Senior and Retirement Fraud, Misrepresentation and Breach of Fiduciary Duty Litigation and FINRA Arbitration Attorney:
Commission Charges Indiana Resident with Conducting Ponzi Scheme Targeting Retirement Savings of Investors
The Securities and Exchange Commission (“Commission”) recently charged a Noblesville, Ind., resident and his company with defrauding investors in a Ponzi scheme that targeted retirement savings.
High Yield – Junk Bond Investment Loss – Florida Litigation and FINRA Arbitration Attorney:
A High Yield or Junk Bond is a bond with a credit rating of BB or lower by a recognized rating agency such as Fitch Ratings, Moody’s Investors Services, Morningstar Rating System and others. Although the term Junk Bond is commonly used, issuers and holders of such securities prefer the securities be call high yield bonds. Junk Bonds are usually issued by companies without long track records of sales and earnings, or by those with questionable credit strength. Since they are more volatile and pay higher yields than investment grade bonds, many risk-oriented investors specialize in trading them. The phrase “risk-oriented” being the operative term.
If you are an average investor, with fairly conservative investment objectives, these types of bonds are not for you. If you own these bonds, the current yield section of your statement, more likely than not, reflects a yield of around 10% or higher but compare that against the current market value. At the end of the day, especially when comparing the maturity of the bond to your age or when you might need the principal returned, what is more important, high risk yield or the protection of your principal.
Securities and Exchange Commission Sustains FINRA Disciplinary Action against Registered Representative and Supervisor
The Securities and Exchange Commission has sustained disciplinary action by the Financial Industry Regulatory Authority (“FINRA”) against William J. Murphy and Carl M. Birkelbach, formerly associated with member firm Birkelbach Investment Securities, Inc. In its opinion, the Commission sustained FINRA’s finding of sales practice violations by Murphy, which included discretionary trading without authorization, unauthorized trading, unsuitable and excessive trading, churning, and the creation and distribution of misleading communications. In one customer account at issue, Murphy engaged in excessive options trading that generated over one million dollars in commissions in the span of approximately three-and-half years. The Commission also sustained FINRA’s findings of supervisory violations by Birkelbach for ignoring obvious and repeated red flags with regard to Murphy’s handling of customer accounts. Finally, the Commission has sustained FINRA’s imposition of sanctions: a bar in all capacities and the disgorgement of $585,174.67 for Murphy and bar in all capacities for Birkelbach.
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Naked Option – Florida Breach of Fiduciary Duty, Negligent Supervision and Mismanagement FINRA Arbitration and Litigation Attorney:
A Naked Option is an option for which the buyer or seller has no underlying security position. A writer of a naked Call Option, therefore does not own a Long Position in the stock on which the call has been written. Similarly, the writer of a naked Put Option does not have a Short Position in the stock on which the put has been written. Naked options are very risky and are not suitable for many investors, especially risk adverse investors. However, naked options can be potentially rewarding. If the underlying stock or stock index moves in the direction sought by the investor, profits can be large, because the investor would only have had to put down a small amount of money to obtain large returns. On the other hand, if the stock moves in the opposite direction, the writer of the naked option could be subject to huge losses.
Please keep in mind that the information being provided in this post is for educational purposes only. It is not designed to be complete in all material respects. Thus, it should not be relied upon as providing legal or investment advice. If the reader has any questions relative to this post, you should contact a qualified professional
Fixed-Income Abuse, Fraud and Misrepresentation, Florida FINRA Arbitration and Litigation Attorney:
A fixed-income investment refers to a security or other type of investment that pays a fixed return. Types of investments that generally fall within this category are government, corporate, or municipal bonds, which pay a fixed rate of interest until maturity, and to preferred stock, paying a fixed dividend. Such investments are advantageous in times of low inflation but do not protect holders against erosion of buying power in a time of rising inflation, since the bondholder or preferred shareholder gets the same amount in interest or dividends, even though consumer goods cost more.
Fixed-income investments can also be adversely effected by rising interest rates and the credit-worthiness of the issuing authority. For example, as interest rates rise, the market value of the fixed income investment can decline as investors move to alternative and more attractive investments.
Investment Strategy – Florida Common Stock and Bond FINRA Arbitration and Litigation Attorney:
An “Investment Strategy” is nothing more than a plan to allocate assets among various investment classes such as stocks, bonds, cash or cash equivalents, commodities and real estate. An investment strategy should be based on an investor’s outlook on such things as interest rates, inflation, economic growth while, at the same time, taking into consideration the investor’s age, tolerance for risk, amount of investable capital, and time horizon.
If a stockbroker or investment advisor has formulated an investment strategy for you, it is imperative that the investments and strategy recommend to you are suitable to meet your investment objectives. If, as an investor, you feel that this is not the case, it is time to seek legal assistance.
Securities and Exchange Commission v. Joshua Constantin, Brian Solomon, and Windham Securities, Inc. and Relief Defendants Constantin Resource Group, Inc. and Domestic Applications Corp.,, Civil Action No. 1:11-cv-4642 (MHD) (filed July 6, 2011)
Court Finds Brokerage Firm and Two Former Executives Liable for Over $2.74 Million in a Fraudulent Misappropriation Case
The Securities and Exchange Commission recently announced that, on April 25, 2013, a federal court in New York found defendants Joshua Constantin and Windham Securities, Inc. jointly and severally liable for over $2.49 million and defendant Brian Solomon liable for over $249,000 in disgorgement, pre-judgment interest, and civil penalties. In addition, the court found relief defendants Constantin Resource Group, Inc. (CRG) and Domestic Applications Corp. (DAC) jointly and severally liable with Constantin and Windham for over $760,000 and $532,000, respectively, of disgorgement and pre-judgment interest.
RBC Capital Markets Corporation nkn RBC Capital Markets, LLC, New York, New York:
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 Senior, Elder and Retirement Financial Abuse and Exploitation FINRA Arbitration, Litigation and Probate Estate Attorney:
Should you risk your home to invest in stocks, bonds, mutual funds or other investments? In our opinion, the answer is no.
Over the years, in our representing investors, those individuals that have been impacted the most by losses suffered in the stock market or, for that matter in any other type of investments, are those that have borrowed money against their home and invested the proceeds, only to lose that money also.
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.
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