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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George Merhoff and Energy Stocks – The Investigation Continues

The Investigation of Klamath Falls Financial Advisor George Merhoff Jr. and Cetera Investments, Pacific West Securities, Inc. Continues

Customer Concerns Grow About Energy Stock Concentration and George Merhoff

Our office continues to investigate Cetera Investments and its representative George Merhoff Jr. Since our last reporting, even more investors have called us to report that they suffered significant losses in their accounts as a result of having virtually all of their investments in energy stocks. We continue to evaluate how widespread this problem is for our clients and potentially others who were customers of George Merhoff. Mr. Merhoff is currently a registered representative of Cetera Investments, and was previously a registered representative of Pacific West Securities, Inc.

If you are or were a customer of George Merhoff and are willing to share your information with us that might help us in this investigation, or if you have lost money in another investment or have concerns about the conduct of another financial advisor, please call our office at 800-647-8130 for a confidential, and free no obligation consultation.

Is Your Investment Portfolio Over-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.

What is FINRA and what is the Suitability Rule?

FINRA (the Financial Industry Regulatory Authority) is the self-regulatory organization that is authorized by Congress to regulate the securities industry.

That includes brokers and brokerage firms. FINRA has various rules to do this including Rules 2110 and 2111, which provide that a broker’s investment recommendations must be “suitable” for the customer. Suitability includes reasonable-basis suitability (that the investment or investment strategy is suitable for at least some investors), customer-specific suitability (the recommendations are suitable for that specific customer), and quantitative suitability (that a series of recommended transactions, even if suitable in isolation, when considered together are not excessive and unsuitable for that customer). Violations of the FINRA suitability rules may implicate other laws such as negligence and breach of fiduciary duty, and financial losses caused by the unlawful conduct may be recoverable by the investor.

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, 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.

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.

Form U5 Information Gets to BrokerCheck Faster with New FINRA Rule Change

Effective December 12, 2015, certain information provided on the registration termination paperwork (Form U5) for a brokerage firm or terminated broker will be accessible on BrokerCheck in 3 business days instead of 15. The SEC approved the proposed change to FINRA Rule 8312 (FINRA BrokerCheck Disclosure). The Form U5 includes important information for investors researching brokers or firms on BrokerCheck, including whether a broker was fired from a firm and the reason given by the firm for termination.

See the full FINRA Regulatory Notice 15-49.

BrokerCheck and other investor educational materials are available on FINRA’s website.

Investor Defender attorneys Robert S. Banks Jr. and Darlene Pasieczny have the experience, knowledge, and dedication to help you. Mr. Banks himself has over 30 years experience representing investors in recovering millions of dollars in investment losses, and he has served on FINRA’s own National Arbitration and Mediation Committee. If you have concerns about your financial advisor or investment portfolio, please contact us and visit our website at investordefenders.com.

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.

Investor Alert: Kevin Winder Lesson – Beware of Promised High Return Investments

Oregonian article alerts investors to the dangers of high return investments

Securities attorney Robert Banks and Chief of Enforcement at the Division of Finance and Corporate Securities Consumer & Business Services Department (DFCS), Van Pounds,  were both quoted in Molly Young’s recent Oregonian article about high return investments and Salem investment adviser Kevin Winder.  Winder lost his license for selling promissory notes to clients in businesses in which he had a personal  interest. Misrepresenting investments is not a new storyline, but it is uniquely tragic for every new set of victims. You can read the full story here.

Use caution when advisors recommend alternative Investments with high return rates

As a general rule Banks says, “If you can’t sell your investment at will, and you can’t find out its true value on any given day, then you should avoid it. Some private investments are certainly legitimate, but so many of them involve far more risk than the investor understands. Don’t risk it unless you really understand the potential for loss.”

Investor Defender attorneys Robert S. Banks, Jr. and Darlene Pasieczny represent investors in securities industry disputes in FINRA arbitrations across the U.S. Banks himself has over 33 years of experience in securities litigation and FINRA arbitration, and has served multiple times on the National Arbitration and Mediation Committee, an advisory board to FINRA on its rules, regulations, and procedures.  We know the rules, and we fight for our clients in recovering investment losses. Contact us at 800.647.8130

Investor Alert: Complaints Against Sagepoint Financial Advisor Daryl Richard Lemon

Investors may have claims against Daryl Richard Lemon (CRD 2473133), a broker with Sagepoint Financial. He submitted another letter of Acceptance, Waiver & Consent (AWC) to FINRA this week after the most recent allegations involving his actions with an elderly customer’s account.  According to Lemon’s BrokerCheck report, this is not the first time he has been investigated for misconduct. Mr. Lemon’s report includes allegations of excessive fees  and unsuitable recommendations, among others.  He has been barred from association with any FINRA member in any capacity.

If you are concerned about advice you received from financial advisor Daryl Richard Lemon of Sagepoint Financial, contact our office at 800.647.8130 or info@investordefenders.com.

Your choice of attorney could be the most important step you take in recovering your loss.

Investor Defender attorneys Robert S. Banks, Jr. and Darlene Pasieczny represent investors in securities industry disputes in FINRA arbitrations across the U.S. Bob Banks himself has over 33 years of experience in securities litigation and FINRA arbitration, and has served multiple times on the National Arbitration and Mediation Committee, an advisory board to FINRA on its rules, regulations, and procedures.  We know the rules, and we fight for our clients in recovering investment losses. Contact us at 800.647.8130

Investor Defenders are the securities litigation practice group at Samuels Yoelin Kantor, LLC.