Victory – Vindicated By The California Court of Appeals

“The victory benefits investors everywhere by making clear that basic rules of due process do apply in FINRA arbitration”

In August, 2014, I represented Sandra Liebhaber in a FINRA hearing requested by Royal Alliance Associates and its one time financial advisor, Kathleen Tarr. This was an expungement hearing in which Royal Alliance and Tarr asked FINRA to erase any trace of the claim that my client had filed and settled with Royal Alliance. To grant that extraordinary remedy, the FINRA three-person panel had to find essentially that Ms. Liebhaber had filed a false claim. Ms. Liebhaber did not and would not file a false claim, and when I found out about the request, Darlene Pasieczny and I agreed to represent her without charge at the hearing to oppose the expungement. At the hearing, the arbitrators allowed Ms. Tarr to testify that she was a minister’s daughter and had done nothing wrong. When I asked to cross examine Ms. Tarr, the FINRA panel refused to allow me to ask her any questions. I then asked permission to call Ms. Liebhaber as a witness, to testify about what Ms. Tarr really had done. The panel refused to allow her to testify, as well. And, along the way, they told me that they had heard enough from me, despite the fact that I retained my cool and acted with respect through the entire Gulag-like ordeal. When the decision came down, and not surprisingly, the panel granted the expungement.

Yesterday, we were vindicated by the California Court of Appeals. The court found that the panel had acted improperly. It vacated the FINRA panel’s decision granting expungement. Ms. Liebhaber’s claim will remain on Ms. Tarr’s Broker-Check report, as it should.

The victory benefits investors everywhere by making clear that basic rules of due process do apply in FINRA arbitration. It was the product of many hands. I owe a debt of gratitude to my friend and colleague in Beverly Hills, Lenny Steiner, who ably represented Ms. Liebhaber before the California Court of Appeals. I thank FINRA itself for recognizing that the panel had done wrong, and joined us in the request that the court toss the arbitration ruling. I also thank Susan Antilla, whose reporting on this case originally in The New York Times, and again yesterday in TheStreet.com, brought much-needed national attention to the case. And, last but clearly not least, I thank Sandra Liebhaber, who cared enough for future victims of investment abuse to fight the good fight.

A copy of the California Court of Appeals decision, which is scheduled for publication, can be found on the California Courts website.

 

Investor Defenders is a practice group of Samules Yoelin Kantor LLP focused on representing investors in situations where professional misconduct resulted in a financial loss. Lead securities attorney Bob Banks has earned a national reputation for his success fighting on behalf of investors in FINRA arbitration and in court for over 30 years. Consultations are complimentary and most cases are done on contingency fee, meaning that our clients do not pay any attorney fees unless we recover losses.

Aequitas Inside Look Article – Banks Quoted

Portland Securities Attorney Robert Banks was quoted today in an Oregonian article that offers one of the first inside looks at the Aequitas situation.

“It is absolutely outrageous that a financial adviser would put important client retirement money into promissory notes issued by a company that was already on the ropes,” Banks said.

Jeff Manning reports that Chris Bean, a 41-year-old investment adviser with Private Advisory Group had 330 clients invested in Aequitas, more than any other financial adviser in the country. Bean and his firm were part of a national network of investment advisers that helped to connect Aequitas to necessary capital.

Manning’s article exposes the fact that an Aequitas affiliate bought a controlling interest in Bean’s firm in July of 2014 and investors were encouraged to continue putting money into funds even after Aequitas showed signs of financial trouble. Obviously investors are concerned but Bean insists that Aequitas kept their financial troubles totally private. In the interview with Manning, Bean claims that Aequitas executives repeatedly portrayed a strong financial position.

Investor Defender attorneya Bob Banks and Darlene Pasieczny are representing clients who may have claims against Aequitas. The law generally provides that a licensed financial adviser cannot successfully solicit or sell an investment to a client by use of misrepresentations or omissions of material fact. If that law is violated, investors are entitled to a return of their investment proceeds upon tender of their investment back to the sellers. To see how that law might apply to the unique purchase circumstances of individual or institutional investors, you may call our office at 800.647.8130 or contact securities attorneys Bob Banks and Darlene Pasieczny by e-mail at info@investordefenders.com.

Investor Defenders is a practice group of Samules Yoelin Kantor LLP focused on representing investors in situations where professional misconduct resulted in a financial loss. Lead securities attorney Bob Banks has earned a national reputation for his success fighting on behalf of investors in FINRA arbitration and in court for 33 years. Consultations are complimentary and most cases are done on contingency fee, meaning that our clients do not pay any attorney fees unless we recover losses.

Aequitas Investor Updates

                  UPDATE: We have created a site specific hub for investors wanting information about the Aequitas Situation.

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Recent Concerns:

 In the last two weeks, we have been contacted by investors  around the country who were sold investments in the Aequitas Income Opportunity Fund II, LLC in 2015 and into 2016.  This was at a time when the Securities and Exchange Commission was investigating Aequitas, when Aequitas was unable to make payments on its private notes to lenders, and when the Consumer Financial Protection Bureau was investigating Aequitas for its lending practices. We are at a loss to understand how professional Registered Investment Advisory firms and their investment advisors would put their clients’ retirement money into the Income Opportunity Fund II (or any Aequitas investment) in 2015 and 2016 in light of those events.   We also question how Aequitas and its accountants and legal advisors could offer those investments without amending or supplementing their written disclosures to reflect Aequitas’s list of new problems.

Early Aequitas Warnings.

Investor rights attorney Bob Banks (click here for full biography)  has been following Aequitas since 2011, when a  high net worth client asked for advice on whether an investment in secured subordinated promissory notes issued by Aequitas Commercial Finance, LLC Fund was a safe investment.  After reviewing the prospectus for that investment, Banks strongly advised his client not to make the investment.  Among other things, Banks told his client that, contrary to the oral statements that were made to him, the Aequitas fund was not comprised of truly “secured” notes because other creditors would be paid before investors per the subordination agreements tied to the notes.  Additionally, Banks noted, the Commercial Finance LLC notes involved loans to companies that were not able to get financing from traditional financial institutions, making them more of a credit risk.  The “security” that was touted on some of the loans was equipment whose true value was not disclosed and may have been worth less than the loans they secured.  And, the “security” was based on personal guarantees from persons of unknown credit reliability.  Finally, Banks advised his client of the levels of fees charged to investors in the Commercial Finance LLC Fund, which is a common denominator running through all of the Aequitas investments Banks has reviewed.

Since then, Mr. Banks, associate attorney Darlene Pasieczny, and others on the team at Samuels Yoelin Kantor have followed Aequitas’s growth decline.

What Now? Primer On The Laws Governing Investment Advisors and Issuers of Investment Securities.

It is against the law to sell investments by means of misrepresentations of fact or by omitting to state important facts that a reasonable investor would want to know about. The rules governing FINRA-licensed financial advisors requires that the advisor understand any investment he or she recommends, and state that advisors cannot recommend any investment that is not suitable to the investment objectives and risk tolerance levels of the investor.  The law also provides that Registered Investment Advisors have a fiduciary duty to their clients.  That means, first and foremost, that they must place their clients’ interests ahead of their own interests.  In other words, they cannot recommend investments that pay high commissions and fees if it is not in their clients’ best interest.  We believe that Aequitas investments were sold in violation of the securities laws and the fiduciary responsibility laws, and that the investors we have agreed to represent are entitled to a refund of their investments, together with interests and their attorney fees. We are preparing to pursue those claims for investors in the Aequitas Income Opportunity Fund II and all other Aequitas investments that were misrepresented to individuals and institutions.

If you have questions about your investment and what you should do, or if you have information to share, please contact our office at 800-647-8130 or by email at bbanks@samuelslaw.com

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Energy Stocks: Problems with Cetera Investments and George Merhoff

Investigation: Cetera Investments and George Merhoff

At the request of our clients, we are investigating Cetera Investments and its representative George Merhoff Jr. regarding concerns that the investment portfolios held at that firm were overly concentrated in energy stocks. Investors report to us that they have suffered significant losses as a result of having virtually all their investments in energy company investments. We are evaluating how widespread the problem is for our clients.  We also want to compare similarities of our clients’ investment portfolios to those of other clients of Cetera Investment where George Merhoff was the advisor. Please feel free to contact our office if you are willing to share information that might assist our clients and us in this investigation. You may remain anonymous if you prefer.

Is Your Account Concentrated In Energy Stocks?

Here is why we are conducting our investigation: When a portfolio is heavily weighted in one particular industry sector, we refer to it as a non-diversified, over-concentrated account. Over-concentration increases volatility and risk in investment portfolios. Licensed securities stockbrokers and have an obligation under the law and FINRA Rule 2110 to recommend only suitable investments and trading strategies, based upon the particular customer’s risk tolerance, investment objectives, investment experience, time frame, and other factors when recommending an investment. If a broker recommends the same types of concentrated energy sector portfolios to a broad array of clients, regardless of their needs for safety and moderation, that suggest that the securities laws may have been violated.

FINRA BrokerCheck Reveals Customer Complaints

Mr. Merhoff and Cetera are both registered with the Financial Industry Regulatory Authority. Mr. Merhoff’s (CRD#2918171) FINRA BrokerCheck report reveals six prior disclosure events. He previously was registered with Pacific West Securities Inc. in Klamath Falls, Oregon. Cetera Investment Services (CRD#15340) operates out of St. Cloud Minnesota, and has offices in Oregon. Their BrokerCheck report shows 26 disclosure events including claims of breach of fiduciary duty and failure to supervise.

Do you have questions about losses in accounts managed by Cetera Investments or George Merhoff?

The fact that you invested with Mr. Merhoff or Cetera does not necessarily mean that there was wrongdoing. However, if your account was over-concentrated in energy stocks and you did not ask for those investments, we would like to hear from you. Bob Banks, a nationally recognized securities attorney who is listed in SuperLawyers and Best Lawyers In America, has fought for investors in court and FINRA arbitration since 1985.  He has successfully represented investors in over-concentration cases where there has been a failure to diversify investments. He leads the Investor Defenders practice group at Samuels Yoelin Kantor LLP. If you have lost money in an investment, or if you have any concerns about the conduct of your financial adviser, please contact us or call our office at 800-647-8130 for a free no obligation consultation.

Three Protections For Pension Funds

Geoff Mulville wrote in an article for the Associated Press printed in The Oregonian on January 24 that pension funds could be damaged by the recent stock market slide.

Pension and other retirement funds will best weather the storm when protected by the following three strategies:

  1. Proper Asset Allocation
  2. Diversification Within Asset Classes
  3. Careful Management of Investment Costs

If you are an employer who selected your fund manager, do you know how to evaluate those criteria? Bob Banks works with registered investment advisors to evaluate and advise about the legal and investment consequences of your employer sponsored retirement fund.

Investor Defender attorneys Robert S. Banks Jr. and Darlene Pasieczny have the experience, knowledge, and dedication to help you. Banks, a nationally recognized securities attorney, has fought on behalf of investors in court and FINRA arbitration since 1985. If you have concerns about your investments, lost money in an investment, or if you have concerns about the conduct of your financial advisor, please contact us for a free, confidential initial consultation with an experienced securities litigation attorney. For more information about different types of securities claims, the FINRA arbitration process, current investigations, sample cases and results, and our attorneys, visit our website at InvestorDefenders.com and SamuelsLaw.com.

Investment Losses in Oil, Gas, and Energy Driving Down Your Retirement Savings?

You might have a claim to recover your loss in oil, gas, or energy stocks.

If you have concerns about the effect that oil, gas and energy stocks and investments are having on your retirement savings, we are happy to provide a free and confidential review of whether claims may exist based on your investments, and whether you have a right to recover your losses.

Investments in oil and gas stocks and partnerships have taken a real hit lately. Energy stocks in general have as well. However, if your financial advisor has properly allocated and diversified your retirement savings, you should not see a significant decline in your savings because of these investments. That is because oil, gas and energy stocks should only represent a small portion of your retirement savings, unless you specifically instructed your advisor to overweight your savings with those investments.

We have received calls from very concerned investors this month, who tell us that their accounts have lost 50% or more in value in recent months. The reason is that they were grossly over-concentrated in energy stocks. We have been retained to investigate and file claims against advisers who have invested too much of their clients’ savings into the energy sector. Among others, we are investigating portfolios managed by Cetera Advisors and George Merhoff, based in Colorado and Oregon, respectively.

Since 1985 Bob Banks Jr. has fought on behalf of investors nationwide in court and FINRA arbitration. He leads the Investor Defenders team at Samuels Yoelin Kantor, LLP. He has represented many investors on claims to recover investment losses resulting from over-concentrations. If you’ve lost money in an investment, or if you have concerns about the conduct of your financial adviser, he will speak with you directly. Please contact us or call our office at 800-647-8130.

The North American Securities Administrators Association Nation (NASAA) and the Securities Exchange Commission (SEC) have published the linked informational articles about energy stocks. Please understand, while filing a complaint with these agencies is helpful for future investors, it is not likely to result in any loss recovery for you, and it does not stop the applicable statutes of limitation from running. Those time periods do not stop running until a lawsuit or FINRA arbitration claim is filed.

FINRA Examines Conflict in Broker Compensation

As reported by Investment News recently, FINRA has sent letters to brokerage firms asking about Broker Compensation. The goal is to discourage firms from selling products that benefit the brokerage firm and the broker at the expense of the customer. I think FINRA enforcement staff would agree that investors expect their financial advisors (whether called registered representatives or investment advisors) to recommend an investment based on what is in the client’s best interest, and not on the amount of sales compensation to be earned.  I applaud FINRA for sending out its compensation inquiries. There have been too many cases where my clients have been sold investments that paid a 5% commission, where there were far more appropriate investments available, that paid less to the salesman.  FINRA should take the next logical step and support the Department of Labor’s proposed fiduciary standard. Brokers claim to have the client’s best interests at heart, and they should be held to the same standard  — the fiduciary standard —  when handling the life savings of public investors.

I have represented investors in breach of fiduciary duty cases for more than 25 years.  If you have questions about investor rights issues, do not hesitate to contact Investor Defenders at (800) 647-8130.

Robert S. Banks, Jr. has over 30 years experience representing investors in securities industry disputes and FINRA arbitration across the United States. His clients include institutional investors, pension funds, municipalities, fiduciaries, as well as individual investors. If you have concerns about your financial advisor or investment portfolio, please contact us and visit our website at investordefenders.com

Investor Defenders is a practice group of Samuels Yoelin Kantor LLP focused exclusively on investor advocacy.

Asset Allocation – The Life Raft in a Stock Market Storm

Stock Market Decline Should Not Rattle Investors Who Are Properly Asset Allocated

Asset Allocation as a Predictor of Stock Performance

The recent plunge in the stock market is grabbing headlines and making investors anxious. Most of the worrying should be unnecessary for moderate and conservative investors who use competent financial advisers, however. While no one can reliably predict what the markets will do, studies have repeatedly shown that asset allocation is the best predictor of how a portfolio will perform, and the best way to control the risk/reward ratio. Asset allocation in its most simplified form is the percentage of a portfolio that is invested in stocks, and in bonds or cash. The larger the percentage in stocks, the more aggressive the portfolio. Conversely, the larger the percentage in bonds and cash, the more conservative the portfolio. An 80/20 asset allocation (80% stocks, 20% bonds) is an aggressive portfolio that will have suffered significant declines since May of this year. An allocation of 20/80 will have weathered the storm much more favorably. Of course, in a rising market, the aggressive portfolio (assuming it was properly diversified) will have made more money than the portfolio heavily weighted toward bonds and cash.

Financial Advisers Should Have Their Older Clients Allocated to Weather the Market Swing

Most investors who are at or approaching retirement that plan to rely on their investment savings to meet their living expenses should have a conservative to moderate asset allocation. Good financial advisers have so positioned their clients to guard against the recent market volatility. If you are a conservative investor and your portfolio has dropped as much as or more than the S&P 500 index over the last few months, chances are your portfolio is not properly asset allocated. If so, you may have a right to complain and recover your losses in a FINRA arbitration if a financial professional recommended your lopsided portfolio. If you have questions about this, contact Investor Defenders and we will be happy to discuss it with you.

More on Asset Allocation and How To Find A Trustworthy Adviser From CNN Here: http://money.cnn.com/pf/money-essentials-asset-allocation/

Robert S. Banks, Jr. has more than 33 years experience representing investors in securities industry disputes and FINRA arbitration across the United States. His clients include institutional investors, pension funds, municipalities, fiduciaries, as well as individual investors. If you have concerns about your financial advisor or investment portfolio, please contact us and visit our website at investordefenders.com

Investor Defenders is a practice group of Samuels Yoelin Kantor LLP focused exclusively on investor advocacy.

FINRA Arbitration 101

Banks Speaks to DFCS About FINRA Arbitration

Securities attorney Robert S. Banks, Jr. traveled to Salem, Oregon today to discuss FINRA arbitration with a select group of regulators at the Department of Finance and Corporate Securities (DFCS). Banks’ presentation detailed the arbitration process from start to finish. The presentation covered filing, discovery, arbitrator selection, and awards. He wrapped up with a summary of both the pros and the cons of FINRA arbitration, as compared to court.

Banks is uniquely qualified to speak to groups about FINRA arbitration. As a securities attorney, he has spent over 30 years advocating for investors in arbitration, in court, and in Washington D.C. Last month he traveled to New York to review FINRA rules as part of the National Arbitration and Mediation Committee (NAMC). If you are interested in scheduling a presentation, or if you have any questions about FINRA arbitration, please contact the SYK Investor Defenders team at 800.647.8130 or visit our website at www.investordefenders.com for more information.

Events of Interest to Municipal Bond Investors

Most investors automatically equate a municipal bond investment with safety. Not so fast, investors. The Securities and Exchange Commission announced yesterday that it was filing and settling claims against 36 municipal bond offering companies. The SEC charged that the firms used offering documents that contained material false statements or omissions, and that the firms did not conduct adequate investigations before selling the bonds to their customers. The brokerage firms agreed to pay civil penalties and refrain from such violations in the future. Some of the firms charged, including Merrill Lynch, Citigroup, Goldman Sachs, Stifel Nicholas and Raymond James, agreed to pay fines of $500,000. Read the SEC’s press release here.

In other muni bond news, an article in The Wall Street Journal today recounted the downgrade to junk bond status of Chicago’s bonds by Moody’s in May of this year. As WSJ reporters Timothy Martin and Mark Peters explain, Moody’s has adopted a stricter standard for rating bonds since the 2008 financial crisis. I for one applaud Moody’s for doing so. Municipalities including Dade County Florida and Santa Clara California are not so thrilled. They have responded by omitting Moody’s from their bond offerings.

What does this mean to muni bond investors? Check the ratings of the bonds you own and make sure that the rating is in line with the level of safety that you thought you were buying. If it were me, I’d take more comfort in a rating by Moody’s than the other ratings giants, Fitch and S&P.

Our firm  represents investors nationwide in claims against municipal bond offering companies. We recover money for our clients both in court and in FINRA arbitration. We welcome calls from investors with questions about their investments or suspicious account activity. You will speak directly with a securities attorney at 800.647.8130. Your call is confidential and complimentary.

Robert S. Banks, Jr. has more than 33 years experience representing investors in securities industry disputes and FINRA arbitration across the United States. His clients include institutional investors, pension funds, municipalities, fiduciaries, as well as individual investors. If you have concerns about your financial advisor or investment portfolio, please contact us and visit our website at investordefenders.com

Investor Defenders are a practice group of Samuels Yoelin Kantor LLP focused exclusively on investor advocacy.