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Wells Fargo Representative Suspended for Unauthorized Trades

Santander Securities Puerto Rico Closed-End Bond Funds Cause Substantial Losses for Investors

Investors in Santander Securities closed-end bond funds have suffered substantial losses after being forced to liquidate hundreds of millions of dollars in the funds to meet margin calls. Many of the investors were seeking tax-free income, so they sheltered millions in local municipal bond funds, which have been hit hard as the island struggles with a weak economy, rising interest rates, and significant debt loads. Investment losses were magnified because many investors were encouraged by their brokers to borrow money through credit lines to invest in the funds, which generated handsome commissions. Now, a number of investors have been forced to liquidate hundreds of millions of dollars in these funds to meet margin calls.

Popular Securities Puerto Rico Closed-End Bond Funds Cause Substantial Losses for Investors

Investors in Popular Securities closed-end bond funds have suffered substantial losses after being forced to liquidate hundreds of millions of dollars in the funds to meet margin calls. Many of the investors were seeking tax-free income, so they sheltered millions in local municipal bond funds, which have been hit hard as the island struggles with a weak economy, rising interest rates, and significant debt loads. Investment losses were magnified because many investors were encouraged by their brokers to borrow money through credit lines to invest in the funds, which generated handsome commissions. Now, a number of investors have been forced to liquidate hundreds of millions of dollars in these funds to meet margin calls.

Recover Your Losses in Leveraged UBS Puerto Rico Bond Funds Purchased with Borrowed Funds

The Law Offices of Robert Wayne Pearce, P.A. is investigating claims involving leveraged UBS Puerto Rico bond funds purchased with borrowed funds. Many of UBS Puerto Rico’s bond funds were highly leveraged, which means that the funds borrowed more money than investors contributed to the funds in order to attempt to increase the funds returns. On top of this, a number of complaints have been made that many UBS Puerto Rico brokers recommended that their clients borrow funds, either through traditional borrowing methods such as a personal or home equity loan or through a margin account, to invest even larger amounts into their proprietary funds.

Michael Palazzo Fixed Income 1 Fund Investigation by Robert Wayne Pearce, P.A.

The Law Offices of Robert Wayne Pearce, P.A. is currently investigating an alleged Ponzi scheme perpetrated by Michael Palazzo, a former Tonawanda, New York based stockbroker at Berthel Fisher & Company Financial Services, Inc. Mr. Palazzo’s former customers are alleging that he fraudulently solicited investments in Fixed Income 1 Fund as a part of his plot to misappropriate funds. Sales practice allegations by customers against Mr. Palazzo and his employer have been filed. The Financial Industry Regulatory Authority (FINRA) recently reported a June 3, 2013 complaint made by former customers inquiring whether the investments they made through Mr. Palazzo were legitimate. FINRA also reported a June 7, 2013 complaint by former customers against Mr. Palazzo alleging churning, misapppropriation of funds, and a misrepresentation related to the terms of a variable annuity contract. In addition, the June 7, 2013 complaint alleged that Berthel Fisher & Company Financial Services failed to supervise Mr. Palazzo’s activities.

Investors Nationwide Beware of Affinity Fraud Schemes That Target Member Groups!

Affinity fraud exploits the trust and friendship that exist in groups of people who have something in common. Some of the common interests include a religious beliefs, ethnic groups, immigrant communities, racial minorities, and members of a workforce. Various methods are used to access or target the groups. One common way is to persuade leaders from within to endorse the scheme. Sometimes the leaders do not even know that they are endorsing a scam, and they may end up becoming one of the victims of the fraud themselves. Because of the tight-knit structure of some of the groups, it can be quite challenging for regulators or law enforcement officials to detect affinity scams. Fraud victims often fail to notify the authorities in time, or they will try and work things out internally. This particularly true where the fraudsters have used respected community or religious leaders to convince members to join in on the investment.

Ninety-Six Broker-Dealers Sued for Commissions Generated from Tenant-in-Common Ponzi Scheme

Mr. James Zazzali, trustee for the DBSI Inc. bankruptcy, is suing ninety-six broker-dealers to recover $49 million in commissions for securities fraud related to tenant-in-common investments (TICs). In the complaint, Mr. Zazzali alleged that DBSI’s TIC deals were part of a $600 million Ponzi scheme. Mr. Zazzali contends that the broker-dealers should return investors’ payments and commissions, which should be distributed to DBSI creditors.

SEC Pursues ex-Money Concepts Florida Broker “Buddy” Persaud for Ponzi Scheme

Gurudeo “Buddy” Persaud, an ex-Money Concepts registered representative, is being charged by the Securities and Exchange Commission (SEC) for running a Florida based Ponzi scheme. An SEC investigation revealed that Mr. Persaud accumulated close to $1,000,000.00 from family and friends by promising them 6-18% returns with little to no risk. What his clients did not know was that Mr. Persaud’s investment philosophy was based on the earth’s gravitational forces and its effects on the valuation of stock prices. He also believed that the moon could influence investors to sell their stocks. In addition, Mr. Persaud hid his involvement in his own company, White Elephant Trading Co., by acting as an independent advisor that sold investments in White Elephant to his clients in contract form. The SEC is seeking to recoup Persaud’s gains, obtain injunctive relief, and impose financial penalties against him.

Universities Not Spared from Ponzi Scheme Epidemic

A Texas based money manager has been charged with running a Ponzi scheme that defrauded the Houston Athletics Foundation, a University of Houston entity which funds athletic scholarships. David Salinas, who took his life after the Securities and Exchange Commission (SEC) filed a suit against him and his associate Brian Bjork, was charged with perpetrating a $39 million Ponzi scheme that involved over 100 investors, which included high-profile college coaches. A Ponzi scheme is an unsustainable fraud pyramid that inevitably ends in ruin. Schemers use money raised from latter investors or investors higher up the pyramid to pay an earlier investor’s returns. Ponzi schemes invariably fall apart when markets deteriorate or when the schemer is unable to raise more cash. Around $2.2 million of the Foundations assets, having supposedly been invested in bonds, are still unaccounted for.

AXA Advisors Fined $100,000.00 for Not Firing Broker Who Ran a Missouri Ponzi Scheme

AXA Advisors has been fined $100,000.00 by the Financial Industry Regulatory Authority (FINRA) for not investigating and firing a broker who was running a Ponzi scheme, which dates back to 2001. Kenneth Neely began to work with AXA Advisors in Clayton, Missouri in 2007 before FINRA permanently barred him from the financial industry in 2009. Mr. Neely’s Ponzi scheme defrauded investors out of $600,000.00 who for the most part belonged to a church and were led to believe they were investing in a real estate investment trust. Be that as it may, AXA was aware of Mr. Neely’s fraudulent activity in 2008 when AXA conducted a yearly audit of him, which revealed a spreadsheet with investor payout information. Mr. Neely falsely claimed that the figures were for a client who wanted to start and budget a business. Mr. Neely eventually pled guilty to mail fraud and converting and commingling funds. Mr. Neely was fired by AXA Advisors in 2009.