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/
25th Anniversary Guavaween Family Fun Fest.
Happy Halloween to All! the Anton Legal Group would like to let everyone know about Ybor City’s Guavaween Family Fun Fest. It is a free event that runs from 10 AM to 3 PM on Saturday, October 30th. The event benefits the Ybor City Chamber of Commerce. Many activities are planned for families, kids and the young-at-heart, including pumpkin decorating,
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