September 2012 Archives

September 27, 2012

ALF Investigating Claims Involving San Diego Investment Advisor Ray Lucia

$Bucket.jpgThe Alcala Law Firm is investigating claims about the sales practices of Ray Lucia, a San Diego, California, financial advisor and radio personality best known for his Buckets of Money (BOM) investing strategy. Raymond Lucia is the principal of RJL Wealth Management LLC (formerly Lucia Financial LLC). Recently, the Securities and Exchange Commission (SEC) filed a securities fraud lawsuit against Raymond Lucia and one of his former companies--Raymond J. Lucia Companies, Inc. According to the SEC's lawsuit, Lucia made false and misleading representations regarding the history and performance of his BOM strategy.

Raymond Lucia is the author of three books on investing for retirement: "Buckets of Money: How to Retire in Comfort and Safety," "Ready? Set? Retire!," and "The Buckets of Money Retirement Solution: The Ultimate Guide to Income for Life."

September 24, 2012

United Planners Fined $200,000 Over Variable Annuity Sales

United Planners Financial Services of America (Scottsdale, Arizona) agreed to the payment of a $200,000 fine to the Financial Industry Regulatory Authority (FINRA) to settle allegations involving the failure to properly supervise and detect the unsuitable sale of variable annuities (VAs). According to FINRA, United Planners allowed supervisors to self-approve their own VA sales and the firm failed to implement proper supervisory procedures and training of VA transactions. United Planner's Chief Compliance Officer Douglas Hall (Phoenix, Arizona) was fined $15,000 in a related disciplinary action.

Despite increased efforts from regulators, our securities law firm continues to see abuses in the sale of VAs. Two areas of particular concern are the sale of VAs to elderly investors and the unnecessary exchange or replacement of existing VAs.

See related blog posts:

Variable Annuity Exchanges and Replacements

The Trouble with Variable Annuities

September 20, 2012

Brokers Behaving Badly: Elder Financial Abuse

In my securities law practice, I've encountered numerous instances of elder financial abuse. Often the abuse is caused by a family member. Other times, a financial advisor is the root cause. According to the Consumer Financial Protection Bureau, seniors lost over $2.9 billion to financial exploitation in 2010. As the percent of the population over 65 continues to grow, instances of elder financial abuse will be on the rise. Here are three examples of elder financial abuse that recently caught my eye:

RBC Capital Markets: RBC Capital Markets was fined $200,000 by FINRA and required to pay $70,000 in restitution to an elderly customer for engaging in unsuitable and excessive trading of closed-end funds ("CEFs") that were purchased at the initial public offering ("IPO"). See related blog posting regarding the unsuitability of purchasing CEFs at the IPO.

Wells Fargo Investments Inc.: Former Wells Fargo broker Alfred Chi Chen entered into a settlement barring him from acting as a stockbroker for improprieties associated with sale of reverse convertible notes to elderly and retired individuals. See related blog post: Wells Fargo Investments Fined $2 Million for Unsuitable Reverse Convertible Note Sales. Alfred Chi Chen also reportedly conducted unauthorized trades in the accounts of deceased clients.

H.D. Vest Investment Services: Former broker Charles Duane Lewis was permanently barred from acting as a broker after pleading guilty to the charges of misappropriating more than $500,000 from a customer in her late 80s using a power of attorney which allowed him to draw checks on her account.

For more information about elder financial abuse, please click here.

September 14, 2012

ProShares ETF Class Action Dismissed: Aggrieved Investors Should Consider Their Options

Thumbnail image for Thumbnail image for toxic.jpgEarlier this month, a New York judge dismissed an investor class action lawsuit alleging that ProShares Advisors LLC and SEI Investments Distribution Co failed to fully disclose the risks of investing in leveraged exchange traded funds ("ETFs") such as the ProShares SRS Fund. In dismissing the action, U.S. District Court Judge John G. Koeltl wrote that ProShares' sales materials adequately disclosed the risks involved. The court's ruling shows how tough it can be for aggrieved investors to directly sue fund companies for misleading marketing.

The message for do-it-yourself investors is caveat emptor (buyer beware). However, investors who purchased leveraged or inverse ETFs through a financial advisor may want to consider pursuing a securities arbitration claim. See related blog post: Securities Arbitration vs. Class Actions: Which is More Financially Rewarding? Our securities law firm has helped several investors recover losses from financial advisors that inappropriately recommendeded leveraged and inverse ETFs such as those offered by ProShares and Direxion. Please read the blog postings below for more information.

Related blog posts:

What Are Leveraged and Inverse ETFs?

Are Leveraged and Inverse ETFs Suitable for You?