Investments In The News - Law Offices of Robert Wayne Pearce

Apr 9, 2025

Florida Investors Must Not Rely Upon Non-Traded REIT Valuations

You cannot and must not rely upon the valuation of non-traded REITs on your account statements. The FINRA rules currently mandate that sponsors of non-traded REITs establish an estimated per-share valuation within 18 months after the REIT stops raising money from investors. The problem with this language is that fund raising often lasts for years which results in the per-share valuation potentially remaining unchanged and consequently misrepresented for years.

Apr 9, 2025

SEC Can Sue Morgan Keegan For Auction Rate Securities Misrepresentations to Investors Nationwide

According to Bloomberg News, an SEC lawsuit alleging Morgan Keegan & Co. brokers misled investors about the liquidity risk of auction-rate securities was reinstated by a federal appeals court.

Apr 9, 2025

SEC Investigates Inland American REIT

The SEC recently announced that it is looking at activity of Inland American REIT to determine if the REIT committed violations related to management fees, the timing and amount of distributions paid to investors, and transactions with affiliates. It is unclear at this time what the investigation will mean for the value of Inland American REIT but obviously this is not good news.

Apr 9, 2025

Wells Fargo, Citigroup, Morgan Stanley, UBS Fined for Improper Sales of High-Risk ETFs Nationwide

The Financial Industry Regulatory Authority (FINRA) announced that it ordered Wells Fargo Advisors, Citigroup Global Markets, Morgan Stanley, and UBS Financial Services to pay more than $9.1 million for failure to supervise and failure to have a reasonable basis for recommending selling leveraged and inverse exchange traded funds. Each of the four firms sold billions of dollars of these leveraged and inverse exchange traded funds.

Apr 9, 2025

NASAA Warns Investors Throughout the United States About Crowd Funding Investments

The North American Securities Administrators Association (NASAA), an organization comprised of the 50 state securities regulators, believes that the crowd funding provisions of the so-called JOBS Act are just another “Regulation D-like rip-off,” according to InvestmentNews (“Crowd funding draws scorn from NASAA,” by Mark Schoff Jr.). Regulation D provides a registration exemption for certain investments that are privately offered – i.e., not offered by means of a general solicitation to the public at large.

Apr 9, 2025

Watch Out Florida Fixed Income Investors–High Yield Junk Bonds Are Dangerous!

Junk bonds have benefited both investors and issuers over the past few years, providing borrowers with some of the lowest interest rates ever, while providing yield-hungry investors with better returns than they could receive by investing in investment-grade debt. Junk bonds produce higher yields because of the increased risk of default by the issuer. “But investors run the risk of having the tide turn against them should interest rates start rising. Some analysts have begun suggesting that day could come soon” (“Junk Bonds Feed a Hungry Market,” by Matt Wirz, Wall Street Journal).

Apr 9, 2025

More Bad News for Pacific Cornerstone Capital and Florida Investors

The Financial Industry Regulatory Authority (FINRA) is investigating and considering legal action against a “captive” broker-dealer of a real estate investment company for the second time in three years. (See InvestmentNews article by Bruce Kelly entitled “Non-traded REITs’ B-D faces another probe”).

Apr 9, 2025

Watch Out Investors–They Are Not Called Junk Bonds For Nothing!

Wall Street calls them “high-yield bonds” but Main Street has a better name, “junk bonds.” These are long-term, interest bearing IOUs issued by companies or municipalities with poor credit ratings (indicating an inability to pay those IOUs) or none at all! These bonds pay high yields for one and only one reason-it’s the only way to get investors to buy them. Apparently, many investors have forgotten who popularized them in the 1980s, Drexel-Burnham and Michael Milken, a bankrupt brokerage and felon, respectively.

Apr 9, 2025

SEC Issues Alert to United States Broker-Dealers and Investors About Municipal Bonds!

The SEC’s Office of Compliance Inspections and Examinations has put out an alert reminding broker-dealers about what their supervisory and due diligence duties are when it comes to underwriting municipal securities offerings. According to the examination staff, there are financial firms that are not maintaining enough written evidence to show that they are in compliance with their responsibilities as they relate to supervision and due diligence. OCIE Director Carlo di Florio stressed how sufficient due diligence when determining the operational and financial condition of municipalities and states before selling their securities, is key to investor protection.

Apr 9, 2025

Watch Out Florida Investors–Junk Bond ETFs Throughout the United States Have Hidden Risks!

“ETFs have their known costs and benefits. And this is one of their costs,” Oleg Melentyev, head of high-yield corporate strategy at Bank of America Merrill Lynch, was quoted as saying.