Tag: FINRA Arbitration

SEC warns of “Red Flags” when Making Investment Decisions

The Securities and Exchange Commission recently issued an Investor Alert to help older Americans identify signs that what is offered as an investment may actually be a fraud. The SEC’s Office of Investor Education and Advocacy warned that older Americans are often targets of investment fraud, and advised that there are five (5) “red flags” seniors should look out for when making investment decisions:

  1. Promises of High Returns with Little or No Risk. A classic warning sign of investment fraud is the promise of a high rate of return, with little or no risk. The SEC advised that every investment carries some degree of risk, and the potential for greater returns generally comes with greater risk. The SEC warns investors to avoid putting money into “can’t miss” investment opportunities or those promising “guaranteed returns.”
  2. Unregistered Persons. The SEC advises investors to check whether the person offering to sell you an investment is registered or licensed, even if you know him or her personally. Unregisterd/unlicensed persons who sell securities commit many of the securities frauds that target older investors. It is free to research the background of the individuals and firms selling you investments, including their registration/license status and disciplinary history. There are several way you can research the individuals selling you investments:
  • Search the SEC’s Investment Adviser Public Disclosure (IAPD) online database.
    • Search the Financial Industry Regulatory Authority (FINRA)’s BrokerCheck online database.
    • Contact your state securities regulator.
    • Contact the SEC’s Office of Investor Education and Advocacy directly at (800) 732-0330 to help research the person and firm selling you the investment.
  1. Red Flags in the Financial Professional’s Background. The SEC advises investors to be aware of potential red flags in their advisor’s or broker’s background, including: (1) employment at firms that have been expelled from the securities industry; (2) personal bankruptcy; (3) termination; (4) being subject to internal review by an employer; (5) a high number of customer complaints; (6) failed industry qualification examinations; (7) federal tax liens; and (8) repeatedly moving firms. Investors can search the records of the SEC, FINRA, and state securities regulators to identify red flags.
  2. Pressure to Buy Quickly. The SEC warns that if an investment professional attempts to pressures you into making an investment decision quickly, you should walk away as you could potentially be at risk for becoming a victim of investment fraud. The SEC cautions investors that no reputable investment professional should push you to make an immediate decision about an investment, or tell you that you’ve got to “act now.”
  3. Free Meals. The SEC further warns investors to be cautious of “free lunch” seminars. The ultimate goal of investment professionals in offering free meal investment seminars is typically to attract new clients and to sell investment products. The SEC advises investors that even if the free meal does not come with a high-pressured sales pitch, investors should expect the “hard sell” during later contacts from the investment advisor or broker selling the investment.

If you have suffered investment losses as a result of your broker’s or brokerage firm’s misconduct, contact the Hanley Law to discuss your legal options. The Hanley Law is dedicated to helping investors nationwide. If you have lost money as a result of your broker’s recommendations, you may be entitled to recover your investment losses. Contact our office toll free at (239) 649-0050 for a complimentary initial consultation.

New York Broker Jonathan A. Francis Barred by FINRA for Issuing Unauthorized ATM Cards to Clients

The Hanley Law (239) 649-0050 recently discovered that according to FINRA’s Disciplinary and Other FINRA Actions Publication, Jonathan A. Francis (CRD #5204602) allegedly issued unauthorized ATM cards as part of a scheme to convert funds from bank customers’ accounts.
FINRA alleged that between 2012 and 2013 while registered with Chase Investment Services Corp., J.P. Morgan Securities, LLC, and the affiliated banks, Francis allegedly issued seven (7) ATM cards in the accounts of six (6) deceased customers. The ATM cards were used to withdraw approximately $210,000 from the accounts of the customers. FINRA further alleged that Francis failed to cooperate with FINRA’s investigation by refusing to respond fully to requests for documents and information.

According to FINRA’s Broker Check, Jonathan A. Francis has been permanently barred from acting as a broker or otherwise associating with firms that sell securities to the public. (See FINRA Disciplinary Proceeding No. 2013038988301)

Francis was registered in the securities industry for three (3) years with the following firms:

J.P. TURNER & COMPANY, LLC
CRD #43177
BROOKLYN, NY
10/2013 – 11/2013

J.P. MORGAN SECURITIES, LLC
CRD #79
BROOKLYN, NY
10/2012 – 10/2013

CHASE INVESTMENT SERVICES CORP.
CRD #25574
BROOKLYN, NY
04/2010 – 10/2012

If you have suffered financial losses as a result of your broker’s or brokerage firm’s misconduct, contact the Hanley Law to discuss your legal options. The Hanley Law is dedicated to helping investors who have been victims of securities fraud. If you have been a victim of securities fraud, you may be entitled to recover your financial losses. Contact the Hanley Law toll free at (239) 649-0050 for a complimentary initial consultation.

North Carolina Broker Charles Caleb Fackrell Formerly of LPL Financial Barred by FINRA

The Hanley Law (239) 649-0050 recently discovered that according to FINRA’s Disciplinary and Other FINRA Actions publication, Charles Caleb Fackrell (CRD #5369665) allegedly converted customer funds and sold private securities offerings away from his brokerage firm, without the firm’s approval. FINRA further alleged that Fackrell failed to cooperate with FINRA’s investigation by not providing requested documents and information. (See FINRA AWC No. 20140437052).

According to FINRA’s Broker Check, Fackrell has been permanently barred by FINRA from acting as a broker or otherwise associating with firms that sell securities to the public.

Charles Caleb Fackrell was registered in the securities industry for six (6) years with the following member firm(s):

LPL FINANCIAL, LLC
CRD #6413
YADKINVILLE, NC
06/2010 – 12/2014

WELLS FARGO ADVISORS, LLC
CRD #19616
HIGH POINT, NC
12/2009 – 06/2010

SUNTRUST INVESTMENT SERVICES, INC.
CRD #17499
YADKINVILLE, NC
07/2008 – 12/2008

MORGAN STANLEY & CO., INC.
CRD #8209
WINSTON-SALEM, NC
08/2007 – 02/2008

If you have suffered losses as a result of your broker’s or brokerage firm’s misconduct, contact the Hanley Law to discuss your legal options. The Hanley Law is dedicated to helping investors who have been victims of securities fraud. If you have been a victim of securities fraud, you may be entitled to recover your financial losses. Contact the Hanley Law toll free at (239) 649-0050 for a complimentary initial consultation.

5 Most Common Types of Fraud Identified by FINRA

The Financial Industry Regulatory Authority (FINRA) issued a new Investor Alert called Avoiding Investment Scams which described common types of fraud. Below are the 5 most common types of fraud identified by FINRA:

  1. Pyramid Schemes: Fraudsters claim that they can take a small investment and turn it into large profits in a short amount of time. However, participants make money solely by recruiting new participants and the schemes quickly fall apart when new participants are no longer available. Pyramid schemes may appear to be legitimate multi-level marketing programs.
    2. Ponzi Schemes: Fraudsters recruit new investors and use their funds to pay earlier-stage investors, instead of investing the funds as promised. This type of scam is named after Charles Ponzi, who in the 1920s tricked thousands of investors to place their funds in a price arbitrage scheme involving postage stamps. Ponzi schemes are similar to pyramid schemes with the exception that in ponzi scheme investors do not have to recruit new investors to earn a share of profits. Ponzi Schemes usually collapse when new investors cannot be attracted or when too many investors try to cash out.
    3. Pump-and-Dump: Fraudsters buy shares of a low priced stock from an unknown company and then trump up interest in the stock to increase the stock’s price. Investors are tricked into believing they are getting a good deal and create buying demand at high prices. At this point the fraudsters sell their shares at the high prices and disappear, leaving the unsuspecting investors with worthless stock. Previously, these schemes were conducted by cold callers, facsimiles or online newsletters, but now the most common medium is through spam emails or text messages.
    4. Advance Fee Fraud: The scams starts by an offer placed to buy a worthless stock for a high price, but to facilitate the deal the investor must send a fee for the service. Once the fee is sent, the investor never hears from the fraudster again.
    5. Offshore Scams: These scams include any of the above mentioned scams and may also involve Regulation S. Offshore scams can be difficult for U.S. law enforcement agencies to investigate or rectify.

If you and have suffered investment losses, please contact the Hanley Law to explore your legal options. The Hanley Law is dedicated to helping investors who have been victims of securities fraud. If you have lost money as a result of securities fraud, you may be able to recover your financial losses. Contact us today toll free at (239) 649-0050 for a free initial consultation.

Common Sales Pitches Used in Investment Scams

The Financial Industry Regulatory Authority (FINRA) issued a new Investor Alert called Avoiding Investment Scams which describes common sales pitches used in investment scams.

Investment fraudsters make their living by making sure the investments they pitch sound good and true. Additionally, fraudsters tailor their pitches to the investor by first gaining background information on the investor and using that information to lure them in. FINRA has identified the following five (5) most common sales pitch tactics:

  1. Phantom Riches Tactic: Entice investors with promises of wealth.
    2. Source Credibility Tactic: Build credibility with claims of having expertise, experience and being from a reputable firm.
    3. Social Consensus Tactic: Lead investors to believe that other savvy investors have already invested.
    4. Reciprocity Tactic: Offer to do a small favor for investor in return for the investor doing a large favor.
    5. Scarcity Tactic: Create a false sense of urgency by claiming limited supply of product.

If you and have suffered investment losses, please contact the Hanley Law to explore your legal options. The Hanley Law is dedicated to helping investors who have been victims of securities fraud. If you have lost money as a result of securities fraud, you may be able to recover your financial losses. Contact us today toll free at (239) 649-0050 for a free initial consultation.

FINRA Issues New Investor Alert, Avoiding Investment Scams

The Financial Industry Regulatory Authority (FINRA) issued a new Investor Alert called Avoiding Investment Scams which describes common types of tactics employed by fraudsters to solicit investors. FINRA advises of the following seven (7) red flags investors should look out for:

  1. Guarantees: Be wary of anyone who predicts how investments will perform.
    2. Unregistered Products: Many investments scams involve unlicensed individuals selling unregistered products.
    3. Overly Consistent Returns: Investments that provide steady returns regardless of current market conditions.
    4. Complex Strategies: Avoid anyone who cannot clearly explain their investment technique.
    5. Missing Documentation: A stock should have a prospectus or offering circular, if not the product may be unregistered.
    6. Account Discrepancies: Unauthorized trades, missing funds or other problems with your account statements could indicate churning or fraud.
    7. Pushy Salesperson: No reputable investment professional should push you to make an immediate decision about an investment.

If you and have suffered investment losses, please contact the Hanley Law to explore your legal options. The Hanley Law is dedicated to helping investors who have been victims of securities fraud. If you have lost money as a result of securities fraud, you may be able to recover your financial losses. Contact us today toll free at (239) 649-0050 for a free initial consultation.

Identifying Risk Factors that Make Investors Susceptible to Fraud

The Financial Industry Regulatory Authority (FINRA) issued a new Investor Alert called Avoiding Investment Scams which described risk factors that make investors susceptible to investment fraud and provides tips to avoid being scammed.

FINRA has identified the 5 following risk factors for investors falling prey to fraudsters:

  1. Owning high-risk investments.
    2. Relying on friends, family, co-workers for advice.
    3. Being open to new investment information.
    4. Failing to check the background of an investment or investment professional.
    5. Inability to spot persuasion tactics used by fraudsters.

FINRA urges investors to ask questions about investments and investment professionals by doing the following:

  1. Perform a Background Search on the Investment Professional: Ask if the investment professional is licensed to sell you the investment and confirm which regulator issued their license. Additionally, ask if and when their license has ever been revoked or suspended. A legitimate securities salesperson must be properly licensed, and his or her firm must be registered with FINRA, the SEC or a state securities regulator—depending on the type of business the firm conducts. An insurance agent must be licensed by the state insurance commissioner where he or she does business. To verify the investment professional’s response use FINRA BrockerCheck, contact National Association of Insurance Commissioners or contact North American Securities Administrators Association.
  2. Check Out Investments: Ask whether the investment is registered and, if so, with which regulator. Usually companies register their securities before they can sell shares to the public. You can find out whether a product is registered with the SEC by using the EDGAR database. Additionally, you can also use FINRA’s ScamMeter to determine whether an investment might be a scam.

If you and have suffered investment losses, please contact the Hanley Law to explore your legal options. The Hanley Law is dedicated to helping investors who have been victims of securities fraud. If you have lost money as a result of securities fraud, you may be able to recover your financial losses. Contact us today toll free at (239) 649-0050 for a free initial consultation.

FINRA Issues New Investor Alert, Should You Exchange Your Variable Annuity

The Financial Industry Regulatory Authority (FINRA) issued a new Investor Alert called Should You Exchange Your Variable Annuity. The article explains what a variable annuity is, reasons investors should or should not make a section 1035 exchange, what investors should look out for and what regulators do to protect investors.

An annuity is a contract between an investor and an insurance company. The investor buys the annuity and the company promises to make periodic payments to the investor. There are three types of annuities, fixed, variable and equity-indexed. Fixed annuities are guaranteed a payout, variable annuities payouts depend on the investments chosen and equity-indexed annuities payouts vary, but typically not as much as a variable annuity.

Variable annuities are securities registered with the Securities and Exchange Commission (SEC) and their sales are regulated by the SEC and FINRA. These annuities may impose numerous fees when you invest in them, including surrender charges, mortality and expense risk charges, administrative fees, underlying fund expenses and charges for special features.

An investor might choose to make a Section 1035 Exchange because of new developments in annuity features, including an increase in investment options, less expensive variable annuity contracts, and enhancement of death and living benefits.

However, Section 1035 Exchanges are not always a good idea for investors. FINRA listed the following reasons why investors should not take part in the exchanges:

1) The credits offered are usually offset by the insurance company adding other charges.

2) Contract provisions, such as surrender charges, expire with an existing contract. New charges could be imposed with a new contract or may increase the period of time for which the surrender charge applies.

3) There could be higher charges, like annual fees for the contract.

4) The costly features might not benefit the investor.

5) The broker usually gets paid a higher commission for a variable annuity, compared to the sale of a stock, bond or mutual fund.

Prior to making a Section 1035 Exchange an investor should learn all the facts to determine if the exchange will benefit them. An investor should only exchange their investment when it benefits the investor, not just the financial advisor.

Financial Advisors and Insurance Agents must provide all information to the investor. The advisor or agent should offer the exchange only if it is determined that it could benefit the investor after conducting a review of the investor’s personal and financial situation and needs, tolerance for risk and financial ability to pay for the contract. This suitability obligation is based on FINRA Rules.

Several states and brokerage firms require forms to reflect customer acknowledgement of a replacement transaction. Such forms should provide a comparison of features and costs of an existing contract to the proposed contract and detail what is needed to make the exchange.

FINRA and the SEC have conducted special sales practice examinations that focus on the sales of variable contracts, annuities and life insurance products. The results indicated that some advisors and agents recommended unsuitable products for their customers and the firms did not properly supervise their employees to prevent the unsuitable recommendations.

Furthermore, FINRA points out that unsuitable sales of variable contracts are routinely investigated. Therefore, it is important for the investor to do research and protect their assets.

If you and have suffered investment losses, please contact the Hanley Law to explore your legal options. The Hanley Law is dedicated to helping investors who have been victims of securities fraud. If you have lost money as a result of securities fraud, you may be able to recover your financial losses. Contact us today toll free at (239) 649-0050 for a free initial consultation.

FINRA- Before You Invest, Working With Your Investment Professional

The Financial Industry Regulatory Authority (FINRA) issued an article titled Working With Your Investment Professional which provides tips to promote a productive relationship between customers and financial advisors.

FINRA has identified the following 10 tips for customers:

  1. Review the background of any investment professionals you work with or are considering working with. This can be done by using FINRA’s BrokerCheck.
    2. Be clear in your investment goals and risk tolerance with your financial advisor.
    3. Prior to investing, research the product.
    4. Discuss fees with your financial advisor. Fees include commissions, costs associated with the sale of an investment, or management charges.
    5. Review and retain you monthly account statements, confirmations and other correspondence.
    6. Contact your financial advisor immediately if you have questions or concerns about an investment. Additionally, contact the firm’s compliance department if you are unhappy with you financial advisor’s response.
    7. Be wary of exaggerated claims about an investment.
    8. Be wary of financial advisors who pressure you to invest quickly or do not provide you sufficient information about the investment.
    9. Never send money to a firm or financial advisor that you are hearing from for the first time.
    10. Contact the firm’s compliance department in writing if you suspect improper business conduct. Additionally, retain a copy of your complaint and in responses the firm sends.

If you and have suffered investment losses, please contact the Hanley Law to explore your legal options. The Hanley Law is dedicated to helping investors who have been victims of securities fraud. If you have lost money as a result of securities fraud, you may be able to recover your financial losses. Contact us today toll free at (239) 649-0050 for a free initial consultation.