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.

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.

Before Hiring a Financial Professional – Ask These Questions

It’s a new year and you’re looking to hire a broker or investment advisor to help you with your financial planning and investment decisions. What questions should you ask at that first meeting? FINRA recently released an Investor Education top 5 questions to ask:

1. What experience do you have working with people like me?

2. Are you registered with FINRA, the SEC or a state securities regulator?

3. Do you or your firm have an overarching investment philosophy?

4. Do you or your firm impose any minimum account balances on customers?

5. How do you get paid?

Before you entrust your retirement or other savings with a financial professional, it’s important that you understand the answers to these and other questions.

The Investor Defenders attorneys at Samuels Yoelin Kantor represent investors each day who were unlucky in hiring the wrong adviser. We work to recover investment losses caused by negligent portfolio management, unsuitable product sales, excessive transactions (“churning”), and other bad acts.

Investor Defender attorneys Robert S. Banks Jr. and Darlene Pasieczny have the experience, knowledge, and dedication to help you. Since 1985, they have represented clients nationwide. If you have concerns about your investments or the conduct of your financial adviser, 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.

LPL Financial In Trouble Again For Improper Sales of Non-Traded REITs

The North American Securities Administrators Association (NASAA) announced Wednesday a settlement with brokerage firm LPL Financial. The settlement is the result of a multi-state investigation led by the Nevada Secretary of State Securities Division into LPL’s failure to implement adequate supervisory systems and failure to enforce its own written procedures regarding sales of non-traded REIT shares.

Under the terms of the settlement, in addition to remediating certain investor losses, LPL will pay civil penalties of $1.425 million to be distributed among 48 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. LPL already reached a prior settlement with Massachusetts’s securities regulators in 2013, and a separate action by New Hampshire securities regulators is still pending.

This is only the latest sanction against LPL for improper sales of non-traded REIT shares to investors. In May, 2015, the Financial Industry Regulatory Authority (FINRA) ordered LPL to pay about $10 million for broad supervisory failures in the sales of non-traded REITs, non-traditional exchange-traded funds (ETFs), certain variable annuities and other complex products.

My advisor sold me a non-traded REIT…. I didn’t understand the risks. Can I get my money back from these state regulator settlements?

If you have any concerns about a sizable non-traded REIT purchase, contacting an attorney experienced in representing investors in securities litigation and FINRA arbitration is your first stop.   While the recent settlements between LPL and other brokerage firms with state securities regulators may include some limited compensation for certain investors, only a private action in court or FINRA arbitration is the best chance to rescind (unwind) an unsuitable investment sale, or otherwise recover your investment losses from improper investment recommendations.

What’s so Risky About Non-Traded REITs?

  • Not a “liquid” investment. Non-traded means not traded on a public securities exchange. It may be that the only way an investor can re-sell the shares is to take pennies on the dollar in a private secondary market.   A financial advisor should clearly explain this to you before you invest, and you should be willing to take the risk of not having access to your investment. Be wary if your advisor tells you not to worry, that the company will buy it back, or that they can make special arrangements for a sale. A non-traded REIT may occasionally offer to buy back a limited amount of investor shares at some highly discounted value, but the company is not required to do that and it is impossible to predict if or when it may happen.
  • Expected holding time can be long (7-10 years) and may never end. The idea behind a REIT is that it is a pooled investment fund for income-producing real estate with special tax breaks under the Internal Revenue Code. At some point, the real estate project may fully develop and the company has a “liquidity event” – the first date when an investor can sell his or her shares. But, that date can be years away – or never occur – if the underlying real estate investments are unsuccessful.   Retail investors are unsecured creditors if the company goes belly-up, putting you at the end of the line for a payout. Be wary if your advisor recommends a non-traded REIT without explaining the risk of a long time horizon or total loss of your investment, in particular if you are 60+ years old and thinking about retirement needs.
  • High front-end fees that may not be disclosed end up costing investors. Those fees can be up to 16%, so the $10,000 you put in is really only an $8,400 investment. That makes a big difference over time as to how dividend payments are calculated and your principal investment value.

A recent study by the Securities Litigation & Consulting Group found that investors are about $50 billion worse off for having put money into non-traded REITs, versus exchange-traded REITs (which do exist).

  • Those same front-end fees mean big commissions for the financial advisor. Your broker might earn 8 – 10% on the sale of a non-traded REIT. This can create an incentive to recommend unsuitable products to the investor. Be wary if your advisor does not (or cannot) explain the illiquidity, long time horizon, higher risk of loss of investment, and high costs of purchasing a non-traded REIT.

These are some of the most prominent risks of non-traded REIT sales. Many brokerage firms, not only LPL Financial, have been sanctioned for supervisory failures and other sales practice violations regarding these risky products. Whether a non-traded REIT is a suitable component of an investment portfolio is a case-by-case analysis, and the Investor Defender attorneys at Samuels Yoelin Kantor LLP may be able to help recover your money.

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.

Professional Athletes Suing Financial Advisors

A gallery of athletes’ photos akin to a wall of fame came into focus today in an OnWallStreet story about investment fraud entitled, Cautionary Tales: Pro Athletes who Sued Their Advisor. Studies show that professional athletes, doctors, lawyers, high profile business owners and other busy professionals make up a high percentage of investment fraud victims.  They have the money, they have the character and, most importantly, they don’t have the time to watch their investments carefully. They trust their advisor to make sound decisions and sometimes they get burned.

The OnWallStreet article talks about Terrell Owens, a six-time Pro Bowl selection, NFL wide receiver who sued his advisor, Jeff Rubin, and his form, Pro Sports Financial for mismanaging his accounts. Vince Young, the Tennessee Titans and Buffalo Bills quarterback filed claims against his Houston agent and his advisor in North Carolina for outright fraud. Five time MLB all-star Mike Sweeney, a relative youngster, claims that his advisor took advantage of his inexperience and invested his money in private equity and start-up companies that later failed.  Mike Tyson and his wife fought against Live Nation Entertainment and its subsidiary SFX Financial Advisory Management claiming breach of fiduciary duty, fraud and unjust enrichment. Similarly, Denny Neagle, former MLB pitcher filed suit with his ex-wife Jennifer Neagle in Illinois Circuit Court after they discovered large sums of money in risky and illiquid assets including hedge funds and private equity funds.

In another story, Steve Gordon, a former special assistant for the Seattle Supersonics  was charged with a $4 Million Ponzi scheme which he reportedly perpetuated by falsely claiming a business relationship with Los Angeles Clippers owner Steve Ballmer.

High net worth can put you at greater risk of investment fraud. Lead Investor Defender Attorney Robert S. Banks has represented professional athletes among many other individual and institutional clients he has represented across the nation. If you have concerns about your investments, contact our office so we can evaluate your situation and let you know what your options might be for recovery: 800.647.8130 or info@investordefenders.com

Investor Defender Attorneys make up the securities litigation practice group at Samuels Yoelin Kantor LLP. Your choice of attorney could be the most important decision you make in recovering your loss. Visit our securities litigation website at investordefenders.com

FINANCIAL ALERT: Michael Oppenheim Charged With Fraud

Investor Defender Attorneys encourage investors who had money with Michael Oppenheim when he was with J.P. Morgan Chase to call us at 800.647.8130. We can help you understand your options for recovery of your investment.

Recent news reports reveal that Oppenheim effectively stole more than $20 million from customers. Oppenheim convinced clients to allow millions of dollars in transfers from their accounts with promises that he would invest the funds in low-risk bonds.

The SEC’s complaint alleges that Oppenheim took intentional action to conceal his fraud.  Evidence suggests that he created false account statements and transferred money from one customer to another to replenish missing dollars.The SEC and the FBI continue to investigate this situation. Investor Defender attorneys will be focused on helping investors explore their options for recovery.

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