J.P. Morgan Sued for Edward Turley and Steven Foote’s Alleged Margin Account Misconduct

J.P. Morgan Securities, LLC (“J.P. Morgan”) employed San Francisco Financial Advisor Edward Turley (“Mr. Turley”) and his former New York City partner, Steven Foote (“Mr. Foote”), and is being sued for their alleged stockbroker fraud and stockbroker misconduct involving a highly speculative trading investment strategy in highly leveraged margin accounts1. We represent a family (the “Claimants”) in the Southwest who built a successful manufacturing business and entrusted their savings to J.P. Morgan and its two financial advisors to manage by investing in “solid companies” and in a “careful” manner. At the outset, it is important for our readers to know that our clients’ allegations have not yet been proven. We are providing information about our clients’ allegations and seeking information from other investors who did business with J.P. Morgan, Mr. Turley, and/or Mr. Foote and had similar investments, a similar investment strategy, and a similar bad experience to help us win our clients’ case. INTRODUCTION This case is about alleged misrepresentations and misleading statements relating to investments and an investment strategy that were not only allegedly unsuitable for the Claimants but allegedly mismanaged by J.P. Morgan investment advisors and stockbrokers, Mr. Foote and Mr. Turley. Mr. Foote represented, in writing, the investment strategy only involved “solid companies with good income producing securities.” Later, Mr. Foote represented, in writing, that Mr. Turley and he would only “carefully add leverage to the accounts to enhance returns.” Notwithstanding the representations, Mr. Foote and Mr. Turley took control of Claimants’ accounts and engaged in a speculative, over-leveraged fixed income investment strategy involving excessive trading of high yield “junk” bonds, foreign bonds, preferred stocks, exchange traded funds (“ETFs”), master limited partnerships (“MLPs”), and foreign currencies. In March 2019, Mr. Foote became too ill to manage Claimants’ accounts, and Mr. Turley took sole control of the portfolio. Thereafter, Mr. Turley recklessly increased the risks (market, over-concentration, interest rate, leverage, commodities, and foreign currency) to which Claimants and their accounts were allegedly exposed. The family’s portfolio became even more over-concentrated in the financial and energy sectors under Mr. Turley’s control. He made a multi-million dollar investment in unregistered Nine Energy Senior Notes rated by S&P B- (speculative) in Claimants’ accounts. Mr. Turley also allegedly turned over the fixed income assets with new investments in “new issue” preferred stocks underwritten by J.P. Morgan, for which he allegedly received “seller concessions” paid at a much higher percentage than regular commissions on other securities transactions. Over the next six months, the margin balances increased by millions of dollars, and the Claimants’ accounts became ticking time bombs ready to explode at any moment. Indeed, they did explode in March 2020 when the market collapsed and Claimants realized substantial losses in their accounts. THE RELEVANT FACTS Our clients live on a ranch in a remote area in northern Texas. They regularly commute by private airplane to work and elsewhere for business and pleasure. One of our clients is a member of the Citation Jet Pilot Owners Association (“CJP”), an organization of many wealthy business people who own Citation jets. This organization holds its meetings throughout the country. It so happened that Mr. Foote and Mr. Turley were also members of the CJP. In the summer of 2016, Mr. Foote successfully solicited our clients at their ranch in Texas to manage their investment portfolio. At that ranch meeting, Mr. Foote described an investment strategy that he and his partner, Mr. Turley, managed for all of their biggest and best clients. According to Mr. Foote, they conservatively managed a fixed-income strategy that included investments in corporate bonds, notes, and preferred stocks. At that meeting and repeatedly thereafter, Mr. Foote told our clients that Mr. Turley and he only invested in “solid companies with good income producing securities.” Mr. Foote boasted that Mr. Turley and he were first in line for the best investment opportunities at J.P. Morgan because of their status at the firm. Our clients were impressed by Mr. Foote and especially by what he told him about Mr. Turley. They appeared to share our clients’ passion for aviation and the CJP and, more importantly, their religious beliefs. They agreed to transfer one-half of the investment portfolio to J.P. Morgan under Mr. Foote and Mr. Turley’s stewardship. The other half was managed by a UBS Financial Services, Inc. (“UBS”) financial advisor. In the beginning, Mr. Foote was the primary manager of the relationship with Claimants. All of the investments in the Claimants’ accounts were either allegedly “solicited” by Mr. Foote or executed by Mr. Foote and Mr. Turley’s use of “de facto” discretion because, on information and belief, none of the Claimants ever executed any documents giving either Mr. Foote, Mr. Turley, or any other person at J.P Morgan written discretionary authority over the Claimants’ accounts. The Claimants did not think this was unusual because they had a special relationship with Mr. Foote, whom they placed their trust and confidence in to manage their accounts as their investment adviser and portfolio manager. By the spring of 2017, Mr. Foote and Mr. Turley had fully invested Claimants’ accounts, so they injected leverage into their speculative investment strategy to make more commissions. Mr. Foote allegedly told our clients they also “carefully” managed a fixed-income strategy that would profit primarily from the difference in the high interest paid on corporate bonds, notes, and preferred stocks and the low margin interest rates. Mr. Foote allegedly assured Claimants that the strategy was safe and was used all of the time by banks and institutional and other wealthy clients to make money when interest rates were low to take advantage of the spread in interest rates. In fact, at that time, Mr. Foote misrepresented, in writing, that “we will keep pursuing solid companies with good income producing securities and we will continue to carefully add leverage to the accounts to enhance returns.” To the contrary, Mr. Foote and Mr. Turley quickly and recklessly ratcheted up the margin balances to over $7.1 million by the end of August 2017. It...

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Securities-Backed Lines of Credit can be More Dangerous Than Margin Accounts!

Securities-Backed Lines of Credit Can Be More Dangerous Than Margin Accounts! Many investors have heard of margin accounts and the horror stories of others who invested on margin and suffered substantial losses. But few investors understand that securities-backed lines of credit (SBL) accounts, which have been aggressively promoted by brokerage firms in the last decade, are just as dangerous as margin accounts. This is largely due to the fact that the equity and bond markets have been on an upward trend since 2009 and few investors (unless you are a Puerto Rico investor) have experienced market slides resulting margin calls due to the insufficient amount of collateral in the SBL accounts. It is only over the last several months of market volatility that investors have begun to feel the wrath of margin calls and understand the high risks associated with investing in SBL accounts. For investors considering your stockbroker’s offer of a line of credit (a loan at a variable or fixed rate of interest) to finance a residence, a boat, or to pay taxes or for your child’s college education, you may want to read a little more about the nature, mechanics, and risks of SBL accounts before you sign the collateral account agreement and pledge away your life savings to the brokerage firm in exchange for the same loan you could have obtained from another bank without all the risk associated with SBL accounts. First, it may be helpful to understand just why SBL accounts have become so popular over the last decade. It should be no surprise that the primary reason for your stockbroker’s offering of an SBL is that both the brokerage firm and he/she make money. Over many years, the source of revenues for brokerage firms have shifted from transaction based commissions to fee based investments, limited partnerships, real estate investment trusts (REITs), structured products, managed accounts, and income earned from lending money to clients in SBL and margin accounts. Many more investors seem to be aware of the danger of borrowing in margin accounts for the purposes of buying and selling securities, so the brokerage firms expanded their banking activities with their banking affiliates to expand the market and their profitability in the lending arena through SBL accounts. The typical sales pitch is that SBL accounts are an easy and inexpensive way access cash by borrowing against the assets in your investment portfolio without having to liquidate any securities you own so that you can continue to profit from your stockbroker’s supposedly successful and infallible investment strategy. Today the SBL lending business is perhaps one of the more profitable divisions at any brokerage firm and banking affiliate offering that product because the brokerage firm retains assets under management and the fees related thereto and the banking affiliate earns interest income from another market it did not otherwise have direct access to. For the benefit of the novice investor, let me explain the basics of just how an SBL account works. An SBL account allows you to borrow money using securities held in your investment accounts as collateral for the loan. Once the account is established and you received the loan proceeds, you can continue to buy and sell securities in that account, so long as the value of the securities in the account exceed the minimum collateral requirements of the banking affiliate, which can change just like the margin requirements at a brokerage firm. Assuming you meet those collateral requirements, you only make monthly interest-only payments and the loan remains outstanding until it is repaid. You can pay down the loan balance at any time, and borrow again and pay it down, and borrow again, so long as the SBL account has sufficient collateral and you make the monthly interest-only payments in your SBL account. In fact, the monthly interest-only payments can be paid by borrowing additional money from the bank to satisfy them until you reach a credit limit or the collateral in your account becomes insufficient at your brokerage firm and its banking affiliate’s discretion. We have heard some stockbrokers describe SBLs as equivalent to home equity lines, but they are not really the same. Yes, they are similar in the sense that the amount of equity in your SBL account, like your equity in your house, is collateral for a loan, but you will not lose your house without notice or a lengthy foreclosure process. On the other hand, you can lose all of your securities in your SBL account if the market goes south and the brokerage firm along with its banking affiliate sell, without prior notice, all of securities serving as collateral in the SBL account. You might ask how can that happen; that is, sell the securities in your SBL account, without notice? Well, when you open up an SBL account, the brokerage firm and its banking affiliate and you will execute a contract, a loan agreement that specifies the maximum amount the bank will agree to lend you in exchange for your agreement to pledge your investment account assets as collateral for the loan. You also agree in that contract that if the value of your securities declines to an amount that is no longer sufficient to secure your line of credit, you must agree to post additional collateral or repay the loan upon demand. Lines of credit are typically demand loans, meaning the banking affiliate can demand repayment in full at any time. Generally, you will receive a “maintenance call” from the brokerage firm and/or its banking affiliate notifying you that you must post additional collateral or repay the loan in 3 to 5 days or, if you are unable to do so, the brokerage firm will liquidate your securities and keep the cash necessary to satisfy the “maintenance call” or, in some cases, use the proceeds to pay off the entire loan. But I want to emphasize, the brokerage firm and its banking affiliate, under the terms of almost all SBL account agreements, are not...

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Investors With “Blown-Out” Securities-Backed Credit Line and Margin Accounts: How do You Recover Your Investment Losses?

If you are reading this article, we are guessing you had a bad experience recently in either a securities-backed line of credit (“SBL”) or margin account that suffered margin calls and was liquidated without notice, causing you to realize losses. Ordinarily, investors with margin calls receive 3 to 5 days to meet them; and if that happened, the value of the securities in your account might have increased within that period and the firm might have erased the margin call and might not have liquidated your account. If you are an investor who has experienced margin calls in the past, and that is your only complaint then, read no further because when you signed the account agreement with the brokerage firm you chose to do business with, you probably gave it the right to liquidate all of the securities in your account at any time without notice. On the other hand, if you are an investor with little experience or one with a modest financial condition who was talked into opening a securities-backed line of credit account without being advised of the true nature, mechanics, and/or risks of opening such an account, then you should call us now! Alternatively, if you are an investor who needed to withdraw money for a house or to pay for your taxes or child’s education but was talked into holding a risky or concentrated portfolio of stocks and/or junk bonds in a pledged collateral account for a credit-line or a margin account, then we can probably help you recover your investment losses as well. The key to a successful recovery of your investment loss is not to focus on the brokerage firm’s liquidation of the securities in your account without notice. Instead, the focus on your case should be on what you were told and whether the recommendation was suitable for you before you opened the account and suffered the liquidation. Should either one of those leveraged accounts have been recommended at all by a financial advisor in the first place? Should the broker-dealer have even allowed you to open one of those type of accounts based upon your investment profile and financial condition? Did the financial advisor misrepresent the nature, mechanics, and/or risks of the securities backed line of credit and/or margin account? Once the accounts were opened, did the financial advisor make unsuitable securities recommendations to purchase especially volatile securities in that account? Did the financial advisor recommend that you over-concentrate your investment portfolio in stocks in any particular sector (such as the oil and gas, hospitality, gaming, air travel, and/or cruise industry) in the leveraged account? Those are the facts and circumstances that probably caused losses but may give you an opportunity to recover all or some of your losses from your stockbrokerage firm. The leverage and liquidation to meet margin calls with or without notice probably only magnified and accelerated the inevitable losses. Your stockbroker had a duty to not only understand but explain the nature, mechanics and all of the risks associated with those investments before he/she sold them to you! Your stockbroker also had a duty to make sure they were suitable investments before they were recommended in light of your risk tolerance and financial condition and not over-concentrate investments in volatile emerging market stocks or any industry in your portfolio. Leveraged investments are not suitable for clients with conservative and moderate risk tolerance. All securities-backed lines of credit and margin accounts employ leverage, and leverage is a “speculative” investment strategy. Individuals close to retirement who are depending upon income from their investment portfolio cannot afford to speculate in leveraged accounts. If your financial advisor misrepresented the nature, mechanics, and/or risks of those accounts; or the investments or the risks were not fully explained; or you were over-concentrated (more than 10%) in any investment sector; or if it was not in your best interest (or unsuitable); and your investments were liquidated with or without notice due to margin calls, you may have the right to bring an arbitration claim against your financial advisor and/or the brokerage firm who employed him. One thing is certain, there is no way you will recover your losses in any SBL or margin account case without some legal action. At The Law Offices of Robert Wayne Pearce, P.A., we represent investors in investment disputes for misrepresented and unsuitable investments in FINRA arbitration and mediation proceedings. The claims we file are for fraud and misrepresentation, breach of fiduciary duty, failure to supervise, and unsuitable recommendations in violation of SEC and FINRA rules and industry standards. Attorney Pearce and his staff represent investors across the United States on a CONTINGENCY FEE basis which means you pay nothing – NO FEES-NO COSTS – unless we put money in your pocket after receiving a settlement or FINRA arbitration award. Se habla españolCONTACT US FOR A FREE INITIAL CONSULTATION WITH EXPERIENCED SBL AND MARGIN ACCOUNT INVESTMENT FINRA ARBITRATIONS ATTORNEYS The Law Offices of Robert Wayne Pearce, P.A. have highly experienced lawyers who have successfully handled many SBL and margin account “blow-out” cases and other securities law matters and investment disputes in FINRA arbitration proceedings, and who work tirelessly to secure the best possible result for you and your case. For dedicated representation by an attorney with over 40 years of experience and success in SBL and margin investment cases and all kinds of securities law and investment disputes, contact the firm by phone at 561-338-0037, toll free at 800-732-2889, or via e-mail.

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FINRA Arbitration: What To Expect And Why You Should Choose Our Law Firm

If you are reading this article, you are probably an investor who has lost a substantial amount of money, Googled “Securities Arbitration Attorney,” clicked on a number of attorney websites, and maybe even spoken with a so-called “Securities Arbitration Lawyer” who told you after a five minute telephone call that “you have a great case;” “you need to sign a retainer agreement on a ‘contingency fee’ basis;” and “you need to act now because the statute of limitations is going to run.” You may want to ask yourself whether that attorney is as bad as the stockbrokers you were concerned about in the first place. Some attorneys will rush you to hire them before you speak to anyone else and not tell you about the clause in their contract that allows them to drop you as a client later on if they cannot get a quick settlement. They will solicit you without a real case evaluation and/or without any explanation of Financial Industry Regulatory Authority (“FINRA”) proceedings. The scenario above is not the way for attorneys to properly serve clients, and it is not the way we do business at The Law Offices of Robert Wayne Pearce, P.A. If you are planning on speaking or meeting with us or any other attorney, let us introduce you to the FINRA arbitration proceeding by giving you some information in advance to help you understand the different stages of FINRA arbitration, what you should expect from skilled and experienced FINRA securities arbitration lawyers, and what you should expect to personally do in order to have the best outcome: 1. CASE REVIEW Before we accept any case, our attorneys conduct a thorough interview of you to understand: the nature of your relationship with your broker; the level of your financial sophistication; the representations or promises made to you in connection with any investment recommendation; and your personal investment experience, investment objectives, and financial condition at the time of any recommendation or relevant time period. We will review your account records, including, but not limited to: account statements; confirmations; new account opening documents; contracts; correspondence; emails; presentations; and marketing materials that you may have received in connection with your accounts and the investments made therein, etc. Investors rarely contact our office without knowing whether they have suffered investment losses, but sometimes that occurs because the particular investor does not have all their records and/or is unsophisticated, inexperienced, and unable to decipher the account records they retained. If you retained your account statements and provide them, we should be able to at least estimate (under the different measures of damages) the amount you may be able to recover if you win your arbitration proceeding. If you do not have those records, we will help you retrieve them without any obligation so that all of us are fully aware of the amount we may possibly recover for you if we are successful in arbitration. In addition, we will spend the time necessary to get to know you and the facts of your dispute to have a good chance of success in proving your case. After all, it does not benefit either you or our law firm to file an arbitration claim that, months or years later, we discover has little chance of success. Ultimately, we want to know, and so should you, whether or not you have a claim with merit and are likely to recover damages if we go through a full arbitration proceeding. The fact is Attorney Pearce does not take cases unless he and his team believe you suffered an injustice and are likely to succeed at the final arbitration hearing. 2. THE STATEMENT OF CLAIM Many of these young and/or inexperienced attorneys with flashy websites and Google Ad Word advertisements (to get them to the top of the page) are more interested in marketing and signing up cases to settle early than they are in going all the way and winning your case at a final arbitration hearing for a just result. Oftentimes, they will insert your name in a form pleading, one that they use in every case, which states little more than if you (the “Claimant”) were an investor with brokerage firm ABC and stockbroker XYZ (the “Respondent(s)”) made misrepresentations, failed to disclose facts, made unsuitable recommendations, and violated laws 123, you are entitled to damages. They are unwilling and/or fail to take the time necessary to study the strengths and weaknesses of your case and write a detailed Statement of Claim (also referred to as the “Complaint”) with all of the relevant facts necessary to inform the arbitrators what happened and why you are entitled to recover your damages. That is not the way Attorney Pearce, with over 40 years of experience with investment disputes, files a Statement of Claim, the first and sometimes the only document that the arbitrators will read before the final arbitration hearing. 3. THE ANSWER After we file the Statement of Claim and it is served, the brokerage firm and/or stockbroker will have forty-five (45) days to file the Answer to your allegations. Oftentimes, the Respondent(s) will ask for an extension of time to file the Answer and we will give it to them provided no other deadline is extended, particularly the deadlines associated with the selection of arbitrators and scheduling of the initial pre-hearing conference, where all of the other important deadlines and dates of the final arbitration hearing are scheduled. Some clients have asked why would you give them extra time to file their best Answer? Well, we believe after 40 years of doing these FINRA arbitrations, that it is better to know the story they intend to tell the arbitrators early on and lock them in so we can come up with the best strategy and all the case law necessary to overcome their best defenses and win your arbitration. In other words, we would rather know about the defense early on than be surprised at the final hearing. Besides, Respondent(s) can always try to file...

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EquiAlt Private Placement Investments

We are investigating and representing investors against FINRA-registered brokerage firms and financial advisors who offered and sold securities issued by affiliates of EquiAlt, LLC (EquiAlt), a private real estate company which organized at least four private placements: EquiAlt Fund, LLC; EquiAlt Fund II,LLC; EquiAlt Fund III, LLC; and EA Sip, LLC (collectively referred to as the EquiAlt Funds). According to a recent SEC Complaint, Brian Davison (Davison) and Barry Rybicki (Rybicki) offered and sold $170 million of unregistered debentures issued by the EquiAlt Funds to over 1,100 investors nationwide. The SEC alleged that Davison, Rybicki, and others committed securities fraud by misrepresenting the debentures as “secure,” “safe,” “low risk,” and “conservative.” Further, while investors were promised “that substantially all of their money would be used to purchase real estate in distressed markets in the United States and their investments would yield generous returns … EquiAlt, Davison, and Rybicki misappropriated millions in investor funds for their own personal use and benefit.” According to the SEC, the revenues that were generated by the EquiAlt Funds became insufficient to pay the interest owed to investors. As a result, the SEC alleged “the Defendants resorted to [a Ponzi Scheme] fraud, using new investor money to pay the returns promised to existing investors.” While many of the sales were solicited by unregistered EquiAlt salespersons, it is reported there were many sales by small offices of registered salespersons associated with large independent FINRA-registered stockbrokerage and insurance firms primarily located in Florida, Arizona, California, and Nevada, and many other states nationwide. It is alleged that EquiAlt salespersons received “commissions of anywhere between 10%-14%,” which is extraordinarily high for the sale of any investment product. Thus, there was such a strong incentive to sell these debentures by any means. It is likely that many of the FINRA registered brokerage firms did not authorize sales of the EquiAlt Fund debentures and that no due diligence or any other investigation of the company or its investment offerings were ever conducted. Consequently, it is very likely that the EquiAlt Funds were sold via misrepresentations and misleading statements. We have learned that investors who purchased the EquiAlt Funds debentures through FINRA-registered brokerage firm representatives also received the same sales pitch; that is, the debentures are “secure,” “safe,” “low risk,” and “conservative” investments, which was untrue which constitutes securities fraud. If you invested in any of the EquiAlt Funds private placements, you may be able to recoup your losses through a FINRA arbitration proceeding. Mr. Pearce has over 40 years of experience with private placement investment disputes and recovering money for investors lost in Ponzi Schemes. The cases we accept will be filed against FINRA registered broker-dealers for misrepresentation, omissions due to failed due diligence, unsuitable investment recommendations, and unauthorized private securities transactions otherwise known as “selling away.” If Attorney Pearce accepts your case there will be no attorney’s fee or arbitration expenses unless we recover funds for you in a settlement with the brokerage or through an arbitration award. Call 1-800-SEC-ATTY (1-800-732-2889) or email us now and get your questions answered and top notch representation in connection with your EquiAlt Funds private placement investments. If you purchased your investment directly from EquiAlt or BR Support Services, your recovery will probably be limited to what assets the Court Appointed Receiver is able to locate, liquidate, and distribute to investors. However, please call us to find out what recourse is available for this investment fraud.

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SEC Halts Alleged EquiAlt Ponzi Scheme: How do Investors Recover Their Losses?

On February 11, 2020, the United States Securities and Exchange Commission (“SEC”) filed a Complaint for injunctive relief to halt an alleged ongoing fraud conducted by EquiAlt LLC (“EquiAlt”), a private real estate investment company that controlled the business operations of EquiAlt and its four real estate investment funds: EquiAlt Fund, LLC (“Fund I”); EquiAlt Fund II, LLC (“Fund II”); EquiAlt Fund III (“Fund III”); and EA SIP, LLC (“EA SIP Fund”) (collectively referred to as the “EquiAlt Funds”). Simultaneously, the SEC and filed an Emergency Motion to freeze all of the Defendant assets and appoint a Receiver to marshall all of the assets and take control of EquiAlt and the EquiAlt Funds. The Court entered an Order that granted the SEC’s request for Temporary Restraining Order and Asset Freeze and another Order Appointing a Receiver. According to the SEC, beginning in 2011 and up until it filed suit, Defendants EquiAlt, Brian Davison (“Davison”), and Barry Rybicki (“Rybicki”), through fraudulent unregistered securities offerings, raised more than $170 million from over 1,100 investors nationwide. The Defendants were supposed to invest all of the investors’ money in the EquiAlt Funds by purchasing real estate in distressed markets throughout the United States. The managers of the EquiAlt Funds were supposed to manage the real estate, pay high rates of returns to investors, sell the real estate for a profit, and then liquidate the EquiAlt Funds. Instead, according to the SEC, EquiAlt, Davison, and Rybicki misappropriated millions in investor funds for their own personal use and benefit. According to the SEC, the revenues generated by the EquiAlt Funds were insufficient to meet the interest rate obligations of the debentures sold to the investors. In addition, the SEC alleged Defendants Davison and Rybicki paid themselves millions from the EquiAlt Funds and spent it on automobiles, jewelry, and private jets. The insufficient cash flow due to operations and alleged misappropriation of funds supposedly led the Defendants to perpetrate the Ponzi Scheme fraud. As time went by, the Defendants allegedly sold more and more debentures and used the sales proceeds to pay the interest obligations to the earlier investors in the EquiAlt Funds. The SEC further alleged the investments – unregistered securities in the form of debentures issued by four real estate investment funds managed by EquiAlt – were falsely touted to investors as “secure,” “safe,” “low risk,” and “conservative.” The Defendants paid significant sales commissions to numerous unregistered sales agents who allegedly repeated the same misrepresentations and sold investments to unaccredited and unsophisticated investors in various states. Sadly, the combined assets of EquiAlt and its three active funds (Fund I, Fund II, and the EA SIP Fund) are insufficient to repay the principal and interest owed to investors. By December 2020, investors in these three funds will be owed approximately $167 million in principal and interest. However, as of November 2019, the assets of EquiAlt, Fund I, Fund II, and the EA SIP Fund total only $6.8 million in cash and real property purportedly worth $145 million based upon EquiAlt’s own inflated valuation. Thus, the combined assets of the three active EquiAlt Funds are insufficient to pay investors the principal and interest owed to them at the end of this year. The SEC suit has resulted in an Asset Freeze and appointment of a Receiver who has taken control of EquiAlt and all of the EquiAlt Funds. Since that appointment, the Receiver, in a letter to all investors, said he has stopped making any interest payments and will not return any principal invested in the EquiAlt Funds to investors while the suit is pending. The length of time before any investor will see any of their money again is uncertain and will depend upon: 1) whether the SEC proves its case of fraud or the Defendants settle and relinquish all right to the assets of EquiAlt and the EquiAlt Funds; 2) the Court Orders a liquidation of EquiAlt and the EquiAlt Funds and all other assets marshalled by the Receiver from the Defendants; and 3) the time it takes the Receiver to liquidate the assets and distribute the proceeds. It is fair to say this process will take years to complete. But one thing is certain, and that is investors will not receive back their entire investment due to the Defendants’ dissipation of assets and the Receiver’s fees and expenses, including attorney fees, to marshal the assets and liquidate them. And so, the investors in the EquiAlt Funds will need to take charge of their own case and hire their own attorneys to recover their losses from those who offered and sold the investment, such as attorneys, accountants, stockbrokers, insurance brokers and other salespersons. Attorney Pearce has over 40 years of experience with private placement investment disputes and recovering money for investors lost in Ponzi Schemes. If you invested in any of the EquiAlt Funds, you may be able to recoup your losses through a FINRA arbitration proceeding. We are reviewing and accepting EquiAlt Fund cases on a contingency fee basis, meaning you do not pay any fees or expenses unless we are successful in recovering money for you in a court or arbitration proceeding or settlement. The cases we accept will be filed against FINRA registered broker-dealers for misrepresentation, omissions due to failed due diligence, unsuitable investment recommendations, and/or unauthorized private securities transactions otherwise known as “selling away” in a FINRA arbitration proceeding. We may also group investors in lawsuits to be filed with the Receiver or other counsel against attorneys, accountants, and other unlicensed salespersons who are not subject to mandatory arbitration. Please complete the Contact Us form below for help recovering your EquiAlt Fund investment losses. Alternatively, call 1-800-SEC-ATTY (1-800-732-2889) or email us now and get your questions answered along with top-notch representation in connection with your EquiAlt Funds private placement investments. If Attorney Pearce accepts your case there will be no attorney’s fee or expenses charged unless we recover funds for you by judgment, award, or settlement.

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The Law Offices of Robert Wayne Pearce, P.A. Wins $6 Million Plus Award Against UBS and UBS Puerto Rico

In an arbitration proceeding against UBS Financial Services, Inc. (UBS) and UBS Financial Services, Inc. of Puerto Rico (UBS-PR), the Law Offices of Robert Wayne Pearce, P.A. won $4.25 million in compensatory damages plus interest at 6.25% from February 28, 2014 and costs of $170,000 for one of the firm’s clients last month. A summary of our clients’ allegations against UBS and UBS-PR are set forth below. If you or any family member received similar unsuitable recommendations from UBS-PR and its stockbrokers, or found yourself with an account overconcentrated in Puerto Rico municipal bonds and/or closed-end bond funds, or if you borrowed monies from UBS and used your investments as loan collateral, we may be able to help you recover your losses. Contact our office as soon as possible for a free consultation about your case. Time is of the essence! INTRODUCTION This arbitration arose out of a series of unsuitable recommendations by a UBS-PR and UBS financial advisor that our clients purchase and then hold an excessive concentration of Puerto Rico Bonds and UBS-PR Closed-End Funds. As a result, our clients’ investment portfolios were not diversified from not only an asset allocation standpoint but also overly concentrated in securities from a single geographic area – Puerto Rico. The excessive concentration in Puerto Rico securities and leverage strategy implemented made the accounts highly speculative, which was inconsistent with not only our clients’ investment objectives but also the UBS-PR and UBS financial advisor’s representations. UBS and UBS-PR, through their representatives, disseminated false and misleading information to our clients about the nature, mechanics and risks of owning leveraged and concentrated positions in Puerto Rico Bonds and UBS-PR Closed-End Funds and the investment strategy employed in their accounts. In so doing, the UBS, UBS-PR, and their representatives not only violated the Puerto Rico Uniform Securities Act (“PRUSA”), but also committed fraud, breached their fiduciary duties to our clients, breached their contracts and the FINRA Code of Conduct, and were negligent in advising our clients on how to safeguard their investment capital. UBS-PR and UBS negligently failed to supervise its employees in connection with the management of our clients’ accounts. As a result, our clients suffered substantial damages. BACKGROUND Our clients (the Claimants), a husband and wife, were both retired individuals, 61 and 53 years of age. They have been married for 26 years with three children. Our client owned and operated a 100 year old family business until he sold the business and retired. The profit from that sale was the source of their retirement savings and entrusted to their UBS-PR and UBS registered financial advisors to preserve their capital and generate income to support them during their retirement. During the relevant period, our client and his family maintained at least seven UBS-PR accounts, including, individual, joint, corporate and a trust account for the benefit of him and/or his family. Claimants’ uniform instruction to their stockbroker was to invest in “inversiones seguras” or “safe investments” in their UBS-PR accounts and generate the income the family needed to support their lifestyle. Claimants relied primarily upon their stockbroker for investment advice and management of all of the investments in their UBS-PR accounts in accordance with their instructions. However, on at least two occasions, our client met with the Chairman of the Board and Chief Executive Officer of UBS-PR and of its Puerto Rico affiliate companies and also Chairman of the Board of each of the 23 UBS-PR Closed-End Funds, and discussed the Puerto Rico Bonds and UBS-PR Closed-End Bond Funds in his family’s accounts. Unfortunately, all of the UBS-PR representatives misrepresented the risks of the investments and investment strategy implemented in our clients’ accounts. Our clients were told by their stockbroker that the investments in their accounts were “conservadoras,” (i.e., “conservative”). The UBS-PR representatives told Claimants that the Puerto Rico General Obligation bonds (“GO Bonds”) and Sales Tax and Financing Authority bonds (“Cofina Bonds”) were “garantantizados,” (i.e., “guaranteed”) to be paid by the Commonwealth of Puerto Rico (the “Commonwealth”). The Cofina Bonds were described as “el estándar de oro” and “blindados,” (i.e., “the gold standard” and “bulletproof”). The stockbroker had also purchased what were described to Claimants as “fondos mutuos conservadores, seguros, y de bajo riesgo,” (i.e., “safe, low risk, and conservative mutual funds”). The stockbroker also told Claimants that the bonds in the so-called “fondos mutuos” were either backed by the U.S. government or “garantantizados por Puerto Rico,” (i.e., “guaranteed by Puerto Rico,”) which was false and/or misleading. The UBS-PR representative told our client the so-called “fondos mutuos” were so safe that he had his aunts fully invested in them. But, the so-called “fondos mutuos” were not really typical mutual funds; they were leveraged, illiquid closed-end bond funds concentrated in a single geographic area (Puerto Rico) and suitable for only the most aggressive bond investors. Over the years, the stockbroker offered financing opportunities to our client. He offered lines of credit at interest rates lower than banks whenever our clients needed to make large withdrawals for purchases. According to the stockbroker, our clients would profit from the difference in the high interest paid on the bonds by the government and the low interest charged on their variable line of credit through UBS Bank (USA) that was collateralized with the pledged shares of the UBS-PR Closed-End funds in their UBS-PR accounts. He assured them that the strategy was safe and used all of the time by banks to make money when interest rates were low. The only risk the stockbroker mentioned was that they would need to stop using the strategy if and when interest rates rose in the future. There was no discussion about the risk of leverage or what could happen in the account if the bond and funds prices declined. Our clients let the stockbroker manage their accounts and periodically received verbal reports from him that all was well. He never expressed any concerns about economic or political issues developing within the Commonwealth, not even after our clients approached him in September and October...

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GPB Capital Fund Investors: How Do You Recover Your GPB Capital Investment Losses?

Recently, we have received telephone calls from investors inquiring about whether they have suffered losses in one or more of the GPB Capital Holdings, LLC sponsored private placement investments known as: GPB Automotive Portfolio, LP GPB Waste Management Fund, LP GPB Holdings Fund I, LP GPB Holdings Fund II, LP GPB Holdings Fund III, LP GPB New York Development, LP, GPB Cold Storage, LP. GPB Holdings Qualified, LP For some reason, these investors still believe their $50,000, $100,000 or $250,000 investments in one or more of the above-listed limited partnerships (the “GPB Funds”) are still valuable even though they invested in a company: that stopped making the promised distributions with no audited financial statements for years with no Audit Committee because they quit due to perceived risks in the firms books and records that failed to send out Form K-1s so now some IRA investors are going to be penalized whose Chief Compliance Officer was indicted for Obstruction of Justice whose former business partner sued alleging it has been engaged in a massive Ponzi -like scheme for some time that has failed to file mandatory SEC annual and quarterly statements for two years that last reported 39% and 25% declines in valuations of its two biggest funds two years ago and given no valuations since that time whose funds will no longer be permitted on broker-dealer platforms because they cannot be valued whose 2015 and 2016 financial statements admittedly needed to be restated because they were wrong that is under investigation by the FBI, SEC, FINRA, State of Massachusetts and NYC Business Integrity Commission that is a defendant in multiple class action lawsuits GPB Capital investors are shocked when we tell them they lost 8 to 10% of their investment the second they delivered the check due to the excessive commissions paid the broker who sold them. It’s true, GPB Capital has not filed bankruptcy and the company itself has not been indicted or proven to be a Ponzi-like scheme but we will bet (dollars for doughnuts) GPB Capital investors have investment losses and so, you do not have to wait for someone to tell you it’s all gone. But first, what exactly were those so-called investments in the GPB Funds and when are you supposed to get your money back? Investors purchased limited partnership interests that are not transferable and cannot be sold in any public market. The GPB Funds were never obligated to make any redemption or repurchase any investor’s interest in any of the funds. Yet investors were led to believe they would get all of their money back with a nice dividend up until the point of termination. However, there was never any definite termination date for return of those funds. For example, the GPB Automotive Fund stated: While we generally expect the Dealerships to operate for approximately 2 to 5 years, the company’s term will expire on the earliest of: (i) a determination by GPB that the Company should be wound up, (ii) the date we divest our ownership interest in all of the Dealerships, (iii) the termination, bankruptcy, insolvency or dissolution of GPB, (iv) the sale of substantially all of our assets, (v) upon written consent of all our partners to terminate, (vi) an event of withdrawal of GPB, or (vii) a court decree requiring our winding up or dissolution. This appears to be nothing more than an illusory promise about termination and when there will be a return of investor’s capital. Further, if any investment capital is going to be returned, it will not be for years and probably only after a bankruptcy, insolvency or other court ordered dissolution of GPB Capital and the funds it sponsored. Notwithstanding, there is a way for investors to recover the amount they invested in one or more of the GPB Funds before the termination date, whenever that may be in the future. According to SEC filings, more than 60 brokerage firms sold investments in the various GPB Funds. The major players were financial advisors associated with Royal Alliance, FSC Securities, SagePoint Financial, Cetera Advisors and Woodbury Financial Services. These broker-dealers and the others who sold the limited partnership interests (otherwise known as securities) in the GPB Funds were all subject to the federal and state securities laws and regulations, as well as the Financial Industry Regulatory Authority (FINRA) rules governing the offer and sale of securities. They were responsible for conducting due diligence to make sure these investments were reasonable investments for individuals and not a fraud. These broker-dealers and their financial advisors who actually offered and sold the investments were obligated to make sure they did not misrepresent the investment and that these limited partnership interests were suitable investments for the person to whom they were offered and sold. Did they act properly or were the firms conflicted and their advisors blinded by the huge 8-10% commissions? The only avenue for investors to recover their capital invested before the termination date of the GBP Funds is to file a FINRA arbitration proceeding. Many GPB Fund investors are reporting that the stockbrokers and investment advisors who recommended the GPB Funds to them are telling them to hold off and not be so quick to file any suit or arbitration claim. Investors are being told the funds have assets and they have suffered any losses. Why any investor would continue to believe any salesman (who received a 8 to 10% commission) is beyond comprehension given all the bad news, inaccurate financials and now the absence of any meaningful financial information? Investors need to understand those salesman are conflicted in giving you any advice. Any further delay in filing claims could be detrimental to your case and ability to obtain certain remedies under the law like rescission. If you file a timely claim under certain securities statutes you could be entitled to rescind the investment transaction and receive a return of your entire investment plus legal interest from the date of purchase (less any income received) plus attorney...

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The Law Offices of Robert Wayne Pearce, P.A. Wins $1.45 Million Plus Interest Award Against UBS and UBS Puerto Rico

In an arbitration proceeding against UBS Financial Services, Inc. (UBS) and UBS Financial Services, Inc. of Puerto Rico (UBS-PR), the Law Offices of Robert Wayne Pearce, P. A. won a $1.45 million plus interest award for one of the firm’s clients last week. A summary of Claimant’s allegations against UBS and UBS-PR are set forth below. If you or any family member received similar unsuitable recommendations from UBS-PR and its stockbrokers or found yourself with an account overconcentrated in Puerto Rico municipal bonds and/or closed-end bond funds, or if you borrowed monies from UBS and used your investments as collateral for those loans, we may be able to help you recover your losses. Contact our office for a free consultation about your case. SUMMARY OF ALLEGATIONS MADE AGAINST UBS AND UBS-PR The arbitration arose out of a series of unsuitable investment recommendations made by a UBS-PR and a UBS financial advisor that our client purchase and hold an excessive concentration of UBS-PR closed-end bond funds in a leveraged UBS-PR account. Because of the financial advisors’ unsuitable recommendations, our client’s investment was not diversified from an asset allocation standpoint and also from a concentration standpoint, as the portfolio was overconcentrated in a single geographic area, namely, Puerto Rico. UBS and UBS-PR, through their representatives, disseminated false and misleading information to our client about both the nature and risk of owning the closed-end bond fund and the leveraged investment strategy employing UBS and UBS-PR financing schemes through UBS Bank. UBS, UBS-PR and its employees not only violated the FINRA Code of Conduct, but they also committed fraud, breached their fiduciary duties to our client, and were negligent in advising her on how to safeguard her investment capital. Both UBS and UBS-PR also negligently failed to supervise its employees in connection with managing our client’s account. Our client suffered substantial damages. THE RELEVANT FACTS Claimant was a 45 year old married housewife raising two children in San Juan, Puerto Rico. She had very little investment experience and a very small account. Claimant relied exclusively upon her UBS financial advisor for investment advice and management of the investments in her UBS-PR account. Claimant met with her stockbroker to discuss her goals and financial needs and receive recommendations for the investment of the gift she received from her father. She told her stockbroker that she only wanted him to invest in safe income producing investments in her UBS-PR account. Claimant told her stockbroker that she wanted investments that would be guaranteed (i.e., preserve her principal) and produce income. Her UBS financial advisor acknowledged her goals and needs and recommended what he described as seguros, de bajo riesgo y fondos mutuos conservadores, i.e., safe, low risk, and conservative mutual funds. He told her that the bonds in the so-called fondos mutuos, i.e., mutual funds were estan garantizados por la constitución de Puerto Rico, i.e., they are guaranteed by the Puerto Rico constitution. There was no detailed discussion about the nature, mechanics or risks of the proposed investments in the UBS Puerto Rico closed-end funds that he recommended. Neither UBS‑PR nor the UBS financial advisor ever provided Claimant with a prospectus or offering memorandum relating to the closed-end funds. Contrary to the stockbroker’s representations, these were very speculative investments due to the excessive concentration in Puerto Rico bonds, illiquidity and leverage employed by the managers of the so-called conservative mutual funds. Claimant followed her financial advisor’s advice and allowed them to purchase over $4 million of UBS-PR closed-end funds. Shortly after the UBS financial advisor purchased the so-called conservative mutual funds in Claimants account, she decided to purchase a new residence. Claimant told her stockbroker that she would need to raise approximately $1.2 million in cash to purchase the new home. The stockbroker told her that he could arrange for special financing through either a line of credit or what he described as a repo transaction. Claimant followed her UBS financial advisors recommendation and agreed to open a line of credit and then enter into the repo transaction. Approximately two years later, Claimant told her stockbroker that her husband needed to pay off a business loan. The UBS stockbroker recommended she use her line of credit through UBS-PRs bank affiliate, UBS Bank (USA). He told her that the so-called conservative mutual funds in her account would be collateral for the credit line. There was no discussion about the risk of pledging those investments as collateral for the loan. There was no mention of margin calls. He said nothing about the risk of leveraging already leveraged investments in Puerto Rico bonds through the so-called conservative mutual funds. As always, Claimant followed her stockbroker’s recommendation and borrowed approximately $450,000 to help her husband pay off his business loan. In or about June 2011, Claimant told her UBS financial advisor that she wanted to purchase an apartment and needed approximately $840,000. He reminded Claimant that she had a line of credit for that purpose and that she should use her credit line because the interest rate was so low. Once again, there was no discussion about the risk of pledging her investments as collateral for the additional loan. There was no mention of margin calls or forced liquidations without any prior notice. Once again, the UBS financial advisor said nothing about the risk of leveraging already leveraged investments in Puerto Rico bonds through the so-called conservative mutual funds. As always, Claimant followed her stockbroker’s recommendation and withdrew an additional $840,000 to purchase the apartment. Claimant and her UBS financial advisor rarely met and discussed her investments in her UBS-PR account. On occasion, the financial advisor telephoned or sent by mail some investment recommendations and she did whatever he advised her to do. Claimant did not become concerned about any of the activity in her account until the Spring of 2013. At that time, her accountant reported a decline in the value of the investments she owned. The accountant had prepared financial statements for her family and noticed the value of the investments...

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Another UBS Puerto Rico Investor Sues Brokerage For Unsuitable Investments

The Law Offices of Robert Wayne Pearce, P.A. filed another claim against UBS Financial Services Incorporated of Puerto Rico (UBS Puerto Rico). A summary of the allegations the Claimant made against the Puerto Rico based brokerage is below. If you or any family member received similar misrepresentations and/or misleading statements from UBS Puerto Rico and its stockbrokers or found yourself with an account overconcentrated in closed-end bond funds, or if you borrowed monies from UBS Puerto Rico and used your investments as collateral for those loans, we may be able to help you recover your losses. Contact our office for a free consultation about your case. I. INTRODUCTION This arbitration arises out of misrepresentations and unsuitable recommendations by a UBS Puerto Rico financial advisor to Claimant that he purchase and then hold an excessive concentration of UBS Puerto Rico closed-end bond funds in his account. The Respondent through its representatives made false representations and misleading statements to Claimant about both the nature and risk of the closed-end bond fund and the investment strategy. As a result, the Claimant’s investment portfolio was not diversified from not only an asset allocation standpoint but also overly concentrated in securities issued in a single geographic area, i.e., Puerto Rico. The Respondent and its representatives not only violated the FINRA Code of Conduct and Puerto Rico securities laws but they also committed fraud, breached their fiduciary duties to Claimant and were negligent in advising him. UBS Puerto Rico also negligently failed to supervise its employees. The Respondent and its representatives’ misconduct caused the Claimant to suffer substantial damages in an amount to be determined at the final arbitration hearing. II. BACKGROUND The Claimant is 73 years old and living alone in San Juan, Puerto Rico. He retired from the Veterans Administration pharmacy department. Thereafter, he went back to work part-time as a Pharmacist to supplement his income. He has worked as a Pharmacist for over 40 years. He currently supports himself with his Veterans Administration pension, part-time employment income and dividends from his securities account earned on securities in his account at UBS Puerto Rico. The stockbroker has been the Claimant’s primary broker at UBS Puerto Rico for many years. He knows the Claimant’s age, employment status, and financial condition. The stockbroker knew that the Claimant’s life savings were deposited with UBS Puerto Rico and in his hands. Claimant has been a passive investor and relied exclusively on his UBS Puerto Rico Stockbroker to make all of the investment decisions in his UBS Puerto Rico account. As a result of the UBS Puerto Rico stockbroker’s recommendations and decisions, the Claimant’s UBS Puerto Rico account became highly concentrated (100%) in Puerto Rico bonds and what the stockbroker described as “fondos,” i.e., “funds” or “fondos mutuos,” i.e., “mutual funds.” Claimant has never been given a full explanation of the nature, mechanics or risks of only owning Puerto Rico bonds and “funds” in his account. There was little activity in Claimant’s UBS Puerto Rico account, other than dividend reinvestments, for many years. However, in August 2012, the UBS Puerto Rico stockbroker solicited Claimant to sell his investment in the Puerto Rico Fixed Income Funds, Inc. and to purchase the Puerto Rico Fixed Income Fund V, Inc. because it would supposedly increase the amount of income Claimant would receive by investing in a different “fund.”[1] Claimant questioned the stockbroker about the “fund” and whether it was a “safe” investment for him to make at that time. The stockbroker assured Claimant that it was a “very conservative” and “low risk” investment and just like the other “funds” in his retirement account. In March of 2013, Claimant became concerned about the status of his account. The recent change in the government whereby the Popular Democratic Party took control was especially troublesome to him. He was concerned that the Popular Democratic Party would turn everything into junk, including the bonds in his account. Claimant noticed that the value of his accounts had dropped and set up an appointment to meet with the UBS Puerto Rico stockbroker. Upon arrival, Claimant told the stockbroker he wanted to sell all of his investments in the account because he was very concerned about Puerto Rico’s economic future. The stockbroker told Claimant, among other things: “te volviste loco,” i.e., “you are crazy;” “no se preocupe, i.e., “not to worry;” “nunca se convertiran en bonos de chatarra, i.e., “they will never become junk bonds;” “no venda,” i.e., “don’t sell;” “esta pagando interes alto,” i.e., “it’s paying high interest;” and “no puede reemplazar el ingreso,” i.e., “you cannot replace this income.” The stockbroker never said anything about the continuing decline in the ratings of the Puerto Rican bond by the major credit rating agencies, Moody’s, Standard and Poors, and Fitch ratings. He said nothing about the speculative nature of the “funds” due to the illiquidity, leverage and geographic limitations of the investments. He remained silent about the risk of holding an excessive concentration of Puerto Rico securities in the account. As always, the Claimant relied on the UBS Puerto Rico stockbroker for investment advice who did exactly what he told him to; that is, he held all of the Puerto Rico bonds and “funds” in his UBS Puerto Rico account. In September 2013, Claimant attempted to contact the UBS Puerto Rico stockbroker several times by telephone. However, each and every time Claimant called he was told the stockbroker was unavailable. Claimant was only able to exchange messages about the investments in his account through the stockbroker’s assistant. The UBS Puerto Rico stockbroker’s messages were always: Don’t worry, this is temporary, the market will recover, and hold on to all of your bonds and “funds.” The Claimant did not meet with UBS Puerto Rico stockbroker until February 13, 2014 and not until after he sent a letter demanding that the stockbroker sell all of the “funds” in his account. At the meeting, the stockbroker continued to speak highly of the Puerto Rico bonds and “funds.” He continued to tell Claimant that the decline in...

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