Investment Terms and Concepts

The Depository Trust Corporation

Published on: June 10, 2012 | By Russell L. Forkey, P.A.

The Depository Trust Corporation:

June, 2012:

In our continued effort to educate the investing public about various aspects of the securities markets, we are providing the below information. Because this information is being provided for educational purposes only, it should not be relied upon as providing legal or investment advice. Moreover, it is not intended to be complete in all material respects. If you have any questions concerning the information set forth below, you should contact a qualified professional.

Stop Loss Orders – Good or Bad Idea? – Boca Raton, Florida FINRA Arbitration and Securities Litigation Attorney

Published on: January 28, 2011 | By Russell L. Forkey, P.A.

Stop Loss Orders – Good or Bad Idea? – Boca Raton, Florida FINRA Arbitration and Securities Litigation Attorney

We have discussed on or website what a stop loss order is and what are some of the risks associated with its use. The purposed of this post is to give you some food for thought concerning whether or not their use is generally a good or bad idea for you, the investor.

Many U.S. investors use stop loss orders to, among other things, protect gains if they or their investment advisors don’t monitor their holdings regularly. However, some market professionals assert that investors do not understand how dangerous a stop loss order can be in today’s markets. That is because stop losses may be executed before a stock rebounds when there’s abnormal trading. The shares also might be sold at the next available price, which may be far lower than expected. They’re especially dangerous when a stock closes at one price and opens lower the next trading day due to news that breaks overnight or during a weekend. One such circumstance was the decline on May 6 that briefly erased approximately $860 billion in value from the equity market in about 20 minutes.

High Pressure Sales of Annuities to Seniors and Others – Florida Variable and Fixed Annuity Fraud, Misrepresentation and Twisting FINRA Arbitration and Litigation Attorney

Published on: January 15, 2011 | By Russell L. Forkey, P.A.

South Florida Variable and Fixed Annuity Fraud, Misrepresentation, Breach of Fiduciary Duty and Twisting FINRA Arbitration and Litigation Attorney:

We recently were presented with the following factual situation. A single 82 year old, long retired woman received a “cold call” from a mortgage broker, who, after repeated telephone calls and visits to the woman’s home, convinced her to refinance her residence, She somehow got the woman to believe that it would be beneficial to pay off her $200,000 fixed rate, first mortgage, on her house that she had owned for many years, and to take out a new variable rate mortgage for almost $1,000,000 and put the difference in the bank for emergencies. If that was not enough, the 82 year old woman took the net proceeds to deposit into a bank account and the securities arm of the bank got a hold of her. Instead of telling the woman that it was a terrible idea to have taken out the new first mortgage, the securities arm of the bank sold the woman an annuity for $500,000, which started paying her monthly for 10 years. All of the payments that the woman got went to make the monthly mortgage payments. Obviously, the problem that this created for the woman was that after 10 years she would not be getting any more income from the annuity and the principal balance of the mortgage would be unchanged, thereby building into the transaction an automatic default in the mortgage. This is but one of many examples that could be given to show the extent to which some variable sellers will go to sell a product because of the large commission associate with the product.

While variable annuities can be appropriate as an investment under the right circumstances, as an investor, you should be aware of their restrictive features, understand that substantial taxes and charges may apply if you withdraw your money early, and guard against fear-inducing sales tactics.

Reverse Convertibles are having the Reverse Effect on Client Profitability – Boca Raton, Florida Arbitration and Litigation Attorney

Published on: January 7, 2011 | By Russell L. Forkey, P.A.

Reverse Convertibles are having the Reverse Effect on Client Profitability – Boca Raton, Florida Arbitration and Litigation Attorney:

In 2010 banks sold in excess of $6 billion of bonds linked to the performance of stocks, promising substantial returns far exceeding CD and money market rates. The promised returns were generally even more than could be expected from standard bond funds or standard yields on bonds themselves. This was at a time when interest rates were at historic lows. Hence the attractiveness of the investments.

However, instead of receiving the promised returns, reverse convertibles, according to data compiled by Bloomberg on 1,481 of the securities sold last year that matured by November 30, 2010 lost, on average, 1 percent. The Standard & Poor’s 500 Index returned 8 percent during that period and corporate bonds gained 11.1 percent, including reinvested interest, Bank of America Merrill Lynch index data show.

FAQ’s Relating to Life Settlements that Should be Considered by Not Only Seniors but All Investors

Published on: December 27, 2010 | By Russell L. Forkey, P.A.

South Florida Life Settlement Fraud, Misrepresentation, Breach of Contract and Breach of Fiduciary Duty FINRA Arbitration and Litigation Attorney:

This post contains important information that should be considered and questions that should be asked by anyone contemplating entering into a life settlement transaction

What is a life settlement?

Peer-to-Peer Lending – Florida Breach of Fiduciary Duty and Negligent Supervision FINRA Arbitration and Litigation Attorney

Published on: December 21, 2010 | By Russell L. Forkey, P.A.

South Florida Peer-to-Peer Lending Litigation and Arbitration Attorney:

Peer-to-Peer lending has come under the scrutiny of state regulators as it gains in popularity. State securities regulators are warning investors to be careful of peer-to-peer lending over the Internet, a trend they say is on the rise as conventional loans have become scarcer and more costly.

As indicated in the first blog that was filed on this site, it is amazing what may constitute a security. Therefore, it is not surprise that the National American Securities Administrators Association Inc. has issued an alert advising investors about the risks of online loan “matchmaking,” also called social lending or P2P.

North American Securities Administrators Association (NASAA) – Top 10 Investor Traps

Published on: December 17, 2010 | By Russell L. Forkey, P.A.

North American Securities Administrators Association – 2010 Top 10 Investor Traps:

A recent USA today article highlights the fact that investment scams usually increase when there is an economic downturn. The articles refers to The North American Securities Administrators Association’s recently released 2010 list of Top 10 Investor Traps which are as follows:

1. “Exchange Traded Funds” (EITs). While ETSs resemble mutual funds in many respects, some, such as as leveraged and inverse ETFs, may contain hidden traps and complexities, and may consist of highly leveraged bundles of exotic financial instruments, including ope ions and derivatives. Given their potential for volatility, leveraged ETFs may not be suitable for most retail investors. These types of ETFs are primarily designed for short-term trading (such as day-trading), and not for buy-and-hold strategies. Also be aware that some ETFs are thinly traded and may not always be liquid.

Seniors Beware: What you Should Know About Life Settlements – Florida Senior and Elder Financial Abuse Fraud, Misrepresentation and Breach of Fiduciary Duty Litigation and Arbitration Attorney

Published on: December 15, 2010 | By Russell L. Forkey, P.A.

Seniors Beware: What you Should Know About Life Settlements – South Florida Senior and Elder Financial Abuse Fraud, Misrepresentation and Breach of Fiduciary Duty Litigation and FINRA Arbitration Attorney:

Life Settlements:

Lately, more and more seniors are hearing about opportunities to sell their existing life insurance for cash in transactions known as life settlements. A life settlement, or senior settlement, as they are sometimes called, involves selling an existing life insurance policy to a third party-a person or an entity other than the company that issued the policy-for more than the policy’s cash surrender value, but less than the net death benefit.

FAQ’s – What Constitutes A Security? Florida Securities Fraud and Misrepresentation Litigation and Arbitration Attorney

Published on: December 8, 2010 | By Russell L. Forkey, P.A.

South Florida, including Dade, Broward, Palm Beach and Martin County, Securities and Investment Broker/Dealer, Investment Advisor and Private Fraud, Mismanagement and Misrepresentation Arbitration and Litigation Attorney

What Constitutes a Security:

What initially comes to most people’s minds when the word security is mentioned is a stock or bond. Yet, from a legal standpoint, the word security has a much more expansive meaning. For example, in the State of Florida the word “security” is defined in Florida Statute 517.021(21). The word “security” includes a note, stock, treasury stock, a bond, a debenture, an evidence of indebtedness, a certificate of deposit, a certificate of deposit for a security, a certificate of interest or participation, a whiskey warehouse receipt or other commodity warehouse receipt, a certificate of interest in a profit-sharing agreement or the right to participate therein, a certificate of interest in an oil, gas, petroleum, mineral, or mining title or lease or the right to participate therein, a collateral trust certificate, a reorganization certificate, a preorganization subscription, any transferable share, an investment contract, a beneficial interest in title to property, profits, or earnings, an interest in or under a profit-sharing or participation agreement or scheme, any option contract which entitles the holder to purchase or sell a given amount of the underlying security at a fixed price within a specified period of time, any other instrument commonly known as a security, including an interim or temporary bond, debenture, note, or certificate, and receipt for a security, or for subscription to a security, or any right to subscribe to or purchase any security or a viatical settlement investment. Wow!

FAQ’s – The Federal Securities Laws – South Florida Securities Litigation and FINRA Arbitration Lawyer

Published on: December 8, 2010 | By Russell L. Forkey, P.A.

The Securities Act of 1933 and The Securities and Exchange Act of 1934 – South Florida, Fort Lauderdale, Hollywood, Davie, Boynton Beach, Boca Raton, Lake Worth and West Palm Beach, Federal and State Court Litigation and Arbitration Attorney:

The Federal Securities Laws:

The purpose of this post is to provide the reader with general information concerning the Securities Act of 1933 and the Securities and Exchange Act of 1934. This information is being provided for educational purposes only. It is not designed to be complete in all material respects. Thus, it should not be relied upon for legal or investment advice. If you have any questions concerning the contents of this post, you should contact a qualified legal or investment professional.