an enormous difference to investors and their assumed risk. Below is a list of the differences that can leave you open to stockbroker fraud.
- Shares of non-traded REITs do not trade on a national securities exchange and therefore are not liquid, often for periods of up to eight years or more. Many brokers are simply not forthcoming about that risk.
- Early redemption of shares is usually very limited, with enormously high fees for their sale that destroy your total return.
- Seemingly attractive periodic distributions may be based on borrowed funds or a return of the investor’s principal, hiding an actual loss of value. Dividends from REITs traded on national exchanges are usually derived solely from earnings, so it’s much harder for a broker or firm to hide a loss of market value.
Next on REIT Stockbroker Fraud Lane
In this on-going series, we’ll take a more in depth look at REITs, stockbroker fraud and why FINRA is so concerned for your investment safety. If you are not getting anywhere with resolving your investment disputes and need help to discuss your options with the securities arbitration process, call S. David Anton of Anton Legal Group!
S. David Anton, Esquire is a Certified Arbitrator for the Financial Industry Regulatory Authority (FINRA), formerly the NASD, which is the national organization responsible for overseeing the securities industry. He has served as a Judge/Panelist and rendered decisions in many securities arbitration, giving him a unique perspective on his client’s cases.
FOR SECURITIES ADVICE, PLEASE FEEL FREE TO CONTACT DAVID ANTON OF THE ANTON LEGAL GROUP AT (813) 443-5249
[1] http://www.finra.org/
Securities Arbitration: Auction Misrepresentation
Major Companies Embroiled in Securities Arbitration Case
Stockbroker fraud is not just a crime perpetrated by small time con-artists. It is a large scale problem forcing investors to file more and more securities arbitration cases against major firms. Just because a firm is large or has a recognizable name does not mean you are safe! Regardless of a firm’s name or popularity, you must perform the type of research I have outlined in previous blogs with every single investment opportunity to protect yourself from stockbroker fraud.
Auction Rate Securities Fraud Brings Multiple Securities Arbitration Suits
With auction rate securities fraud, the key is misrepresentation. The broker may tell you that certain markets are cash equivalents or an alternative to money markets, easily liquidable on short notice without jeopardy to loss of your principle investment. The broker or firm fails to mention that your ability to sell these investments relies completely on whether or not the brokerage house wants to sell, as the brokerage firm can choose to stop participating in that market at any time, leaving you holding the bag on your investment and completely unable to sell. Furthermore, it is easy for the brokerage firm to artificially inflate the value of these types of investments, since the value of the investment is based solely on how much interest a firm can generate in the product through it’s own marketing campaign. The brokerage firms generate huge fees for underwriting and administering the auctions, When these types of markets have a slump, the firm may choose to continue to participate and allow you to sell your shares or cancel participation in the market. That is exactly what happened in 2008 when several large firms decided to cancel participation in auction rate markets they had formerly advertised, leaving a rash ofsecurities arbitration cases in the wake of their decision.
The Securities Fraud Auction Rate Problem
In 2008, the New York Sun reported on a case where at least four major firms, including but not limited to UBS, Merrill Lynch, Citigroup Smith Barney, Goldman Sachs were expected to address over $150 billion in securities arbitration claims when they failed to continue to support the auctions they had been underwriting. [1] FINRA is still investigating allegations that the firms did not fairly represent the risk of the investment to their clients.
The best help with stockbroker fraud
If you are not getting anywhere with possible stockbroker fraud and need help to discuss your options, call S. David Anton of Anton Legal Group!
S. David Anton, Esquire is a Certified Arbitrator for the Financial Industry Regulatory Authority (FINRA), formerly the NASD, which is the national organization responsible for overseeing the securities industry. He has served as a Judge/Panelist and rendered decisions in many securities arbitration, giving him a unique perspective on his client’s cases.
FOR SECURITIES ADVICE, PLEASE FEEL FREE TO CONTACT DAVID ANTON OF THE ANTON LEGAL GROUP AT (813) 443-5249.
[1]http://www.nysun.com/
Even Nuns Fall Victim to Securities Fraud
The Churning Securities Fraud
Churning is a type of securities fraud where a broker buys and sells securities with your account to excess, in order to generate commissions and fees. The broker or brokerage firm does this solely to increase the fees owed to them from your account, without any regard for you as a client or your investment objectives.
How did Nuns Become Involved in Securities Fraud?
Unfortunately, no one is immune to securities fraud. That’s why it is so important to research not only the registration of the broker, firm and securities you are considering investing in, but to research the complaint history of your proposed broker and brokerage firm. If that had been done, this story would have never taken place. So, here is the story from Forbes…
“In April 2010, the SEC initiated administrative proceedings against stockbroker Paul George Chironis, alleging that he churned two accounts owned by the Sisters of Charity — one account with money for the care of nuns in assisted-living facilities and a second account to support the nuns’ charitable endeavors.” [1]
Protecting Yourself Against Securities Fraud
There are two really disturbing things about this story to me, other than the fact that a shark got one over on a group of aged, sickly, community devoted nuns. First, it is common for confidence men (con artists) to look for large accounts, like retirement funds, to use to perpetrate securities fraud. The bigger the account, the easier it is to manipulate funds, skew reports and hide numbers as traditional standard risk losses. The second, this could have easily been avoided if the investors had properly researched the complaint history filed against stockbroker Paul George Chironis before investing with him.
In part two of this tragic story, I’ll go more into detail about Paul George Chironis’ history as a stockbroker and what you can do to research and protect yourself from this type of stockbroker fraud. Please, if you are not getting anywhere with resolving securities issues on your own, call S. David Anton of Anton Legal Group!
S. David Anton, Esquire is a Certified Arbitrator for the Financial Industry Regulatory Authority (FINRA), formerly the NASD, which is the national organization responsible for overseeing the securities industry. He has served as a Judge/Panelist and rendered decisions in many securities arbitration, giving him a unique perspective on his client’s cases.
FOR SECURITIES ADVICE, PLEASE FEEL FREE TO CONTACT DAVID ANTON OF THE ANTON LEGAL GROUP AT (813) 443-5249.
[1] http://www.forbes.com/sites/
Investigate Before You Invest
In my last blog on securities arbitration, I promised to talk about how to investigate your broker or brokerage firm before you invest, and help save yourself from the need for securities litigation.
Step 1. Investigate the licensing of the broker and brokerage firm. Investigate the license of all parties involved before you consider if you’d like to invest. It doesn’t matter what payoff is promised. Don’t even waste your time listening to the pitch unless you have investigated their license. Securities litigation becomes necessary once a con-artist has swindled you. The name says it all. Con-artists make an art out of gaining your confidence. You need to know if those words are true before you hear the pitch on the investment. For license information on brokers, call your state’s securities regulator and FINRA (Financial Industry Regulatory Authority.) From these sources you can not only find out about licensing and registration, but also if a person or firm has a history of problems with regulators and complaints from investors. For information on investment advisers, read their registration forms. You can get their registration forms (Form ADV) online by visiting the SEC’s Investment Adviser Public Disclosure (IAPD) website. For the moment, only advisers that register electronically are catalogued in the IAPD’s database. Depending on the size of the advisor, you can also get copies of Form ADV that were not filed electronically from the investment adviser, your state securities regulator, or the SEC.
Step 2. Find out if the investment itself is registered. To find out if an investment is registered and avoid securities litigation, check it out using the SEC’s EDGAR database or call toll free at (800)732-0330. An investment being registered is not proof that the investment is legitimate. An investment not being registered isn’t necessarily a sign that the investment is illegitimate. There are companies that are exempt from registration for a myriad of reasons. However, when you check to see if a company is registered, it will tell you if they are exempt from registering. It is more risky to invest in a product when there is little to no information on it. It is easy for a broker or brokerage firm to manipulate prices or spread false information when there is no information available to prove otherwise. If an investment isn’t registered with the SEC, find out if it is registered with your state’s securities regulator. If it isn’t registered with the SEC or your state, and it’s not exempt from registration, call or write your state’s securities regulator or the SEC immediately with all the details. You very well may have discovered a scam.
In my next blog, we’ll talk about the last three steps to investigating possible investment opportunities and help keep you out of the securities litigation process. Please, if you are not getting anywhere with resolving securities issues on your own, call S. David Anton of Anton Legal Group!
S. David Anton, Esquire is a Certified Arbitrator for the Financial Industry Regulatory Authority (FINRA), formerly the NASD, which is the national organization responsible for overseeing the securities industry. He has served as a Judge/Panelist and rendered decisions in many securities arbitration, giving him a unique perspective on his client’s cases.
FOR SECURITIES ADVICE, PLEASE FEEL FREE TO CONTACT DAVID ANTON OF THE ANTON LEGAL GROUP AT (813) 443-5249.
Securities Arbitration and Securities Litigation: How do I know if I need them? (Part 4)
Last time, in my blog about securities litigation, we discussed some information about securities mediation. Today, this Tampa lawyer and certified arbitrator would like to give some more details about securities arbitration and help see if the arbitration process may be right for you.
Now that you’ve tried other dispute resolution techniques, it’s time to decide whether you want to file a claim to arbitrate. Securities arbitration may not be the best and most appropriate option for you. It really depends on your situation and objectives. If you choose to use, or are required by your agreement to use securities arbitration as opposed to civil litigation (a lawsuit), you should seriously consider hiring a Tampa lawyer for instruction and advice. Remember, the brokerage firm will most likely have a team of lawyers for consultation, so having a Tampa lawyer in your ball court will really help level the playing field.
Arbitrators like me, in general, do not have to be Tampa lawyers. They can be from any and all walks of life. They have been trained and approved, and act as arbitrators when selected to hear a case. Some arbitrators work in securities, but they could be doctors or homemakers or professional businessmen. The most important things about an arbitrator are that they be completely impartial and knowledgeable about the area of the dispute in your securities arbitration. A potential arbitrator will submit a personal profile to FINRA (the Financial Industry Regulatory Authority) detailing their knowledge of the securities industry and the concerns of an investor. If the securities arbitrator is accepted, their names go into a pool to be selected for any case matching their background. Arbitrators do not work for FINRA. They receive an honorarium from FINRA to recognize their service.
When deciding whether or not to file a securities arbitration claim, there is one factor that is vitally important to consider, up front. If your broker or brokerage firm goes out of business or files bankruptcy, you may not be able to recover your losses, even if the arbitrator or court rules in your favor. Over 80% of all unpaid awards involve a firm or individual that is no longer in business. That is why it is so important to investigate the disciplinary history of the broker and the firm you are considering investing with. I will write more on that investigation in future blogs so, stay tuned!
Please, if you are not getting anywhere with resolving securities issues on your own, call S. David Anton of Anton Legal Group!
S. David Anton, Esquire is a Certified Arbitrator for the Financial Industry Regulatory Authority (FINRA), formerly the NASD, which is the national organization responsible for overseeing the securities industry. He has served as a Judge/Panelist and rendered decisions in many securities arbitration, giving him a unique perspective on his client’s cases.
FOR SECURITIES ADVICE, PLEASE FEEL FREE TO CONTACT DAVID ANTON OF THE ANTON LEGAL GROUP AT (813) 443-5249.
Securities Arbitration and Securities Litigation: How do I know if I need them? (Part 3)
Our next stop on our tour of securities litigation is the mediator. The mediator’s role is to guide all involved parties towards your own solution by helping you to define the issues clearly and understand each other’s position. “ Unlike an arbitrator or a judge, the mediator has no authority to decide the settlement or even compel you to settle. The mediator’s “key to success” is to focus everyone involved on the real issues of settling–or the consequences of not settling. While the mediator may referee the negotiations–defining the terms and rules of where, when, and how negotiations will occur–he or she never determines the outcome of the settlement itself.” [1]
The mediator also helps all parties see the facts or the reality of the situation. Often times, participants in the securities mediation process are blinded by their own needs and desires. they choose not to see the weaknesses of there own case and choose not to see the strengths of the other parties case. There view of their case may also be tainted by string emotions. The mediator has the expertise to give each side an unbiased opinion of the strengths and weaknesses of their case, giving them a more clear and more fair picture of their individual situation.
Securities mediation has a high success rate. According to FINRA (the largest independent regulator for all securities firms doing business in the United States) professional mediation services have a settlement rate of about 80%. FiNRA explains “Mediation experts attribute this to the parties’ complete control over the process, costs, and outcome. If you feel good about the process, you will likely approach it with enthusiasm and good intentions. Approximately eight out of ten cases settle within a few weeks to a few months of the formal agreement to mediate–when everyone approaches the mediation table in earnest.
Even if your dispute was not fully settled by securities mediation, usually the mediation helps aid in communication, define the issues involved, diffuse emotions, and define area of agreement so that future dispute resolution processes, like securities arbitration, can become more effective and more likely to produce a settlement.
In part four of this blog on securities litigation, we’ll take a good look at possitives and pitfalls of securities arbitration. Please, if you are not getting anywhere with resolving securities issues on your own, call S. David Anton of Anton Legal Group!
S. David Anton, Esquire is a Certified Arbitrator for the Financial Industry Regulatory Authority (FINRA), formerly the NASD, which is the national organization responsible for overseeing the securities industry. He has served as a Judge/Panelist and rendered decisions in many securities arbitrations, giving him a unique perspective on his client’s cases.
FOR SECURITIES ADVICE, PLEASE FEEL FREE TO CONTACT DAVID ANTON OF THE ANTON LEGAL GROUP AT (813) 443-5249.
[1] http://www.finra.org/ArbitrationMediation/Parties/Overview/OverviewOfDisputeResolutionProcess/
Securities Arbitration and Securities Litigation: How do I know if I need them? (Part 2)
If your attempt to resolve issues with the firms management doesn’t work, it is time to seek legal advice from a Tampa lawyer with plenty of experience in securities arbitration and securities fraud. Even if your final objective is securities arbitration over civil litigation, an attorney’s advice is invaluable at this point, to help you weigh the pro’s and con’s of all available options. Although it is not a requirement, you have the right to have a Tampa lawyer present throughout the securities arbitration and securities mediation processes. Remember, the brokerage firm will definitely have the legal advantage of a lawyer on their side, why shouldn’t you have the same advantages and level the playing field?
Securities Mediation
Before entering into securities arbitration or civil litigation, your Tampa lawyer may suggest securities mediation, the logical first step in the dispute resolution process. FINRA (The Financial Industry Regulatory Authority) defines mediation as “an informal process in which a trained and impartial mediator facilitates negotiations between disputing parties, helping them to find their own mutually acceptable resolution.” [1] The difference between mediation as opposed to securities arbitration and civil litigation, is that the mediator does not impose a solution, but helps you and the other party form and accept a solution yourselves.
Mediation does not have a rigid structure and therefore varies on a case by case basis. In some cases, you and the other party might have a face to face meeting, with the mediator there to help you remain focused and reasonable. In other cases, the mediator might hold private caucuses with you and the other party separately, and would then carry communications back and forth between you and the other party. The mediation process may involve any format the mediator deems necessary to move the process forward. The mediator is there to referee, but will not have any authority to decide a settlement or even if you settle.
In my next blog, I’ll discuss details about the mediator’s function, the success rate of mediation, and we’ll talk about the next possibility for resolution, securities arbitration. Please, if you are not getting anywhere with resolving the issue on your own, call S. David Anton of Anton Legal Group!
S. David Anton, Esquire is a Certified Arbitrator for the Financial Industry Regulatory Authority (FINRA), formerly the NASD, which is the national organization responsible for overseeing the securities industry. He has served as a Judge/Panelist and rendered decisions in many securities arbitrations, giving him a unique perspective on his client’s cases.
FOR SECURITIES ADVICE, PLEASE FEEL FREE TO CONTACT DAVID ANTON OF THE ANTON LEGAL GROUP AT (813) 443-5249.
[1] http://www.finra.org/
Securities Arbitration and Securities Litigation: How do I know if I need them? (Part 1)
When a trusted advisor misuses your trust; that can be a heated emotional situation. Maybe you didn’t agree with how your broker handled a transaction. Of course you’re upset! It’s not just a “transaction”, it’s your family’s future. That is why it is so important to keep a cool head, consult with a Tampa lawyer experienced in securities arbitration, and follow a few basic steps to avoid the inconvenience and cost involved with a court battle. In this ongoing series, I will outline and define the steps of resolving the dispute yourself, securities mediation, and securities arbitration, giving you the best advice possible in a brief overview!
Step 1: Attempt to resolve the issue on your own. This sounds obvious, but what is the best way to go about this? Report the issues you are having to your broker’s manager. While securities mediation and securities arbitration are an important part of the dispute resolution process, they are not the first step. From a discrepancy to a full fledged dispute, your broker’s manager should have the authority and insight to take steps that will rectify the problem quickly and easily. If it’s just a misunderstanding, having a manager intervene may be enough to get you back on track and resolve your issues. If management was unable or unwilling to resolve your issues, then look for your next course of action in my next blog! [1]
S. David Anton, Esquire is a Certified Arbitrator for the Financial Industry Regulatory Authority (FINRA), formerly the NASD, which is the national organization responsible for overseeing the securities industry. He has served as a Judge/Panelist and rendered decisions in many securities arbitrations, giving him a unique perspective on his client’s cases.
FOR SECURITIES ADVICE, PLEASE FEEL FREE TO CONTACT DAVID ANTON OF THE ANTON LEGAL GROUP AT (813) 443-5249.
[1] http://www.finra.org/ArbitrationMediation/Parties/Overview/OverviewOfDisputeResolutionProcess/