Green Street Advisors – the “industry leader in REITs research” -recommends against investing in non-traded REITs. Investors who want exposure to the real estate market would be better off investing in publicly traded REITs, according to a report issued by the firm. (“Non-traded REITs should be a nonstarter for clients: Green Street,” InvestmentNews).
Continue ReadingThe Financial Industry Regulatory Authority (FINRA) reported that fines for false advertising have more than quadrupled from $4.75 million in 2010 to $21.1 million in 2011. FINRA found that a big part of that problem involved inaccurate or fraudulent internal communications. Firms were misleading their own brokers by telling them that structured products and other securities were not risky when, in fact, they were very risky. The brokers would then unintentionally mislead their customers by passing along the false information supplied by their firms.
Continue ReadingThe U.S. Securities and Exchange Commission (SEC) is “asking” banks that issue structured notes to improve the accuracy of disclosures to investors, including comparing the sale price to the true (lower) value of the notes at the time of sale. “We believe issuers should consider prominently disclosing the difference between the public offering price of the note and the issuer or its affiliate’s estimate of the fair value,” the SEC said.
Continue ReadingThe Financial Industry Regulatory Authority has issued a number of notices to its member firms reminding them of their obligation to perform due diligence before recommending an investment. However, it has been our experience that, despite these “reminders,” firms often fail to perform adequate due diligence, essentially accepting the promoter’s assertions about the offering uncritically. Lack of due diligence has resulted in significant losses to investors, regulatory actions, lawsuits and arbitrations by aggrieved investors. Ultimately, the failure to perform due diligence has resulted in the collapse of numerous smaller broker-dealers under the weight of their legal liabilities.
Continue ReadingThe Law Offices of Robert Wayne Pearce, P.A. is currently investigating Berthel Fisher and Company Financial Services, Inc. in connection with a Financial Industry Regulatory Authority (FINRA) complaint against TNP Securities LLC alleging fraud and deceit by Thompson National Properties LLC upon high-yield promissory notes purchasers. The three note programs at the heart of FINRA’s complaint are the TNP 12% Notes Program LLC, the TNP 2008 Participating Notes Program LLC and the TNP Profit Participation Program LLC. Thompson National Properties had provided a purported guarantee of principal and interest for the notes when they were sold. However, neither the private placement memorandums (PPMs) for the three offerings nor their supplements disclosed the likelihood that Thompson National Properties would not be able to meet the guarantees of principal and interest. According to the complaint, one of those series of private notes is in default, while two others have stopped making payments to clients.
Continue ReadingThe Law Offices of Robert Wayne Pearce is currently investigating NFP Securities for recommending Warsowe Acquisition Corp. Debentures, which caused many of their clients to lose money. Andrew Rosenberg and Stuart Horowitz, former stockbrokers with NFP Securities, recommended Warsowe Acquisition to clients in 2007 along with other risky and illiquid investments such as the Hennessey Financial Monthly Income Fund (also known as Capital Solutions) and Inland American Real Estate Trust. Warsowe Acquisition began winding down operations as early as March 2008, which caused investors to lose a significant amount of principal in addition to the income they were promised but never received.
Continue ReadingAn ETN investor acts as a lender to the issuer of the note, which promises to repay the investor’s principal with interest that is supposedly gauged to the riskiness of the loan – VXX was created to hold short-term futures contracts linked to the Chicago Board of Options Exchange Market Volatility Index. But the issuer’s payment obligation is unsecured, and if the issuer defaults, the investor can lose his or her entire investment. ETNs have many other risks and problems including illiquidity, high fees, lack of transparency, credit (default) risk, skewed or abnormal returns, and extreme volatility.
Continue ReadingAlternative investments can include virtually any investment that is not a traditional stock or bond, such as gold or currency to mutual funds that employ hedges, leveraged exchange traded funds, options, short-selling, derivatives and non-traded REITs (“Stern Advice-Investors pressed to go alternative,” by Linda Stern, Reuters). “A majority of advisers — 66 percent of a mix of commissioned brokers and fee-only advisers — are inclined to employ alternative investment strategies, even for middle market clients,” according to the article, citing a study released earlier this month by Natixis Global Asset Management. Financial advisers need to know that dangers lurk in the complex world of alternative investments and they must disclose these dangers to their clients.
Continue ReadingSenior citizens lose about $2.9 billion annually to scams and other abuses, according to Don Blandin, president and chief executive of Investor Protection Trust, (See “Survey reveals alarming rise in financial abuse of the elderly”), citing a June 2001 study by MetLife Inc. The number of financial scams targeting seniors is dramatically increasing according to the survey conducted by the non-profit Investor Protection Trust.
Continue ReadingThe Law Office of Robert Wayne Pearce, P.A. has filed KBS REIT I claims to recover losses for investors in KBS Real Estate Investment Trust I (“KBS REIT I”) after learning that shares which they purchased for $10 per share now have an “estimated” value of only $5.16. In his March 26, 2012 letter to shareholders, chief executive Charles Schreiber, Jr. also told Mr. Pearce’s clients that they would no longer receive their monthly distribution payments, which had been reduced to less than $.53 per share.
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