Unsuitable Investment Recommendations

FAQ’s Margin – Fort Lauderdale, Florida Margin Abuse and Negligence FINRA Arbitration and Litigation Attorney

Published on: November 18, 2013 | By Russell L. Forkey, P.A.

Margin Abuse, Margin Miscalculation and Excessive Margin – South Florida FINRA Arbitration and Litigation Attorney:

“Margin” is borrowing money from your broker to buy a stock and using your investment as collateral. Investors generally use margin to increase their purchasing power so that they can own more stock without fully paying for it. But margin exposes investors to the potential for higher losses. Consequently, the use of margin is not appropriate for all investors, especially the unsophisticated or those who are risk adverse.

The Federal Reserve Board and many self-regulatory organizations (SROs), such as the NYSE and FINRA, have rules that govern margin trading. Brokerage firms can establish their own requirements as long as they are at least as restrictive as the Federal Reserve Board and SRO rules. Here are some of the key rules you should know:

Common Stock, Preferred Stock, Corporate Bonds, Municipal Bonds, ETF’s and Mutual Funds – South Florida Securities and Investment Fraud, Negligence and Breach of Fiduciary Duty FINRA Arbitration and Litigation Attorney

Published on: November 6, 2013 | By Russell L. Forkey, P.A.

Common Stocks, Preferred Stocks, Corporate Bonds, Municipal Bonds, Promissory Notes, Exchange-Traded Funds (ETF’s), and Mutual Funds – South Florida Securities and Investment Fraud, Negligence and Breach of Fiduciary Duty FINRA Arbitration and Litigation Attorney:

The elements of a breach of fiduciary duty action are (1) the existence of a fiduciary duty and (2) the breach of that duty that was the proximate cause of the plaintiff’s damages. A fiduciary relationship exists when confidence is reposed by one party and trust accepted by the other. Such a relationship exists where confidence is reposed on one side and there is resulting superiority and influence on the other. When a fiduciary relationship has not been created by an express agreement, the question of whether the relationship exists generally depends upon the specific facts and circumstances surrounding the relationship of the parties in a transaction in which they are involved.

The law is clear that a broker owes a fiduciary duty of care and loyalty to a securities investor. The type and extent of this duty is fact specific. In other words, your relationship with, in the case, your broker/dealer and/or account executive will be determinative of the type of duty that you are owed. However, please keep in mind that the extent of this duty is organic. It is constantly changing. It is for this reason that your specific circumstances need to be reviewed by a qualified professional.

OX Trading, LLC, optionsXpress, Inc. and Thomas E. Stern – South Florida Option Fraud and Breach of Fiduciary Duty FINRA Arbitration and Litigation Attorney

Published on: October 23, 2013 | By Russell L. Forkey, P.A.

In the Matter of OX Trading, LLC, optionsXpress, Inc., and Thomas E. Stern

The Commission issued an Order Making Findings and Imposing Remedial Sanctions and a Cease-and-Desist Order Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 as to OX Trading, LLC and optionsXpress, Inc. (OX Order). The OX Order finds that OX Trading, LLC (OX Trading) willfully violated Sections 15(a) and 15(b)(8) of the Securities Exchange Act of 1934 by operating as an unregistered dealer from October 2009 to November 2010 and transacting in securities while not a member of a national securities association or a national exchange from March 2009 to November 2010, respectively. The OX Order also finds that optionsXpress, Inc. caused OX Trading’s violations. The OX Order ordered OX Trading and optionsXpress to cease and desist and ordered OX Trading to pay $2,750,000 in disgorgement, prejudgment interest of $253,094.39, and a civil money penalty of $750,000. (Rel. 34-70739).

The Commission also issued an Order Making Findings and Imposing Remedial Sanctions and a Cease-and-Desist Order Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 and Section 9(b) of the Investment Company Act of 1940 as to Thomas E. Stern (Stern Order). The Stern Order finds that Thomas E. Stern (Stern), OX Trading’s Chief Financial Officer and Chief Compliance Officer during the relevant time period, willfully aided and abetted and caused OX Trading’s violations of Sections 15(a) and 15(b)(8) of the Exchange Act. The Stern Order ordered Stern to cease and desist and to pay a civil money penalty of $50,000. (Rel. 34-70740) Respondents consented to the issuance of the Orders. These proceedings were instituted on April 19, 2012. (Rel. 34-66831).

John Micciola – Florida Securities Fraud and Theft FINRA Arbitration and Litigation Attorney

Published on: October 18, 2013 | By Russell L. Forkey, P.A.

In the Matter of John Micciola:

The Securities and Exchange Commission recently announced the issuance of an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions (Order) against John Micciola (Micciola), a resident of Freehold, New Jersey. The Order finds that, on August 8, 2011, Micciola was convicted in the Supreme Court of the State of New York in People of the State of New York v. Joseph Stevens & Co., Inc., et al., Case Number 02394-2009 of two counts of securities fraud, one count of grand larceny in the second degree, and one count of grand larceny in the third degree. The Order further finds that Micciola participated in firm-wide schemes that resulted in excessive and undisclosed commissions on stocks.

Based on the above, the Order bars Micciola from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization and from participating in any offering of a penny stock, including acting as a promoter, finder, consultant, agent or other person who engages in activities with a broker, dealer or issuer for purposes of the issuance or trading in any penny stock, or inducing or attempting to induce the purchase or sale of any penny stock. Micciola consented to the issuance of the Order.

Margin – Leverage Abuse and Exploitation – South Florida Leverage and Margin Abuse, Exploitation and Manipulation FINRA Arbitration and Litigation Attorney

Published on: September 30, 2013 | By Russell L. Forkey, P.A.

Leverage Abuse, Exploitation and Manipulation – South Florida State and Federal Fraud, Misrepresentation and Breach of Contract Attorney:

Leverage may be used in a number of circumstances. In the business arena, three common uses, of leverage, relate to investments, financial leverage and operating leverage.

Investment Leverage (also known as margin) uses the equity in your brokerage account as a means of attempting to enhance the return on your equity without increasing your investment capital. Using margin, as part of your investment strategy, carries with it a number of risks, which you should fully understand before putting this strategy into effect. Both the Federal Reserve and brokerage firms have a number of rules that regulate the use of margin. Some key phrases are “initial margin,” “maintenance margin,” “house call,” and “Reg. T. Call.”

Fraudulent Promissory Note Offering – South Florida Securities and Investment Fraud FINRA Arbitration and Litigation Attorney

Published on: September 10, 2013 | By Russell L. Forkey, P.A.

SEC Files Civil Injunctive Action Against Alleged Perpetrator and Unregistered Broker in Fraudulent Promissory Note Offering

Recently, the Securities and Exchange Commission filed a civil injunctive action in the United States District Court for the District of Colorado against Brian G. Elrod for allegedly conducting a fraudulent offering of promissory notes for which Nova Dean Pack acted as an unregistered broker. Elrod and Pack reside in Buffalo Creek, Colorado and Highland, California, respectively.

The Complaint alleges that, from at least March 2009 through November 2009, Elrod and Pack raised approximately $2 million from 12 investors who invested in high-yield promissory notes issued by CFS Holding Company LLC (“CFS”), a Colorado company owned and managed by Elrod. According to the Complaint, Elrod told investors that their investments were secured and guaranteed and would generate annual returns ranging from 12% to 24%. According to the Complaint, Elrod further represented to investors that the proceeds from their promissory notes would be used to expand a group of financial services companies owned and managed by Elrod. The Complaint alleges that the foregoing representations, among others, were false and misleading when made, and that Elrod, rather than use investor money for legitimate business purposes, improperly used most of the investor funds to make substantial payments to himself and family members and to pay for personal expenses, to pay Pack significant commissions for referring investors, and to make interest payments back to investors. According to the Complaint, the CFS note offering was not registered with the Commission, and Pack was not an associated person of a registered broker or dealer at the time he participated in the CFS note offering.

Anthony John Johnson – Florida Civil Conspiracy and Investment Fraud FINRA Arbitration and Litigation Attorney

Published on: September 10, 2013 | By Russell L. Forkey, P.A.

SEC Enforcement Proceedings:

Anthony John Johnson Sanctioned:

The Securities and Exchange Commission recently announced that Anthony John Johnson (Johnson) has been barred from the securities industry. The sanction was ordered in an administrative proceeding before an administrative law judge, following an August 2011 conviction for conspiracy to commit securities, mail, and wire fraud and an August 2012 conviction for mail fraud. Some of his wrongdoing occurred between March 2002 and March 2003, while associated with Park Capital Securities, LLC, where he engaged in manipulative trading and where brokers under his direction engaged in misrepresentations and material omissions to induce customers to purchase and refrain from selling certain stock. From approximately August 2010 to April 2011, Johnson operated a Ponzi scheme while associated with RAHFCO Management Group LLC, an unregistered investment adviser.

False and Misleading Radio and Television Broker/Dealer Advertising – South Florida Direct (Alternative) Investment and Private Placement Fraud FINRA Arbitration and Litigation Attorney

Published on: September 1, 2013 | By Russell L. Forkey, P.A.

Solicitation of Investment Clients by Broker/Dealers and Investment Objectives Through the Use of Radio and Television Programing – South Florida False and Misleading Advertising FINRA Arbitration and Litigation Attorney

The Financial Industry Regulatory Authority, Inc. (FINRA) is a self-regulatory authority assigned the responsibility, by the Securities and Exchange Commission, to license, regulate and discipline securities broker/dealers and their employees, including account executives. In the event that FINRA elects to institute and enforcement action, firms and licensed individuals have the responsibility to reflect such action of their U-4 and/or U-5 filings, which can be viewed on the FINRA website under the broker-check section of the site or by viewing the monthly disciplinary information also provided on the FINRA site.

The monthly disciplinary information is referenced on the site generally in alphabetical order. This post relates to the following company or individuals. If the reader would like to review the entire FINRA release or the broker-check information concerning this matter, you can follow these highlighted links:

South Florida Selling Away, Approved and Unapproved Outside Business Activity and Negligent Supervision FINRA Arbitration and Litigation Attorney

Published on: September 1, 2013 | By Russell L. Forkey, P.A.

South Florida Selling Away, Approved, Unapproved Outside Business Activity and Negligent Supervision FINRA Arbitration and Litigation Attorney:

The Financial Industry Regulatory Authority, Inc. (FINRA) is a self-regulatory authority assigned the responsibility, by the Securities and Exchange Commission, to license, regulate and discipline securities broker/dealers and their employees, including account executives. In the event that FINRA elects to institute and enforcement action, firms and licensed individuals have the responsibility to reflect such action of their U-4 and/or U-5 filings, which can be viewed on the FINRA website under the broker-check section of the site or by viewing the monthly disciplinary information also provided on the FINRA site.

The monthly disciplinary information is referenced on the site generally in alphabetical order. This post relates to the following company or individuals. If the reader would like to review the entire FINRA release or the broker-check information concerning this matter, you can follow these highlighted links:

Income Mutual Fund – South Florida Mutual Fund Abuse and Loss FINRA Arbitration and Litigation Attorney

Published on: August 30, 2013 | By Russell L. Forkey, P.A.

Income and Growth Mutual Fund Abuse, Fraud and Mismanagement Principal and Income Loss FINRA Arbitration and Litigation Attorney:

Income Mutual Funds are designed to produce current income for shareholders. Some examples of income mutual funds are municipal, international and junk bond (high-yield) funds. Several kinds of equity-oriented funds also can have income as their primary investment objectives, such as utilities income funds and equity income funds.

It is important to remember that mutual funds are offered by prospectus. The prospectus will provide all necessary information for an informed investor to make an intelligent investment decision. For example, a prospectus may contain information about such things as: