Articles Posted in Brokerage Firms

rusty barrel.jpgToday, the New York Stock Exchange (NYSE) announced their decision to proceed with delisting Magnum Hunter Resources Corporation (NYSE: MHR). Trading in MHR’s common stock will be suspended immediately causing irreparable harm to many main street investors who had invested heavily in MHR.

Related Story: ALF is investigating complaints by investors that suffered significant losses when two Wells Fargo brokers bet heavily on the small cap energy sector, including Magnum Hunter Resources.

symbol_hazard.pngBy now, readers of this blog are hopefully aware that we are very negative on the marketing and sale of leveraged and inverse exchange-traded funds (“ETFs”) to average investors. The New York Times recently published a news piece declaring that ETFs, like those offered by Direxion, were “Public Enemy No. 1.”

Still not convinced? Take a look at the year-to-date results for the worst performing Direxion ETFs through 10/7/2015 according to Morningstar–all of them triple-leveraged funds:

Direxion Daily Nat Gas Rltd Bull 3X ETF (GASL) -84.36%

Thumbnail image for lpl.jpgAs previously reported in this blog, LPL Financial has recently been faced with numerous fines from various regulators and also securities lawsuits from unhappy investors over the firm’s uncontrolled sale of non-traded REITs and leveraged ETFs.

Multi-State Task Force Concludes LPL Overly Sold REITs to Individual Investors

Today, LPL reached yet another million dollar settlement–this time with a Task Force of state regulators. The Task Force investigation determined that LPL sold non-traded REITS in excess of the requirements set forth in the REIT prospectuses, various state concentration limits and LPL’s own guidelines. The investigation also concluded that LPL’s supervisory system was inadequate. Under the settlement, LPL will remediate investor losses for all sales of non-traded REITs from January 2008 through December 2013 that exceeded the requirements of the REIT prospectuses, applicable state concentration limits or LPL’s own guidelines. The Task Formed by the North American Securities Administrators Association (NASAA) included securities regulators from California, Texas, Colorado, Nevada, Maine, Ohio and Virginia.

The Alcala Law Firm has filed a FINRA arbitration claim against LPL Financial LLC arising out of the actions of their registered representative/investment advisor Jane Everingham doing business as Everignham O’Malley in Larkspur, California. The claim, filed on behalf of a customer of Ms. Everingham, involves the following highly risky and speculative investments:

  • Proshares Trust Short 20+ Year Treasury [Symbol: TBF]. An Exchange Traded Fund (“ETF”) that seeks to achieve the inverse of the daily performance of the Barclays U.S. 20+ Year Treasury Bond Index. Because these ETFs are reset daily, this type of ETF is unsuitable for investors who plan to hold the fund for longer than one trading session due to the effects of compounding.
  • Federated Equity Funds Prudent Bear Fund [Symbol: BEARX]. A mutual fund that seeks capital appreciation primarily through short positions on domestic stocks. “Selling short” generally refers to the act of selling borrowed shares with the hope that the shares can be bought back at a lower price.

Charles Lynch, a financial advisor with Wells Fargo Advisors in Irvine, California, has one or more pending customer complaints alleging “unsuitable concentration in energy sector.”[1] ALF is currently conducting an investigation into related conduct by Mr. Lynch.[2] If you have any questions or information regarding these events, please use the “Contact Us” link above.

Disclosures:

[1] Customer complaint information was verified through FINRA’s BrokerCheck system.

Charles Frieda, a dully registered broker and investment advisor with Wells Fargo Advisors in Irvine, California, has one or more customer complaints alleging “unsuitable concentration in small cap energy sector securities.”[1] ALF is currently conducting an investigation into related conduct by Mr. Frieda.[2] If you have any information regarding this matter, please use the “Contact Us” link above.

Disclosures:

[1] Customer complaint information has been verified through FINRA’s BrokerCheck system.

On May 6, 2015, LPL Financial reached a settlement with the Financial Industry Regulatory Authority (“FINRA”) agreeing to pay FINRA a $10 million fine and make restitution payments totaling $1.7 million to a select group of customers who were sold leveraged and inverse exchange traded funds (“ETFs”).

Restitution Will be Limited to 327 Customer Accounts

Only customers who purchased certain ETFs are entitled to receive any restitution under the terms of the settlement with FINRA. A total of 327 customer accounts are covered under the restitution program. Payments will range from a high of $83,034.97 to a low of $1.02 per account. LPL has 120 days to provide regulators with proof that payment has been made.

Thumbnail image for lpl.jpgToday, the Financial Industry Regulatory Authority (“FINRA”) reached a settlement with LPL Financial LLC totaling $11.7 Million over multiple failures in the firm’s supervision of customer transactions involving non-traditional exchange traded funds (“ETFs”), variable annuities, mutual funds and non-traded real estate investment trusts (“REITs”).

As part of the settlement, LPL will be required to pay $1,664,592.04 million in restitution, plus interest, to customers affected by the firm’s failure to supervise the sale of non-traditional ETFs. FINRA has stepped up its enforcement efforts over the sale of non-traditional ETF such as leveraged and inverse ETFs, which are complex and risky investments that we have covered at length in several blog posts. Click here for more information about leveraged and inverse ETFs.

LPL has 120 days to locate and provide proof of payment to all affected customers. According to the settlement, a total of 327 unidentified customer accounts are entitled to receive payments ranging from $1.02 to $83,034.97 per account.

The Alcala Law Firm, a California-based securities law firm, has filed a securities arbitration claim against LPL Financial before the Financial Industry Regulatory Authority (FINRA) involving the sale of risky and unsuitable investments in a managed account causing a customer to suffer significant losses between 2011 and 2013–a period of time when the overall stock market enjoyed positive returns. The customer’s investments included an inverse exchange traded fund (“ETF”), a bear fund that bet against the market and several gold funds.

In related news, on May 6, 2015, LPL was fined $10 Million by FINRA for widespread supervisory violations and ordered to pay $1.7 in restitution to customers who were sold leveraged and inverse ETFs. Click here for related blog post. LPL, headquartered in Boston, has grown from approximately 8,300 registered representative in 2007 to 18,433. However, LPL’s rapid growth has created problems with regulatory authorities who have repeatedly fined the firm for failure to supervise their growing legion of financial advisors. LPL paid disciplinary fines totaling $2.95 million in 2014 and $8 million (plus $2 million in restitution) in 2013 for supervisory lapses.

Related Blog Post:

The Alcala Law Firm has filed a securities arbitration claim before the Financial Industry Regulatory Authority (FINRA) against Cantella & Co., Inc. alleging elder financial abuse on behalf of a 68-year-old woman diagnosed with dementia. Also named as respondents in the arbitration proceeding where two other brokerage firms where the customer previously maintained accounts as she followed her stockbroker Dennis (“Deno”) Webb from firm to firm. The other respondents named in the claim include: MML Investors Services, Inc. and optionsXpress, Inc. (a subsidiary of Charles Schwab & Co. that was formerly doing business as brokersXpress LLC) This investigation is still ongoing. For further information, please contact us.