December 2012 Archives

December 28, 2012

Worst Investments of 2012

instability.jpgBelow is a list of the worst investments in 2012 according to Bloomberg Businessweek.

Worst Exchange Traded Fund (ETF)

ProShares VIX Short-Term Futures ETF (-79%).

As we've repeatedly stated in this blog, leveraged and inverse ETFs are unsuitable investment vehicles for most individual investors. [Read more.]


Worst Equity Mutual Fund
Federated Prudent Bear Fund (-17%)

Worst Initial Public Offering
Facebook (-30%)

Worst U.S. Large-Cap Stock
Hewlett Packard (-43%)

December 24, 2012

LPL Financial, LLC Under Fire for Sale of Non-Traded REITS

lpl.jpgThe Enforcement Section for the Commonwealth of Massachusetts has filed an administrative lawsuit against LPL Financial, LLC for violation of securities laws in connection with the sale of non-traded REITs. [R-E-I-T is an acronym for "Real Estate Investment Trust."] The term "non-traded" refers to the fact that the REITs are not listed on a national stock exchange and investors have limited redemption rights. The Commonwealth is demanding that the firm make full restitution to Massachusetts investors who were improperly sold non-traded REITs. Following an investigation of 597 non-traded REIT transactions made by LPL, the Enforcement Section determined that 569 of those were made in violation of the prospectus requirements. For example, many of the non-traded REITs sold by LPL contained a requirement in their prospectuses limiting an individual investor's purchase to 10% of their liquid net worth. The Commonwealth's investigation focused on seven non-traded REITs sold by LPL:


  • Inland American, Cole Property Trust II, Inc.

  • Cole Credit Property Trust III, Inc.

  • Cole Credit Property 1031 Exchange

  • Wells Real Estate Investment Trust II, Inc

  • W.P. Carey Corporate Property Associates 17

  • Dividend Capital Total Realty


LPL Financial, LLC is the largest independent broker-dealer in the United States with 12,800 financial advisors. Although the administrative action taken by Massachusetts is primarily concerned with the sale of non-traded REITs to its own residents, LPL's financial advisors sold non-traded REITs to thousands of investors across the country. The Commonwealth of Massachusetts should be commended for their aggressive efforts to protect the rights of financial consumers. In the past, lawsuits such as the one filed by the Commonwealth of Massachusetts have encouraged investors nationwide to seek their own form of justice through individual securities arbitration claims.

See related blog post:

December 4, 2012

Webush Securities Fined Again for Supervisory Lapses

violators.jpgLos Angeles, California-based Wedbush Securities was fined an additional $375,000 by the Financial Industry Regulatory Authority (FINRA) for failing to properly supervise and detect misconduct in connection with the sale of variable annuities. In an earlier blog post, we recently reported that Wedbush Securities had already been fined $300,000 for supervisory conduct that FINRA referred to as egregious and persistent. The firm's founder Edward Wedbush was also fined $30,000 and suspended for 30 days.

Related News:

On November 10, 2010, a Los Angeles Times article titled Edward Wedbush's roof leaks, but his wallet doesn't quoted one employee who referred to him as "the cheapest man alive."