Were you a client of broker Daniel Noah Winger?

The securities attorneys at the Investor Defenders practice group of Samuels Yoelin Kantor LLP are investigating potential claims against this broker.

Public records from the Financial Industry Regulatory Authority (FINRA) show that in August 2018, Daniel Noah Winger (CRD# 1542674) entered into an Acceptance, Waiver and Consent (“AWC”) agreement in which Winger was barred from associating with any FINRA member in all capacities.

Daniel Noah Winger was most recently registered with PFS Investments Inc. in Federal Way, Washington.

The Facts and Violative Conduct alleged in the AWC include that, between April 2015 and April 2018, Daniel Noah Winger converted the funds of an elderly customer in violation of FINRA rules 2150(a) and 2010.  The elderly customer gave checks to Winger totaling approximately $100,000.  The AWC alleges that Winger used the customer’s funds for his own personal use.

Brokers are licensed and regulated by FINRA and state regulatory agencies.  FINRA rules, state securities laws and state common law offer protections for investors from unlawful broker conduct such as:  negligent portfolio mismanagement, selling away, overconcentration, unsuitable investment recommendations, excessive trading (“churning”), failure to supervise, misrepresentations about investments, or outright conversion and theft.

Common Red Flags of broker misconduct include lack of communication from your broker, discovering that you cannot liquidate investments that you thought you could sell, or discovering that large portions of your portfolio are used to purchase “alternative investments” like interests in Limited Partnerships, Limited Liability Companies, or promissory note investments.   The Investor Defenders have compiled a list of Ten Red Flags for Investors, which you can see by clicking on this link.

If you were a client of Daniel Noah Winger, and suspect that financial losses in your brokerage account may have been caused by broker misconduct, call the Investor Defenders.  We represent investors in the United States with securities claims against brokers and brokerage firms for financial losses caused by unlawful conduct.

Darlene PasiecznyDarlene Pasieczny’s practice at Samuels Yoelin Kantor LLP focuses on all stages of corporate and securities law issues, securities litigation and FINRA arbitration, fiduciary litigation in trust and estate disputes, elder financial abuse, and complex civil litigation. Darlene’s practice includes representing investors nationwide in investment disputes through FINRA arbitration.

Were you a client of broker Jameson Jeewon Shin?

The securities attorneys at the Investor Defenders practice group of Samuels Yoelin Kantor LLP are investigating potential claims against this broker.

Public records from the Financial Industry Regulatory Authority (FINRA) show that Jamewon Jeewon Shin (CRD# 2436899) was suspended as of August 13, 2018, from associating with any FINRA member for failure to provide information or keep information current pursuant to FINRA Rule 9552(d).

Jameson Jeewon Shin was most recently registered with LPL Financial LLC in Bellevue, Washington, and was previously registered with Wells Fargo Advisors, LLC in Seattle, Washington.

FINRA records show that the names James J Shin, James Shin, Jameson Jee Won Shin are related to Jameson Jeeswon Shin.

Brokers are licensed and regulated by FINRA and state regulatory agencies.  State securities laws and state common law offer protections for investors from unlawful broker conduct such as: negligent portfolio mismanagement, selling away, overconcentration, unsuitable investment recommendations, excessive trading (“churning”), failure to supervise, misrepresentations about investments, or outright conversion and theft.

Common Red Flags of broker misconduct include lack of communication from your broker, discovering that you cannot liquidate investments that you thought you could sell, or discovering that large portions of your portfolio are used to purchase “alternative investments” like interests in Limited Partnerships, Limited Liability Companies, or promissory note investments.   The Investor Defenders have compiled a list of Ten Red Flags for Investors, which you can see by clicking on this link.

If you were a client of this broker, and suspect that financial losses in your brokerage account may have been caused by broker misconduct, call the Investor Defenders.  We represent investors in the United States with securities claims against brokers and brokerage firms for financial losses caused by unlawful conduct.

Darlene PasiecznyDarlene Pasieczny’s practice at Samuels Yoelin Kantor LLP focuses on all stages of corporate and securities law issues, securities litigation and FINRA arbitration, fiduciary litigation in trust and estate disputes, elder financial abuse, and complex civil litigation. Darlene’s practice includes representing investors nationwide in investment disputes through FINRA arbitration.

Elder Financial Abuse – Do I Have a Claim?

Oregon has strong protections for investors against fraud with our state blue sky securities laws.  The Investor Defenders attorneys at Samuels Yoelin Kantor LLP have deep experience with litigating securities cases to recover investment losses cause by financial advisor misconduct.

We also handle elder financial abuse claims. Sometimes those claims relate to securities, like a registered investment advisor mishandling an investment account, or an unlicensed person unlawfully selling investments.  But financial abuse of our seniors and other vulnerable persons can take many other forms

Under Oregon Law, an “elderly person” is anyone age 65 or older.  ORS 124.100(3).

Financial “abuse” includes “[w]rongfully taking or appropriating money or property, or knowingly subjecting an elderly person or person with a disability to alarm by conveying a threat to wrongfully take or appropriate money or property, which threat reasonably would be expected to cause the elderly person or person with a disability to believe that the threat will be carried out.”  ORS 124.100(1)(g).

The civil penalties are significant for abusers and persons who have “permitted” another to engage in the abuse.  The statutes allow recovery of three times all economic and noneconomic damages, and reasonable attorney fees incurred by the plaintiff.  ORS 124.100(2).

Samuels Yoelin Kantor LLP is one of the few firms in Oregon with equally strong estate planning attorneys and fiduciary litigation attorneys, who have the experience to recognize the signs of potential elder financial abuse, and know how to bring claims for victims of abuse.  Many of our attorneys are licensed in both Oregon and Washington, and litigate claims in both states.

Who can bring a claim under Oregon’s financial elder abuse statute?   The elder, a guardian, conservator, or attorney-in-fact for the elder, a personal representative for a decedent who was an elder at the time of the abuse, or a trustee for a trust on behalf of the trustor or spouse of the trustor who is an elder.  ORS 124.100(3).

The National Adult Protective Services Association reports that 90% of financial abusers are family members or trusted others.  And financial abuse is vastly under-reported: it is estimated that only one in 44 cases are reported to state protective services.

What are some common forms of financial abuse?   Misuse of a Power of Attorney or joint bank account, overcharging for services, or improperly transfer title to property.  Outright threats to abandon unless the victim complies with the abuser’s demands can by itself be financial elder abuse.

What are some warning signs of abuse?

  • An unexplained withdrawal, transfer, credit card charge, or payments that are unusual, or don’t otherwise fit with the explanation.
  • The elder is not given an opportunity to speak for themselves without the presence of a particular care giver, family member, or anyone else suspected of abuse.
  • The elder is extremely withdrawn, defensive, not communicative, or unresponsive. Victims frequently feel shame and embarrassment.
  • Unpaid bills, overdue rent, utility shut-off notices.

If you suspect a senior loved one may have been or is being financially abused, the attorneys at Samuels Yoelin Kantor can help.  Contact us to speak with an experienced fiduciary litigator who understands financial elder abuse claims in Oregon and Washington.

Darlene PasiecznyDarlene Pasieczny’s practice at Samuels Yoelin Kantor LLP focuses on all stages of corporate and securities law issues, securities litigation and FINRA arbitration, fiduciary litigation in trust and estate disputes, elder financial abuse, and complex civil litigation. Darlene’s practice includes representing investors nationwide in investment disputes through FINRA arbitration.

Does My Investment Advisor Have Insurance?

Did you know – most stockbrokers and registered investment advisors (RIAs) are not required by law to carry errors and omissions insurance?

Beginning July 31, 2018, with an amendment to the Oregon Securities Law, Oregon became only state in the nation to require certain state-regulated financial professionals to carry errors and omissions insurance. These financial professionals must now carry at least $1 million in errors and omissions insurance in order to qualify for licensing in Oregon.

 

ORS 59.175 now provides:
. . .
(5)(a) Except as otherwise provided in paragraph (b) or (c) of this subsection, every applicant for a license or renewal of a license as a broker-dealer or state investment adviser shall file with the director proof that the applicant maintains an errors and omissions insurance policy in an amount of at least $1 million from an insurer authorized to transact insurance in this state or from any other insurer approved by the director according to standards established by rule.
(b) A licensed broker-dealer subject to section 15 of the Securities Exchange Act of 1934, as amended, is not required to comply with paragraph (a) of this subsection.
(c) A licensed state investment adviser who has its principal place of business in a state other than this state is exempt from the requirements of paragraph (a) of this subsection.

Why is this important?

Investors are rightfully confused about what protections they have when they sign over their life savings or transfer a retirement account to the care of a financial professional.  One might assume the advisor is insured, just like many attorneys, doctors, and other professionals are insured.

There is no current federal requirement for FINRA-registered brokers or SEC-registered investment advisors to carry basic errors and omissions (“E&O”) insurance. E&O insurance is a form of liability insurance for professionals who provide advice or other services. Some call it “professional liability insurance.”

You may have seen reference to “SIPC” on a sign in your advisor’s office, or on account statements from a firm. The Securities Investor Protection Corp. (SIPC) insures cash and securities in a brokerage account up to a certain amount of losses incurred because of the bankruptcy of a broker-dealer. SIPC does not cover losses caused by faulty or negligent conduct by the broker or brokerage firm.

Wait a minute – A financial advisor may handle millions and millions of dollars of investor money, but not carry insurance for professional misconduct?  Yes.

Investors may win a substantial recovery of losses that were caused by their financial professional’s misconduct, either through a FINRA arbitration award or court judgment. However, many awards and judgments go unpaid. A smaller firm may simply close shop rather than pay. Or a culpable advisor might leave his or her firm and start working for a business or investment vehicle that is not licensed by FINRA or the SEC. If there was applicable insurance that covered the investor claims, the insurance policy would pay the investor at least part if not all of the award or judgment.  Large firms that have significant net capital, or firms that otherwise responsibly carry insurance as a matter of choice, already provide reassurance that they can make good on a successful customer claim.

Generally speaking, E&O insurance should cover mistakes, errors, negligent conduct, and breaches of fiduciary duties by a professional relating to the professional service that result in harm to the client.  In the case of financial professionals, that usually takes the form of recoverable financial losses caused by unlawful conduct.  For example, losses caused by a broker (or RIA or someone dual-licensed as a broker/RIA) failing to follow client instructions, making recommendations to purchase investments that are “unsuitable” for that particular investor, or acting in a way that violates a fiduciary duty to the investor.

The good news for Oregon investors is that there are now at least some new protections at the state level, relating to certain financial professionals.  If you invest with a financial professional and want to know if they have E&O insurance – ask!  Responsible advisors and firms should be able to provide a clear explanation as to what protections their customers have in case of a customer claim to recover investment losses.

Darlene Pasieczny

Darlene Pasieczny’s practice at Samuels Yoelin Kantor LLP focuses on all stages of corporate and securities law issues, securities litigation and FINRA arbitration, fiduciary litigation in trust and estate disputes, elder financial abuse, and complex civil litigation. Darlene’s practice includes representing investors nationwide in investment disputes through FINRA arbitration.

Mediation and FINRA Arbitration

Why mediate? What is mediation? Why do it in FINRA arbitration?

Simply put, mediation is a voluntary process by which disputing parties agree to negotiate with a professional referee – a neutral mediator – to try to settle a dispute. Settlement means resolving a case before incurring further time, costs, and the risk of losing when taking a case to trial or arbitration hearing, where a judge, jury or arbitrator makes the final, binding decisions.

I represent investors in FINRA arbitration and in court, in disputes with the financial industry.  Securities claims against stockbrokers and their firms are typically litigated in FINRA arbitration because there are pre-dispute arbitration clauses in just about every brokerage account agreement.  FINRA rules also provide that an investor may always choose to file claims against a broker or brokerage firm in FINRA arbitration.  FINRA IM-12000.

Arbitration is very different than mediation.  State laws provide the legal framework for arbitration as a binding alternative to trying a case in court.  An arbitration hearing may seem like a mini-trial:  you have one or more arbitrators in place of a judge and jury, you have opening and closing statements, present witness testimony and evidence, and submit briefs on legal issues.  At the end of the the process, the arbitrator or panel of arbitrators issues a binding arbitration decision and award.  A party may take that arbitration award to a court for confirmation as a judgment.  Once the award is entered in the court record as a judgment, the winning party is a judgment creditor and may use that state’s creditor laws to enforce and collect the award.  FINRA arbitration is a specialized forum with its own procedural code and discovery rules – a forum I know very well.

Mediation, on the other hand, is an entirely voluntary process, and a mediator makes no binding decisions that the parties must follow.  Parties can choose to mediate at any time – before a case is filed, or anytime during the case, with strategic decisions when mediation may be the most successful, such as after the exchange of discovery in a case.  State law provides that settlement discussions in the context of mediation are confidential and generally may not be used as evidence in a case.  So, if a mediation session does not result in a settlement agreement, neither side may use what was said or settlement offer dollar amounts exchanged during the mediation against the other side in the related court case or arbitration proceeding.   That’s because we want to encourage good faith negotiation during mediation.

If the parties come to settlement agreement during the mediation, the mediator, or one of the parties, will typically put at least the material terms of the agreement into writing while the parties are still present.  A good mediator will encourage this:  after hours of back-and-forth negotiation, no one wants to go home and get a message that the other side has “buyer’s remorse,” or denies coming to an agreement, and then have to litigate to enforce the settlement.

For my clients in FINRA arbitration, I often recommend trying a mediation session. Why?  The risks are small, and it can be a smart investment.  The parties typically share the cost of hiring a mediator, it’s non-binding, and we prepare as if preparing for the arbitration hearing. I use the time to refine my client’s case, learn about the strengths and weaknesses of respondent’s case, and have a kind of dress rehearsal of testimony – all while still negotiating in good faith towards a settlement.  So, even if a mediation does not immediately result in settlement, we are all better prepared for the hearing.

In a FINRA arbitration case, you want a securities attorney to help you select a FINRA arbitration panel and steer your case through the process, from legal analysis and damages calculations, through filing the statement of claim and discovery, to representing you at the hearing.  When mediating a securities case, you want a securities attorney experienced in mediation to help choose a mediator and stay by your side with analysis of the situation and recommendations during negotiation.  For both arbitration and mediation: these are not trials in courtrooms.  The rules, and the opportunities, are different.

If you have concerns about how your money is being handled by your financial professional, or concerns that you or a loved one might be the victim of financial exploitation, call me at 1-800-647-8130.  Consultations are free, and confidential.

Darlene Pasieczny’s practice at Samuels Yoelin Kantor LLP focuses on all stages of corporate and securities law issues, securities litigation and FINRA arbitration, fiduciary litigation in trust and estate disputes, and complex civil litigation. Darlene’s practice includes representing investors nationwide in investment disputes through FINRA arbitration.

Pasieczny Moderates PIABA Panel on Cryptocurrency Investment Regulation

Current cryptocurrency regulation and cryptocurrency investment regulation can be summed up in one phrase:  Regulation by Enforcement.

I moderated a great panel presentation this weekend on Cryptocurrency Investments, Supervision and Securities Regulation at PIABA’s mid-year CLE event in Los Angeles on May 5, 2018.  We discussed the current state of regulation as well as the nuts-and-bolts of blockchain technology: everything from Bitcoin, the basics of utility tokens, security keys, and even ranging into CryptoKitties.  Our audience included securities attorneys, law professors, and representatives from the Financial Industry Regulatory Authority (FINRA).  I was joined by Professor Benjamin Edwards (William S. Boyd School of Law, University of Las Vegas, Nevada), securities attorney and former SEC Enforcement officer Celiza Braganca (Braganca Law LLC), and industry expert Louis Straney (Arbitration Insight LLC).

Most securities professionals that I’ve talked with consider cryptocurrency investments the Wild West in terms of regulation and safeguards (minimal to none) for the investing public.   The North American Securities Administrators Association (NASAA), the association of state securities regulators, would agree.

Accumulating SEC enforcement actions and reports like the “DAO Report,” Release No. 81207 (June 25, 2017), are the current guides that issuers and industry participants have for what to do, or not do, so that an Initial Coin Offering (ICO) or Initial Token Offering (ITO) complies with existing federal and state securities laws. This kind of “regulation by enforcement” leaves industry participants guessing at what they can do as the technology changes.   And, the SEC and state securities regulators are by no means the only regulatory bodies overlapping with enforcement.  The Internal Revenue Service, FinCen, the CFTC, criminal law, and private class actions are all taking their pound of flesh from industry participants.   FINRA’s 2018 Regulatory and Examination Priorities Letter notes that the SRO will be keeping an eye on developments with ICOs and the supervisory and compliance mechanisms that brokerage firms have put in place for compliance with securities laws and FINRA rules.

But, since December, 2017, the US Commodity Futures Trading Commission (CFTC) has allowed cryptocurrency futures contract trading on the Chicago Mercantile Exchange.  Goldman Sachs recently announced that it will open a Bitcoin trading desk, and now the New York Times reports that the parent company of the New York Stock Exchange, Intercontinental Exchange, has been working on an online trading platform for large investors to buy and hold Bitcoin.   The confidence of these institutions may lead the market in another round of soaring blockchain hype and eager investors buying in … to what?

Warren Buffet made his feelings about clear when he called Bitcoin “probably rat poison squared” in an interview with CNBC over the weekend.

If a FINRA-licensed broker or SEC-licensed registered financial advisor makes recommendations for a customer to buy cryptocurrency investments, it could be a big red flag for a compliance department.  SEC Chairman Jay Clayton has basically said that he thinks all cryptocurrency-related investments are securities.  But the SEC hasn’t issued specific cryptocurrency regulations, and it seems to be relying on shutting down unregistered ICOs and ITOs to create a regulatory roadmap.  Do those offerings sound like Initial Public Offerings (IPOs)?  You are correct, that’s on purpose.  But, importantly, unlike an IPO, you get no ownership interest when buying into an ICO or ITO. There’s no there, there. Unfortunately for investors duped into participating in a fraudulent cryptocurrency offering or hacked offering, the likelihood is that your money is halfway around the world and difficult to recover from the issuer.

I suspect the future of cryptocurrency regulation will include increased claims for participant liability under state securities laws that offer broader investor protections than those provided by federal law.  Attorneys and accountants assisting issuers in these fraudulent offering should be held accountable under appropriate circumstances.  I bring participant liability claims under state blue sky laws to recover investment losses for individuals and groups of individuals.  And, if financial advisors are actively making purchase recommendations to clients otherwise unwilling to take on high risk, speculative investments, there could be viable FINRA arbitration claims against the brokerage firms that allow their brokers to make irresponsible, unsuitable recommendations.

If you have concerns about how your money is being handled by your financial professional, or concerns that you or a loved one might be the victim of financial exploitation, call me at 1-800-647-8130.  Consultations are free, and confidential.

Darlene Pasieczny’s practice at Samuels Yoelin Kantor LLP focuses on all stages of corporate and securities law issues, securities litigation and FINRA arbitration, fiduciary litigation in trust and estate disputes, and complex civil litigation. Darlene’s practice includes representing investors nationwide in investment disputes through FINRA arbitration.

What Does it Mean for Investors? LPL Financial Settlement $26 Million

Today the North American Securities Administrators Association (NASAA) announced a massive LPL Financial settlement with state securities regulators relating to over a decade of sales of unregistered securities by LPL brokers.

Under the terms of the LPL Financial settlement, the firm agreed to repurchase from investors certain securities that were sold to them since October, 2006.  LPL will also have to pay civil penalties to the states, which could be as much as a $26 million penalty.

What happened?   State securities regulators have been investigating LPL Financial for years regarding failures to have reasonable policies and procedures.  In the last year, NASAA’s task force has focused on investigating LPL’s procedures to prevent LPL brokers from selling unregistered, non-exempt securities.

The sale of unregistered, non-exempt securities violates most states’ securities law and federal securities laws.  Often those securities do not disclose important information to the prospective buyer, like the riskiness of the investment, lack of liquidity or ability to sell the investment, or true financial history of the investment.  Sellers may get high commissions and other incentives to pitch these products to investors, even if the product is not suitable or in the best interest of that investor.

Under the agreement, LPL will repurchase from investors unregistered, non-exempt securities sold since October 1, 2006 to LPL customers by their broker.  Not only will LPL repurchase, it will pay 3% interest from the date of sale.  Other terms were agreed upon for customers who have since sold or transferred their qualified securities out of their LPL account.

Is this a good deal?  Yes, for many cheated investors, it’s an unusually good deal. NASAA is an association of state securities regulators.  Those state regulators help investors by cracking down on bad broker conduct by national firms like LPL Financial.  The dollars from civil penalties issued by regulators occasionally go back to compensate the victims — but not usually.  The key to this LPL Financial settlement is that the firm agreed to buy back the securities from investors and pay 3% interest.  For many investors, especially those with smaller amounts of affected securities, that’s a very good result for a recovery without private litigation.

However, investors that otherwise qualify for the buy-back may have strong, valid, private claims for relief against LPL Financial that might result in a better outcome.   It depends on the facts, and an experienced securities attorney can help you make that evaluation.

Failure to have reasonable supervisory and compliance procedures, failures to reasonably supervise its brokers, and unlawful broker conduct all are violations of FINRA rules and may state blue sky securities laws.   In some states like Oregon, brokerage firms may have joint and several liability with the bad broker, and the statutory remedy for these violations can be repayment of the original purchase price, plus interest at 9% from date of purchase, less any dividends or money otherwise received from the investment.  It may also include payment of attorney fees.  These are claims that an experienced securities fraud attorney like Darlene Pasieczny can bring on behalf of an investor in FINRA arbitration.

If you are an LPL Financial customer, or customer of any brokerage firm, and you have concerns about what you were sold for your investment portfolio, call us today for a free initial consultation.   Sudden large drops in portfolio value for a moderate or conservative investor, or discovering you cannot easily sell an investment, are some of the Red Flags that you may have securities claims for recoverable losses.  Don’t wait – statute of limitations may apply to set deadlines of when you can file a claim.

If you have concerns about how your money is being handled by your financial professional, or concerns that you or a loved one might be the victim of financial exploitation, call me at 1-800-647-8130. Again, consultations are free, and confidential.

Darlene Pasieczny’s practice at Samuels Yoelin Kantor LLP focuses on all stages of corporate and securities law issues, securities litigation and FINRA arbitration, fiduciary litigation in trust and estate disputes, and complex civil litigation. Darlene’s practice includes representing investors nationwide in investment disputes through FINRA arbitration.

Down Markets – A Good Time to Look For Red Flags and Recoverable Investment Losses

The news has been full of stories of investment losses. First, it was cryptocurrencies and related investments on a roller coaster ride of valuation. Then, in the last week, the major stock market indices followed… Dow Jones, S&P 500, Nasdaq…

What is a Main Street investor to do?

As a securities attorney representing investors in disputes with the financial industry, down markets mean my phone starts ringing. Investors start to look closely at their portfolios.

Some find surprises. Potential claims against their financial advisor to recover investment losses.

Not every investment loss is a recoverable investment loss – far from it. But, sometimes investment losses are caused because of a financial advisor’s misconduct. Making unsuitable securities recommendations to buy risky investments or allocate a portfolio in a certain way. Failing to follow instructions, negligence, or outright fraud and misrepresentation.

The law provides remedies to investors injured by advisor misconduct. Typically, securities claims are brought by filing a statement of claim in FINRA arbitration. I’ve helped my clients bring securities claims in FINRA arbitration. I help them to navigate mediation and informal settlement discussions. And I have helped them recover millions of dollars, thought to be lost forever due to “bad luck”.

I recently filed some short video clips explaining how an experienced securities attorney like myself can help investors who think they may have a problem, and why investors may be hesitant to seek help and file claims to recover losses.

A down market is a good time to take a hard look at your, or your client’s, portfolio. And ask questions.

Why is the portfolio heavily allocated in one volatile sector, such as oil and gas?

Was that level of risk appropriate for the investor at the time of the recommendation? Why are there so many LP and LLC private placement interests in the portfolio? Can those interests be sold? And why are my investment losses in this down market so much more than my friend’s losses, when we have similar financial goals and risk tolerances? These and other red flags may be signs of investment fraud.

If you think you may be the victim of investment abuse, call me toll free at 1-800-647-8130 for a free, confidential initial consultation. I represent investors in FINRA arbtiration nationwide who have investment losses caused by the conduct of a financial professional or a defective investment product. I also represent parties in trust and estate disputes where a fiduciary has breached their duties and money is recoverable to the estate, trust, or beneficiary.

The Investor Defenders at Samuels Yoelin Kantor LLP help investors get their money back from brokerage fraud, fraudulent investments, elder financial abuse, and other situations. Our specialized investment litigation practice combines familiarity with complex financial modeling, experience with specialized FINRA arbitration rules and securities laws, and empathy for our clients whose investment losses have become personal.

If you have concerns about how your money is being handled by your financial professional, or concerns that you or a loved one might be the victim of financial exploitation, call me at 1-800-647-8130. Again, consultations are free, and confidential.

Darlene Pasieczny’s practice at Samuels Yoelin Kantor LLP focuses on all stages of corporate and securities law issues, securities litigation and FINRA arbitration, fiduciary litigation in trust and estate disputes, and complex civil litigation. Darlene’s practice includes representing investors nationwide in investment disputes through FINRA arbitration.

Ten Red Flags for Investors

Ten Red Flags of Investment Fraud

We’ve updated our list of ten red flags that  investors should be aware of: danger signs that point to potential mismanagement of an account or investment fraud by a financial advisor. These red flags are useful as you evaluate your own investments, review the investments of an elderly relative, or if you’ve decided to change brokers.

From our firm’s first-hand experience in reviewing thousands of financial statements and successfully recovering investment money for many clients, these red flags of investment fraud are often a sign of trouble. If you notice any of these red flags and you have concerns, we encourage you to contact us for a free, confidential review. With early detection, investors have the potential to avoid a lot of heartache and significant financial loss.

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Red Flags:

1. Your financial advisor didn’t discuss your risk tolerance with you, told you “not to worry” about that category when filling out account paperwork, or you somehow ended up with a higher risk portfolio than you wanted.  Any reported swing in portfolio value of more than 10% up or down, when you’re a conservative or moderate investor, is a red flag.

2. You discover that you cannot liquidate investments that you thought you could sell. Or you discover an unexpected high fee or surrender charge for selling.

3. Big portions of your portfolio are used to purchase “alternative investments” – things like interests in limited partnerships (LPs), non-traded REITs, private placements, promissory notes, and interests in limited liability companies (LLCs). Many of these investments come with a prospectus, require you to complete special forms just to purchase them, carry high risk for investors, and pay big commissions to the selling brokers.

4. You are encouraged to purchase investments where you must formally certify that you are an “accredited investor”. These investments also often carry a high degree of risk and are only designed for people who can afford to lose all of their investment.

5. You are advised to purchase investments the same day that they are offered to you, without giving you a chance to think about it, especially when your advisor says that the opportunity won’t last long. If you feel any sense of rush, surprise, or pressure to make any investment decision, that’s a red flag.

6. Your account statements stop arriving, your broker is suddenly hard to reach, or your advisor discourages you from discussing your investments with anyone else at the brokerage company.

7. You have investments that do not appear on the brokerage company’s account statements that you receive.   Or the statements otherwise look irregular, show frequent transactions that you don’t understand, or don’t add up.

8. Your financial advisor promises returns that seem too good to be true. In today’s market, there are no legitimate, safe and secure investments that can guarantee an 8% annual return year after year.  Any promised return that seems like an unusually good deal deserves closer scrutiny.  Risky, unsecured promissory note scams may be particularly targeted towards elderly investors as “fixed income” investments.

9. You are offered an investment that you do not understand.  Or your portfolio contains investments that, on closer examination, are not plausible or understandable.

10. You discover that your advisor has multiple disclosures when you look him or her up on FINRA’s BrokerCheck system (search by name at http://www.finra.org/Investors/ToolsCalculators/BrokerCheck). Disclosures may include prior client complaints, bankruptcy, termination from prior employers, regulatory investigations and sanctions, criminal charges, on-going or resolved client disputes.  These are all red flags about a broker’s prior conduct that you probably want to know about before entrusting them with your money.

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If you have seen any of these red flags, and have questions about the legitimacy of your investments or seen large financial losses, do not ignore your suspicions. Call us for a free initial consultation.  We will tell you if your concerns are well founded and whether we can help.  Your call is confidential.

Please call us first, before contacting your financial advisor or any regulatory agency.  Why?  Because those calls are not confidential.  Once you contact the firm you can bet that your communications are being recorded, and the details you include or leave out may undermine your claim.  Securities regulators may be important allies in stopping wrongdoing, but they are not your attorney. By reporting a complaint to your state agency, FINRA or the SEC, you may be starting the clock on a statute of limitations for filing a claim, without understanding what that means.

The Investor Defenders at Samuels Yoelin Kantor LLP help investors get their money back from brokerage fraud, fraudulent investments, elder financial abuse, and other situations. Our specialized investment litigation practice combines familiarity with complex financial modeling, experience with specialized FINRA arbitration rules and securities laws, and empathy for our clients whose financial losses have become personal.

If you have concerns about how your money is being handled by your financial professional, or concerns that you or a loved one might be the victim of financial exploitation, call me at 1-800-647-8130. Consultations are free, and confidential.

Darlene Pasieczny’s practice at Samuels Yoelin Kantor LLP focuses on all stages of corporate and securities law issues, securities litigation and FINRA arbitration, fiduciary litigation in trust and estate disputes, elder financial abuse, and complex civil litigation. Darlene’s practice includes representing investors nationwide in investment disputes through FINRA arbitration.

New FINRA Rule to Help Prevent Elder Financial Abuse

On February 5, 2018, a new FINRA rule geared towards preventing financial exploitation of seniors  – also called elder financial abuse – goes into effect. This is new Rule 2165, which creates a limited safe harbor for brokers to put a temporary hold on certain disbursement requests from a brokerage account.

The rule “permits members to place temporary holds on disbursements of funds or securities from the accounts of specified customers where there is a reasonable belief of financial exploitation of these customers.”  The new rule also amends existing FINRA Rule 4512, to require members to take reasonable efforts to have the customer identify the name of a trusted contact person as part of gathering customer account information. The broker may contact that person if there is a suspicious request for a disbursement of funds. The broker may also contact that person to confirm the customer’s contact information, health status, or identify of any legal guardian, executor, trustee, or holder of a power of attorney.

The new rule permits, but does not require, temporary holds and contacting the trusted contact person. And using it does not necessarily mean a total halt on all disbursements. For example, a broker could put a temporary hold on a suspicious request to transfer funds to an unfamiliar outside account, while still allowing regular bill payments to continue.

This is an important new tool from the Financial Industry Regulatory Authority (“FINRA”) in the fight to curb financial abuse of senior citizens.

Elder financial abuse continues to be a major problem in the U.S., sometimes with devastating results. Fraudsters cheat seniors out of an estimated $3 billion annually. Some believe the dollar figures are up to ten times higher. Nobody is certain of the overall numbers, in part because it is believed that only a small percentage of cases are reported.  Senior financial abuse depletes retirement savings, and it affects our elderly community in other ways.  Studies concentrated on the health effects among those whose essential life savings have suddenly vanished have found that mortality rate can triple. Just think about the stress and emotional impact on a vulnerable senior when his or her financial security is stolen.

State and federal securities regulators are working to prevent elder financial abuse before it happens. But the scammers are out there. What can you do if you or a loved one has been financially exploited?

Contact an attorney experienced in recovering financial losses. In many circumstances, money unlawfully taken can be recovered. In my work as a litigator, I’ve helped curtail and restore money improperly taken from elders in estate and trust disputes among family members. I have helped recover money from brokers “selling away” from their firm, selling unapproved, extremely risky, or even outright fictional investments to unsuspecting elderly clients. We see bad actors unduly influencing seniors to sell undervalued property.  We see seniors (and others) who continue to place trust in swindlers because con artists are good at what they do. We see forged signatures, shady documentation, account statements printed off a home computer, and account figures that just don’t add up. And we fight for the financial abuse victim to recover money where possible. Contacting law enforcement and regulators are additional important resources, and your attorney can advise you on your best options for loss recovery.

As a securities attorney, I represent investors nationwide who have lost money due to the conduct of a financial professional or a defective investment product. I also represent parties in trust and estate disputes where a fiduciary has breached their duties and money is recoverable to the estate, trust, or beneficiary.

The Investor Defenders at Samuels Yoelin Kantor LLP help investors get their money back from brokerage fraud, fraudulent investments, elder financial abuse, and other situations. Our specialized investment litigation practice combines familiarity with complex financial modeling, experience with specialized FINRA arbitration rules and securities laws, and empathy for our clients whose financial losses have become personal.

If you have concerns about how your money is being handled by your financial professional, or concerns that you or a loved one might be the victim of financial exploitation, call me at 1-800-647-8130. Consultations are free, and confidential.

Darlene Pasieczny’s practice at Samuels Yoelin Kantor LLP focuses on all stages of corporate and securities law issues, securities litigation and FINRA arbitration, fiduciary litigation in trust and estate disputes, and complex civil litigation. Darlene’s practice includes representing investors nationwide in investment disputes.