Recent Posts

Apr 9, 2025

Watch Out Florida Retirees–Higher Yields Involve Greater Risk

The prospect of several more years of extremely low interest rates is causing people who depend on interest income to accept Wall Street’s recommendations to purchase relatively illiquid and opaque alternative investments like structured products, non-traded REITs, hedge funds and variable annuities. (“Itchy Investors Ramp Up the Risk,” Wall Street Journal). Regulators worry that the increased risks associated with such investments are not being explained to investors.

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Apr 9, 2025

Senior Investors Throughout Florida and Nationwide–You Are Targets!

“Complaints [involving seniors and financial scammers] are rising,” according to Jack Herstein, president of the North American Securities Administrators Association (NASAA) and assistant director of the Nebraska securities regulator. Mr. Herstein added that the increased number of complaints is partly responsible for the increased number of enforcement actions. The association of state securities regulators reportedly filed 1,241 such enforcement actions in 2010, the latest year for which data has been compiled – more than double the 506 enforcement actions filed in 2009 (“Financial Scammers Prey on Seniors,” by Anne Teresen, Wall Street Journal).

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Apr 9, 2025

FINRA Fines Morgan Stanley, Citigroup, Wells Fargo, and UBS $9.1M Over Leveraged and Inverse ETFs

Wells Fargo & Co. (WFC), UBS AG (UBSN), Morgan Stanley (MS), and Citigroup Inc. (C) have consented to pay a combined $9.1 million to settle Financial Industry Regulatory Authority claims that they did not adequately supervise the sale of leveraged and inverse exchange-traded funds in 2008 and 2009. $7.3 million of this is fines. The remaining $1.8 million will go to affected customers. The SRO says that the four financial firms had no reasonable grounds for recommending these securities to the investors, yet they each sold billions of dollars of ETFs to clients. Some of these investors ended up holding them for extended periods while the markets were exhibiting volatility.

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Apr 9, 2025

Morgan Stanley Subpoenaed by Massachusetts Regulators over Sales of Alternative Investments to Seniors

Morgan Stanley was subpoenaed by Massachusetts in connection with a sweep investigation, which is looking into sales practices involving alternative investments sold to seniors. Morgan Stanley’s principal office is located in New York, New York. On July 10, 2013, the state’s securities division sent the subpoena to Morgan Stanley asking for information on sales of the products to state residents who are 65 or over. Some of the non-traditional investments include oil and gas partnerships, private placements, structured products, hedge funds, and tenant-in-common offerings. The state demanded information from Morgan Stanley on any such products that have been sold over the past year, the investors who purchased them, the commissions generated, how the sales were reviewed, and all relevant compliance, training and marketing materials – Morgan Stanley has until July 24 to respond. The state added that being on the list of targeted firms does not indicate wrongdoing.

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Apr 9, 2025

Investors Nationwide Beware – Don’t Fall For Early Retirement Investment Schemes that Promise Too Much!

The thought of retiring early is an attractive notion. Especially when faced with a pitch that promises that one can cash in company retirement savings in his or her 50s, reinvest the money, and live comfortably off the proceeds. Many do not have the ability to say no to this alluring proposal, but they should. This is because there have been instances in which employees who had built up sizeable retirement savings have been misled and financially harmed by flawed, and even fraudulent, early retirement schemes.

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Apr 9, 2025

Investors Nationwide Beware – Church Bonds Are Risky and Illiquid Investments!

The Financial Industry Regulatory Authority (FINRA) is concerned about sales of church bonds through inappropriate sales practices by brokers. This matter has earned church bonds a spot on FINRA’s list of examination and enforcement priorities for 2012. Inappropriate sales of church bonds are usually affiliated with affinity fraud, making it somewhat easier for scam artists to hide the real risks associated with the bonds. This is why FINRA is initiating efforts to prevent broker misconduct and to make sure that firms are performing their due diligence, which will ultimately aid it protecting investors’ assets.

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Apr 9, 2025

Seniors Are Targeted in Variable Annuity Sales Nationwide

As investors age, they become more vulnerable to making errors in their finances. This is because the ability to make sound financial decisions begins to peak in one’s mid-50s. For this reason, retirees should be prepared to handle the risk of diminished capacity in order to prevent predatory or fraudulent sales tactics against them before it is too late. Some precautionary measures may include preparing a will and empowering an attorney to handle healthcare and financial issues. Still, brokers are able to convince senior investors into buying variable annuities by misrepresenting the true nature and cost of the product. Variable annuities are generally unsuitable for elderly investors, particularly those over 70 years for several reasons.

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Apr 9, 2025

Florida Retirees–Be Careful With Lump Sum Retirement Payments

Hundreds of thousands of retirees are likely to face a choice of taking a lump sum retirement payment or company sponsored retirement annuity over the next few years. That decision could improve the retiree’s financial situation or result in significant losses with no realistic possibility of recovery. Offers like those call for careful study and analysis by qualified and unconflicted advisers. Unfortunately, in the past, retirees have often fallen victim to bad advice from unscrupulous or incompetent advisers.

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Apr 9, 2025

The Cornerstone Core Properties REIT Collapses and Investors Throughout the United States Sue!

Investors in the Cornerstone Core Properties REIT Inc. were recently told by the company that the shares, once valued at $8, are now worth $2.25 (see article in InvestmentNews by Bruce Kelly). The article references a letter from the REIT’s chairman and chief executive Terry Roussel, as saying “The estimated per-share value has been adversely affected by the recent global economic downturn, negatively impacting our small business tenant base, which has resulted in approximately $43 million of previously announced impairment charges recorded in the second and third quarters of 2011.”

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Apr 9, 2025

Florida Fixed-Income Investors–Watch Out for “Death Puts” in CDs and Structured Notes!

With interest rates stuck at record lows, and retirees or those on the brink of retirement looking for higher yields, Wall Street has capitalized on this dilemma by selling an array of alternative products like “structured notes” that promise higher yields but come with higher (often undisclosed) risks, and by marketing dividend stocks as alternatives to bonds, when, in fact, they are riskier than bonds.

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