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Mar 18, 2023

J.P. Morgan Sued For Edward Turley’s Alleged Misconduct: $55 Million!

The Law Offices of Robert Wayne Pearce, P.A. has filed another case against Ex-J.P. Morgan broker Ed Turley for alleged misrepresentations, misleading statements, unsuitable recommendations, and mismanagement of Claimants’ accounts. The Law Offices of Robert Wayne Pearce has filed another case against J.P. Morgan Securities for alleged misrepresentations, misleading statements, unsuitable recommendations, and mismanagement of Claimants’ accounts continuing in fall 2019 and thereafter by Edward Turley (“Turley”), a former “Vice-Chairman” of J.P. Morgan. At the outset, it is important for our readers to know that our clients’ allegations have not yet been proven. IMPORTANT: We are providing information about our clients’ allegations and seeking information from other investors who did business with J.P. Morgan and Mr. Turley and had similar investments, a similar investment strategy, and a similar bad experience to help us win our clients’ case. Please contact us online via our contact form or by giving us a ring at (800) 732-2889. Latest Updates on Ed Turley – November 18, 2022 The Advisor Hub reported today that the former star broker with J.P. Morgan Advisors in San Francisco Edward Turley agreed to an industry bar rather than cooperate with FINRA’s probe of numerous allegations of excessive and unauthorized trading that resulted in more than $100 million worth of customer complaints. FINRA had initiated its investigation of Edward Turley as it related to numerous customer complaints in 2020. The regulator noted in its Acceptance Waiver and Consent Agreement (AWC) that the investors had generally alleged “sales practice violations including improper exercise of discretion and unsuitable trading.” According to Edward Turley’s BrokerCheck report, he had been fired in August 2021 for “loss of confidence concerning adherence to firm policies and brokerage order handling requirements.” On October 28th, FINRA requested Turley provide on-the-record testimony related to his trading patterns, including the “use of foreign currency and margin, and the purchasing and selling of high-yield bonds and preferred stock,” but Edward Turley through counsel declined to do so. As a result, Edward Turley violated FINRA’s Rule 8210 requiring cooperation with enforcement probes, and its catch-all Rule 2010 requiring “high standards of commercial honor,” the regulator said and he was barred permanently from the securities industry. Related Read: Can You Sue a Financial Advisor or Stockbroker Over Losses? Turley Allegedly Misrepresented And Misled Claimants About His Investment Strategy The claims arise out of Turley’s “one-size-fits-all” fixed income credit spread investment strategy involving high-yield “junk” bonds, preferred stocks, exchange traded funds (“ETFs”), master limited partnerships (“MLPs”), and foreign bonds. Instead of purchasing those securities in ordinary margin accounts, Turley executed foreign currency transactions to raise capital and leverage clients’ accounts to earn undisclosed commissions. Turley over-leveraged and over-concentrated his best and biggest clients’ accounts, including Claimants’ accounts, in junk bonds, preferred stocks, and MLPs in the financial and energy sectors, which are notoriously illiquid and subject to sharp price declines when the financial markets become stressed as they did in March 2020. In the beginning and throughout the investment advisory relationship, Turley described his investment strategy to Claimants as one which would generate “equity returns with very low bond-type risk.” Turley and his partners also described the strategy to clients and prospects as one “which provided equity-like returns without equity-like risk.” J.P. Morgan supervisors even documented Turley’s description of the strategy as “creating portfolio with similar returns, but less volatility than an all-equity portfolio.” Note: It appears that no J.P. Morgan supervisor ever checked to see if the representations were true and if anybody did, they would have known Turley was lying and have directly participated in the scheme. The Claimants’ representative was also told Turley used leverage derived from selling foreign currencies, Yen and Euros, to get the “equity-like” returns he promised. Turley also told the investor not to be concerned because he “carefully” added leverage to enhance returns. According to Turley, the securities of the companies he invested in for clients “did not move up or down like the stock market,” so there was no need to worry about him using leverage in Claimants’ accounts and their cash would be available whenever it was needed. The Claimants’ representative was not the only client who heard this from Turley; that is, he did not own volatile stocks and not to worry about leverage. Turley did not discuss the amount of leverage he used in clients’ accounts, which ranged from 1:1 to 3:1, nor did Turley discuss the risks currency transactions added to the portfolio, margin calls or forced liquidations as a result of his investment strategy. After all, Turley knew he could get away without disclosing those risks. This was because J.P. Morgan suppressed any margin calls being sent to Turley’s clients and he liquidated securities on his own to meet those margin calls without alarming clients.  This “one-size-fits-all” strategy was a recipe for disaster. J.P. Morgan and Turley have both admitted that Turley’s investment strategy was not suitable for any investor whose liquid net worth was fully invested in the strategy. It was especially unsuitable for those customers like Claimants who had other plans for the funds in their J.P. Morgan accounts in fall 2019 and spring 2020. Unfortunately, Turley recommended and managed the “one-size-fits-all” strategy for his best clients and friends, including Claimants. Turley was Claimants’ investment advisor and portfolio manager and required under the law to serve them as a “fiduciary.” He breached his “fiduciary” duties in making misrepresentations, misleading statements, unsuitable recommendations, and mismanagement of Claimants’ accounts. The most egregious breach was his failure to take any action to protect his clients at the end of February 2020, when J.P. Morgan raised the red flags about COVID-19 and recommended defensive action be taken in clients’ accounts. Turley Allegedly Managed Claimants’ Accounts Without Written Discretionary Authority Claimants’ representative hired Turley to manage his “dry powder,” the cash in Claimants’ accounts at J.P. Morgan, which he would need on short notice when business opportunities arose. At one point, Claimants had over $100 million on deposit with J.P. Morgan. It was not...

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Sep 1, 2020

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.

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Jul 1, 2020

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 “FINRA Arbitration Lawyer,” 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.”

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Mar 2, 2019

A Stockbroker’s Introduction to FINRA Examinations and Investigations

Brokers and financial advisors oftentimes do not understand what their responsibilities and obligations are and what may result from a Financial Industry Regulatory Authority (FINRA) examination or investigation. Many brokers do not even know the role that FINRA plays within the industry. This may be due to the fact that FINRA, a self-regulatory organization, is not a government entity and cannot sentence financial professionals to jail time for violation of industry rules and regulations. Nevertheless, all broker-dealers doing business with members of the public must register with FINRA. As registered members, broker-dealers, and the brokers working for them, have agreed to abide by industry rules and regulations, which include FINRA rules.

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Mar 10, 2023

What are Structured Notes?

Structured notes are a type of investment that can offer higher returns than traditional investments, but they also come with more risks. Structured notes are created by banks and other financial institutions, and they are typically sold to investors through brokerages. The issuer of the note will bundle together different types of securities, such as stocks, bonds, and commodities, and then structure them in a way that offers potential for higher returns. For example, a bank might create a structured note that pays out if the stock market goes up by a certain percentage over the course of the year. The downside of investing in structured notes is that they are complex financial products, which means that investors may not fully understand the risks involved. Additionally, if the underlying securities perform poorly, investors could lose all of their money. In this article, we will cover the following topics: – What are structured notes? – How do structured notes work? – The advantages and disadvantages of investing in structured notes – Legal action you can take if you’ve been sold a structured note If you’re thinking about investing in a structured note, it’s important that you understand how these products work before making a decision. Keep reading to learn more. What are Structured Notes? Structured notes are investments that often combine securities of different asset classes as one investment for the desired risk and return over a period of time. They are complex investments that are often misunderstood by not only investors but the financial advisors who recommend them. Note: The lack of understanding around how these investments actually work and the fees charged to purchase them have resulted in many investors losing a great deal of money. If you find yourself in this situation, you should speak with a securities attorney about your legal options. Types of Structured Notes There are different types of structured notes, but they all have one goal in common: to give the investor a higher return than what they would get from a traditional investment, like a savings account or government bond. Structured notes can be created with different underlying assets, including stocks, bonds, commodities, and even currencies. The most common type of structured note is the principal protected note, which is designed to protect the investor’s original investment while still offering the potential for growth. Other types of structured notes include: How do Structured Notes Work? Structured notes are created by banks and other financial institutions. The issuer of the note will bundle together different types of securities, such as stocks, bonds, and commodities. The way these assets are bundled together will create the desired risk and return for the investor over a period of time. All structured notes have two parts: a bond component and a derivative component. Most of the note is invested in bonds for principal protection, with the rest allocated to a derivative product for upside potential. The derivative product investment allows exposure to any asset class. It’s important to remember that a structured note is a debt obligation. The issuer of the structured note typically pays interest or dividends to the investor, similar to a bond, during the terms of the notes. This makes this type of investment seem safe and secure to many investors. However, there is always the potential for loss with a structured note. Structured notes suffer from a higher degree of interest rate risk, market risk, and liquidity risk than their underlying debt obligations and derivatives. If the issuer of the note defaults, the entire value of the investment could be lost. This means that if the issuing bank were to go bankrupt, investors could lose their entire investment. The Advantages of Investing in Structured Notes The versatility of structured notes allows them to provide a wide range of potentially lucrative outcomes that are difficult to come by elsewhere. Structured notes typically offer investors returns that are higher than the interest rates offered on traditional deposits. They may even offer the potential for capital appreciation. However, such gains or capital gains are subject to the performance of the underlying reference asset(s) or benchmark(s), which exposes investors to a wider range of risks than with a traditional deposit. IMPORTANT: Structured notes are often considered too risky and complicated for the individual investor. Unfortunately, the promise of greater commissions in recent years has prompted stockbrokers to push structured notes on investors, including those for whom they were unsuitable, too dangerous, or just not in line with their objectives. Related Read: Can I Sue My Financial Advisor For Structured Note Investment Losses? The Disadvantages of Investing in Structured Notes Investing in structured notes may not be suitable for everyone. The main reason is that they are complex products that are often misunderstood. A vast majority of structured notes are not principal-guaranteed. You may lose all or a substantial amount of the money you invested in certain situations, including if the reference asset or benchmark performs poorly, interest rates rise, or the issuer of the note defaults as outlined by the terms of the product. The principal repayments or the dividends payable, or both may be linked to the performance of a referenced asset, which is often highly volatile. As a result, if the referenced asset underperforms, you may suffer the loss of dividend payments and/or the loss of your principal investment. In addition, the issuer may have the right to call back, or redeem, the notes early, which could also trigger a loss of your investment. What are the risks? An investor will be exposed to a greater variety of risks when investing in structured notes than when investing in traditional products such as deposits. An investor will lose money if: Although structured notes have the potential to generate greater returns, investors also assume more risks. Investors may find themselves confused by the complex terms and conditions associated with structured notes. To make matters worse, some issuers have been known to market their products aggressively, without adequately disclosing the risks involved. In some cases, investors...

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Mar 10, 2023

How SEC Investigations Work: Process, Timeline, and Causes

You never want to be in the situation where the SEC is investigating you, but when they do, you must act quickly and decisively to minimize any harm. In this article, we’ll take a look at some of the most common reasons why the SEC might initiate an investigation into a company or individual, the SEC investigation process, how long SEC investigations take, and some steps you can take to protect yourself if it happens to you. What Causes an SEC Investigation? The SEC’s Division of Enforcement is in charge of investigating alleged breaches of securities law. Unregistered securities offerings, insider trading, accounting errors, negligence, market manipulation, and fraud are all common reasons for SEC investigations. Need Legal Help? Let’s talk. or, give us a ring at 561-338-0037. The SEC may also investigate a company or individual if they receive a complaint from someone who has been harmed by the alleged violations. Note: If you are under investigation by the SEC, it’s generally safe to assume that you’re under investigation for or a witness to securities fraud. You are strongly enouraged to seek an expereinced SEC defense lawyer. There are Two Types of SEC Investigations: The SEC can conduct two types of investigations: formal and informal. Informal Investigations: For a vast majority of cases, investigations are informal. An informal investigation is less formal and typically occurs when the SEC has general concerns about a company or individual’s compliance with securities laws. The focus of an informal investigation is broader, and the SEC typically relies on information provided by the company or individual under investigation as well as other sources such as whistleblowers. This means that the SEC staff will review the facts and evidence available to them and make a determination as to whether or not an enforcement action is warranted. Following an informal investigation, the SEC may choose to take no action, issue a warning letter, or file a formal enforcement action. Formal Investigation: A formal investigation is more serious and typically occurs when the SEC has specific evidence that a violation of securities laws has occurred. In a formal investigation, the SEC will often use its subpoena power to obtain documents and other information from the company or individual being investigated. The SEC generally reserves formal investigations for more-important matters involving large sums of money or a large number of investors. However, this isn’t always the case, and Enforcement Division staff may elect to pursue a formal inquiry in any situation where it appears that administrative, civil, or criminal fines might be appropriate. All SEC investigations are conducted privately. Facts and evidence obtained by the SEC during an investigation are not made public unless and until the SEC files a formal enforcement action. What Happens When You are Under Investigation? First, you will NOT be told you are under investigation by the SEC. But you will likely receive a letter from the SEC’s Division of Enforcement with a Subpoena requesting documents and/or requiring you to give testimony. At that point, you can request the opportunity to view the Formal Order of Investigation with a summary of the investigation underway. It is a very general description and rarely identifies who or what conduct is under investigation. In most cases, it is important to respond to the SEC as quickly as possible and to provide them with all of the relevant information. Failure to respond or provide false information can lead to civil and criminal penalties. It is strongly advised that you seek legal representation if you are under investigation by the SEC before you respond to the SEC’s letter. An experienced securities defense lawyer will be able to help you navigate the process and protect your rights. What are the Risks of Not Responding to an SEC Investigation? If you do not respond to an SEC investigation, the SEC may take enforcement action against you. This could include filing a lawsuit against you or seeking a court order requiring you to take specific actions such as making restitution to investors or ceasing and desisting from certain activities. The SEC may also seek to bar you from working in the securities industry or from participating in penny stock offerings if you are a registered person. How Long Do SEC Investigations Take? The length of an SEC investigation can vary depending on the facts and circumstances of the case. However, in most cases, the SEC will take a many months to investigate a company or individual before making a decision on whether to take enforcement action. Need Legal Help? Let’s talk. or, give us a ring at 561-338-0037. Of course there are factors outside of the SEC’s control that can also affect the length of an investigation, such as the availability of witnesses or the need to gather evidence from foreign jurisdictions. You can learn more about the SEC’s enforcement process by visiting the SEC’s website. What Happens After an SEC Investigation? After an SEC investigation, the Enforcement Division will decide whether to take enforcement action. Of course, the ideal case (when the SEC has started an investigation) is to conclude the inquiry with no evidence of wrongdoing. However, if the SEC’s Enforcement Division decides to take action, the division will file a lawsuit in federal court. The SEC’s litigation is generally public, and the agency will typically issue a press release announcing its action. The press release will include a summary of the allegations and the relief being sought by the SEC. Defendants in SEC lawsuits have the right to be represented by an attorney and to file a response to the SEC’s allegations. The litigation will proceed through the court system, and a final judgment will be issued by the court. What’s a Wells Notice? If the SEC decides that they want to pursue a formal enforcement action against you, they will send you what is known as a Wells Notice. A Wells Notice is a formal notification from the SEC that they are considering bringing an enforcement action against you for violating securities law. It gives you an opportunity to respond to the...

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Mar 10, 2023

GWG Holdings L Bonds: Complaints & Investment Losses

In recent news, it was reported that GWG Holdings, a Dallas, Texas-based asset manager that provides insurance services, as well as acquires life insurance policies in the secondary market, filed for bankruptcy on April 20, 2022. It is estimated that GWG Holdings has more than $2 billion in liabilities, including $1.3 billion of GWG L bonds, and has missed millions of dollars in combined interest and principal payments to investors owning the GWG L bond series. IMPORTANT: As of February 2022, GWG Holdings has failed to pay $13.6 million in payments to GWG L bondholders. These were high yield, high risk, illiquid investments that as stockbrokers should have been wary and not recommended to investors with conversative or moderate risk tolerances. The Law Offices of Robert Wayne Pearce, P.A. is currently investigating claims against stockbrokers related to recommendations to purchase GWG Holdings L bonds (“GWG L bonds”) and is offering free consultations to those who have suffered GWG L bond losses. If you have suffered GWG L bond investment losses, our experienced securities litigation attorneys are prepared to discuss the matter and provide their legal opinion as to whether you can recover damages against the broker-dealer who recommended and sold you GWG L bonds. Please contact our law firm at 561-338-0037 or online for a free consultation. What are GWG L Bonds? In 2012, GWG Holdings created and has since sold nearly $2 billion in GWG L bonds to investors. These high-yield bonds were unrated and illiquid investments and therefore, unsuitable for investors with conservative or moderate risk tolerances. Need Legal Help? Let’s talk. or, give us a ring at 561-338-0037. GWG Holdings issued the GWG L bonds to raise capital to purchase an individual life insurance policyholder seeking liquidity or cash by selling his/her life insurance policy to GWG Holdings for more than the surrender value but substantially less than the policy’s face value. GWG Holdings would then make the premium payments and hope to receive a payout worth greater than what it paid for the policy after the original policy matures or the policyholder passes away. The subject GWG L bonds were created to finance these life insurance policy purchases by GWG Holdings.  The problem for investors was the GWG L bond investments depended on insurance policy premiums and benefits being paid out according to assumptions and statistical models, thus making them speculative investments for investors seeking income and protection of their capital. Further, GWG L bonds had no secondary market, which prevented investors from liquidating should they need the cash immediately. In other words, money used to purchase GWG L bonds was essentially trapped from the moment of purchase. Moreover, the only collateral supposedly backing GWG Holdings are interests in GWG subsidiary companies that purportedly owned real assets, including the insurance policies. Don’t Be Discouraged by GWG Holdings’ Bankruptcy  As early as April 2022, news sources reported that GWG Holdings was filing for Chapter 11 bankruptcy protection. However, this news should not stop investors from seeking the opinion of a skilled and experienced securities attorney and getting just compensation. Broker-dealers and their agents who misrepresented and/or made unsuitable recommendations as to the GWG L bonds may still be held liable for losses in investor accounts. In other words, an account holder can still file a FINRA arbitration against the broker-dealer to recover losses in GWG L bonds for misrepresentations, unsuitable recommendations, failure to conduct adequate due diligence, negligence, etc. You should not let your broker-dealer or broker/financial advisor convince you otherwise. Robert Wayne Pearce, P.A. Recovers Investment Losses The attorneys at Law Offices of Robert Wayne Pearce, P.A. are experienced in litigating high-yield and speculative fixed-income instrument securities loss cases. For over 40 years we have represented investors in arbitration and securities litigation matters, including FINRA arbitration proceedings in nearly every state. Contact us now at 561-338-0037 or contact us online to schedule your free initial consultation.  GWB L Bonds Were Sold for High Commissions! According to GWG Holdings, the GWG L bonds were sold by Emerson Equity, the managing broker-dealer, which partnered with other brokerage firms that also sold the L bonds to their retail customers. The commissions on such sales by the brokerage firms were as high as 8%. The Law Offices of Robert Wayne Pearce, P.A. suspects that many other broker-dealers were involved in the recommendation and sale of the GWG L bonds to their customers. Some of the firms alleged to have sold L bonds to their customers include: If the name of your broker-dealer does not appear on the list above, do not be alarmed. Rather, call us at 561-338–0037 or contact us online for free consultation to discuss whether you may have a claim to recover damages. Recover Your GWG L Bond Investment Losses in a FINRA Arbitration The Law Offices of Robert Wayne Pearce, P.A. is prepared to help investors who have sustained damages or monetary losses not only in GWG L bonds but other investments in your account in FINRA arbitration. If you were one of those investors who have suffered losses, you should seek the immediate advice of an experienced investment fraud attorney with more than 40 years of experience representing investors in investment fraud and broker-dealer negligence cases. It is imperative that you seek our consultation as soon as possible, as there are applicable eligibility rule and/or statutes of limitation that may forever bar your claim against the broker-dealer who sold you the GWG L bonds if you do not file your claim in a timely manner.  We Don’t Get Paid Unless You Get Paid! The Law Offices of Robert Wayne Pearce, P.A. accepts cases on a contingency fee basis. This means if we do not recover money for you, you will not incur any fees owed to our firm. In other words, our attorney’s fees are collected only if we successfully settle your case or obtain a monetary award at the final arbitration hearing. We will also bear the cost of your case through the litigation...

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Mar 10, 2023

Insider Trading: Definition, Rules, and Penalties

Using insider information to make investment decisions on the stock market is illegal and can lead to serious financial penalties. This type of investment fraud is commonly referred to as insider trading. In this article, we will cover the definition of insider trading, how it is detected and prosecuted when insider trading is illegal, and the potential penalties that a person may face if convicted. What is insider trading? Insider trading is the practice of trading a company’s stocks or other securities by an individual to one’s own advantage through having access to confidential or non-public information. Need Legal Help? Let’s talk. or, give us a ring at 561-338-0037. For example, if a company insider tells his or her friend about an upcoming merger that has not been made public, both the company insider and the friend could be held liable for insider trading if the friend buys the stock. IMPORTANT: The definition of an “insider” for insider trading purposes is far broader than most people realize. While it includes corporate officers and directors, it also covers employees at lower levels, friends and family members, and other persons who have access to nonpublic information. Who is an “insider”? An “insider” is anyone who is an officer, director, 10% stockholder or has access to inside information as a result of his or her relationship with the Company or an officer, director, or principal stockholder of the Company. According to SEC Rule 10b-5, the definition of an “insider” goes considerably beyond these key company personnel. In fact, this rule also covers ANY employee who has access to confidential information as part of his or her job duties. In addition, if ANY person outside of the company has received a “tip” from an “insider” about the material, nonpublic information, that person would also be considered an “insider” under this rule. Lastly, Rule 10b-5 also covers any family members or close friends of an “insider.” For example, if the CEO of a company tells his son about an upcoming merger, and the son then buys stock in the company before the merger is public knowledge, both the CEO and his son would be considered “insiders” under this rule. Who can be charged with insider trading? An individual is liable for insider trading when they have acted on privileged knowledge or confidential information that is not available to the general public to attempt to make a quick/easy profit. This may include using information about: Identifying insider threats might be simple at times: CEOs, executives, and directors are immediately exposed to important information before it’s made public. However, lower-level employees may also have access to this type of information, which means that anyone from an entry-level analyst to a janitor could be susceptible to committing insider trading. Note: If you are under investigation or have been charged with insider trading, it is important to seek legal counsel immediately. An experienced SEC defense attorney can help you understand the charges against you and build a strong defense. How is insider trading detected? Both companies and regulators try to prevent insider trading to ensure the integrity of a fair marketplace. Despite what you may have read before, not all insider trading is illegal. Directors, workers, and management of a corporation may buy or sell the company’s stock with special knowledge as long as they notify the Securities and Exchange Commission (SEC) about those transactions; these trades are then made public. Unfortunately, not all insider trading is this transparent. Illegal insider trading happens when people use confidential information to make profits in the stock market. The SEC investigates and prosecutes these cases as they are a form of securities fraud. Here are a few of the ways that the SEC detects insider trading: Monitoring Trading Activity The government tracks stocks that are being bought and sold to look for patterns that may be indicative of insider trading. The SEC monitors trading activity, especially around the time when significant events happen, such as a major announcement or earnings release. This practice of surveillance can lead to the discovery of large, irregular trades around the time of these events. The SEC may then investigate the people behind those trades to see if they had access to nonpublic information. Complaints From The Public The SEC also relies on tips from the public to help detect insider trading. When the SEC receives a large number of complaints from investors who lose substantial sums of money around the same time, it can be an indication that insider trading has taken place. Since the insider trader has special knowledge, they can leverage investment tactics like options trading on the company’s stock to make a lot of money in a short period. When this occurs, it can lead to other investors losing money and filing complaints with the SEC. Whistleblowers The SEC’s Office of the Whistleblower was created in 2011 to reward people who come forward with information about securities law violations, including insider trading. The SEC gets tips from whistleblowers who come forward with information about potential violations. Whistleblowers can be current or former employees, lawyers, accountants, or anyone else with knowledge of insider trading. Whistleblowers have incentives to come forward, as they may be eligible for a portion of the money recovered by the SEC. The maximum award is 30% of the amount recovered, and it can be higher if the SEC takes action based on the information provided. Which regulatory agencies are involved in investigating insider trading? The SEC is the primary federal regulator that investigates and prosecutes cases of insider trading. The agency has a division, called the Division of Enforcement, which is responsible for bringing enforcement actions against individuals and companies who violate securities laws. The Department of Justice (DOJ) also plays a role in investigating and prosecuting insider trading cases. The DOJ can bring criminal charges against individuals who engage in insider trading. In addition to government agencies, FINRA (Financial Industry Regulatory Authority) is a private organization that regulates the securities industry. FINRA can bring disciplinary actions...

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Mar 9, 2023

What is Securities Fraud? Definition, Examples, & How to Report

If you’ve been the victim of securities fraud, you may be able to take legal action. What is Securities Fraud? Securities fraud, also known as investment fraud or stock fraud, involves using false or misleading information to convince investors to make investment decisions that result in substantial losses. All forms of securities fraud aim to deceive investors into taking actions that benefit the perpetrator financially. Need Legal Help? Let’s talk. or, give us a ring at 561-338-0037. Almost anyone can be a victim of securities fraud. While the elderly and inexperienced investors are frequent targets, even savvy investors can fall prey to securities fraud if they’re not careful. Perpetrators of securities fraud will often make false or misleading statements in order to persuade investors to buy or sell securities, usually at the benefit of the perpetrator. If you believe you have been a victim of securities fraud, it is important to take action. Securities fraud is an illegal or unethical activity punishable by law. You may be able to recover your losses by filing a lawsuit against the person or entity who committed the fraud, as well as protect yourself and other investors from future harm. You should consider talking with an investment fraud lawyer to learn more about your legal options. Key Takeaways Securities Fraud is an illegal and deceptive practice targeting investors to make investment decisions based on false or misleading information. There are many different perpetrators of securities fraud, and almost anyone can be a victim. Commons forms of securities fraud include but are not limited to: High Yield Investment Frauds, Ponzi & Pyramid Schemes, Advance Fee Schemes, Misconduct by an Investment Advisor, and Structured Notes. There are legal actions you can take if you have been the victim of securities fraud, especially if you’ve suffered substantial investment losses as a result. The Different Perpetrators of Securities Fraud There are many different perpetrators of securities fraud, and they all have different motivations. Some may be driven by greed, while others may simply be trying to take advantage of investors. Regardless of their motivations, all perpetrators of securities fraud share one goal: to make money by deception. Securities fraud can be committed by a single person, such as a stockbroker or a financial advisor. It might also be perpetrated by an organization, such as a brokerage firm, corporation, or investment bank. In these scenarios, the target is usually an unsophisticated investor who is unaware of the fraud being committed. Independent individuals may also commit securities fraud, such as insider trading or market manipulation. In these cases, the individual investor is usually the perpetrator rather than the victim. Due to the actions of the independent individual, the entire market may be impacted, and other investors may suffer losses as a result. Unfortunately, the perpetrator of securities fraud may be unknown. This is often the case with internet fraud, where scammers set up fake websites or send out mass emails to trick investors into giving them money. Anyone can be a perpetrator of securities fraud, and anyone can be a victim. The best way to protect yourself is to be aware of the different types of securities fraud and to know what red flags to look for. What are Common Examples of Securities Fraud? There are many different types of securities fraud, but some are more common than others. When a broker or investment firm takes your money with the promise of investing it and then uses it for other things, you’ve been a victim of securities fraud. Securities fraud schemes are often characterized by offers of guaranteed returns and low- to no-risk investments. The most typical forms of securities fraud, as defined by the FBI, are: High-Yield Investment Frauds These types of securities fraud are often characterized by promises of high returns on investment with little to no risk. They may involve a few different forms of investments, such as securities, commodities, real estate, or other highly-valuable investments. You can identify these schemes due to their “Too good to be true” offers. These types of fraud tend to be unsolicited. Perpetrators may elicit investments from investors by internet postings, emails, social media, job boards, or even personal contact. They may also use mass marketing techniques to reach a large number of potential investors at once. Once the fraudster has received the investment money, they may simply disappear with it or use it to fund their own lifestyle. The investment itself may not even exist. Ponzi & Pyramid Schemes These types of securities fraud use the money collected from new investors to pay the high rates of return that were promised to earlier investors in the scheme. Payouts over time give the early impression that the scheme is a legitimate investment. However, eventually, there are not enough new investors to support the payouts, and the entire scheme collapses. When this happens, the people who invested at the beginning of the scheme often lose all of their money. In these schemes, the investors were the only source of funding. Advance Fee Schemes In these types of securities fraud, the investor is promised a large sum of money if they pay an upfront fee. The fees may be called “commissions”, “processing fees”, or something similar. The fraudulent organization will often require that the fee be paid in cash, wire transfer, or even cryptocurrency. They may also ask the investor to provide personal information such as bank account numbers or social security numbers. Once the fee is paid, the fraudulent organization will often disappear and the investor will never receive the promised money. Other Securities Fraud In addition to the above list provided by the FBI, at The Law Offices of Robert Wayne Pearce, P.A., we have found that the following types of securities fraud are also common: Misconduct by an Investment Advisor By far the most common type of securities fraud that our firm sees is misconduct by an investment advisor or brokers. Investment advisors or brokers are supposed to act in their clients’ best interests (fiduciary duty), but some advisors put their own...

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Mar 3, 2023

What are Options in the Stock Market?

There are many different investing tactics and strategies that brokers leverage to generate returns on the stock market. Among these are options, which are a type of derivative security. For the common investor, understanding exactly what are options in stocks may leave you scratching your head. In this guide you’ll learn: So if you are ready to learn more about options, you have landed on the right page. Let’s get started. What are Options? Options are a type of derivative security that gives the holder the right, but not the obligation, to buy or sell an underlying asset (such as a stock, commodity, or currency) at a specified price (known as the strike price) within a certain period of time. For the average investor, understanding options can be complicated and intimidating. Despite this, some brokers still partake in the purchase and sale of options for their clients without properly warning them about the risks involved. Options trading is both complex and risky and may be considered unsuitable for many investors. When you (or your broker) buy an options contract, it gives you the right, but not the obligation, to make the purchase or sale at the agreed-upon price. This means that the price of the options contract is connected to the price of the underlying asset. If you think the price of the underlying asset will go up or down, you can buy an options contract to potentially profit from that change without actually owning the asset. IMPORTANT: Options trading is highly speculative in nature and can carry a substantial risk of loss. As such, this type of trading is not suitable for all investors. Investors who have lost significant amounts of money in options trading have been known to sue their brokers for failing to properly inform them about the risks involved. It is important to note that, unlike stocks, there is no actual physical “exchange” of the underlying asset when an options contract expires; rather, your broker will simply adjust your account balance accordingly (or not). The Types of Options: Calls and Puts There are two types of options: call options and put options. A call option gives the options contract holder the right to buy an underlying asset at a specified price (known as the strike price) within a certain period of time while a put option gives the holder the right to sell an underlying asset at a specified price within a certain period of time. What is a Call Option? A call option gives the owner of the contract the right to buy an underlying asset at a certain price (known as the strike price) within a specific period of time. If the underlying asset increases in value above the strike price by the time of expiry, the option buyer will make a profit from the difference. To purchase a call option, the buyer must pay a premium (the cost of the option). The buyer has no obligation to buy the underlying asset at any time; they can simply let the option expire. If the call option expires, the buyer will lose the money (premium) they paid for the option. With call options, you’re ultimately betting that the price of the underlying asset will climb in value over time. Understandably, this carries a certain degree of risk and speculation. What is a Put Option? A put option gives the owner of the contract the right to sell an underlying asset at a certain price (the strike price) within a specific period of time. If the underlying asset decreases in value below the strike price by the time of expiry, the option seller will make a profit from this difference. To purchase a put option, the buyer must pay a premium (the cost of the option). If you own put options, it is in your best interest for the stock price to decrease below the strike price. In this event, whoever sold you the option must purchase shares from you at a value higher than what they are currently being traded on the market – granting you a profit and providing an insurance policy against drastic depreciation of worth. If, instead, the market price increases rather than decreases, your shares will have gained value and all you’ll be out is the cost of the put premium. In this case it’s best to allow your option to expire. The Risks of Options Trading While the intent behind purchasing options is to increase the potential for profits, it’s important to understand that the potential for losses is just as real. Options trading is highly speculative in nature and can carry a substantial risk of loss. Some option strategies are nothing short of gambling and carry immense risk. An example of this would be the sale of a naked (uncovered) call or put option. When a call is exercised it gives the purchaser the right to buy shares at a set price (the strike price) within a certain time period independent of whether or not the investor is currently in possession of the underlying asset. If the option is exercised and the shares are not owned, then the seller of the option must purchase them in order to fulfill their obligation, regardless of how high the price of the underlying asset has risen. In the worst-case scenarios, these losses can be catastrophic and wipe out an entire trading account in a single trade. Did Your Broker Make Unsuitable Recommendations Based on Your Risk Tolerance? Not all brokers take the time to understand their clients’ needs, preferences, financial situation and risk tolerance levels. As a result, these brokers may make unsuitable recommendations regarding investments and strategies in options trading. If you have investment losses because your broker recommended unsuitable options trading strategies, you may have a valid claim to recover your losses. Contact an experienced investment fraud lawyer to discuss your legal rights and options.

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Mar 2, 2023

How to File a SEC Complaint or Report Fraud Against a Broker

Your investments are important—that’s why so many individuals hire investment brokers and financial advisors to manage their investment accounts.  Having a qualified broker can be a great advantage to the growth of your investments. Unfortunately, however, investment and securities fraud remains a common and serious issue in the United States each year. So what do you do if you are a victim of investment fraud at the hands of your broker?  The U.S. Securities and Exchange Commission (SEC) has a mission of protecting investors; maintaining fair, orderly, and efficient markets; and facilitating capital formation. In furtherance of this goal, the SEC allows individual investors to file complaints against their broker or their broker’s firm. If your broker committed negligence or broker fraud, you may be entitled to file a complaint and recover your losses. Violations of securities law can be reported to the SEC, which will conduct a comprehensive investigation.  Looking for information on how to file an SEC complaint against a broker? Look no further than the Law Offices of Robert Wayne Pearce, P.A. Not only can our attorneys help you report your broker, but we can also help you recover your investment losses.  Filing a complaint against your broker with the SEC can be a great way to hold them accountable and put future investors on notice of their wrongdoing. However, doing so doesn’t necessarily help you get your money back. Contacting an attorney, however, can be the first step toward actually recovering your personal investment losses that you suffered at the hands of your broker.  Stockbroker fraud attorney Robert Wayne Pearce has over 40 years of experience handling complex securities, commodities, and investment arbitration and litigation cases. He has helped countless clients through their investment-related disputes, and he will fight to do the same for you. Please don’t hesitate to send us an online message or call (800) 732-2889 today for assistance. Why Would I File a Complaint? There are numerous reasons you may need to file a complaint with the SEC against your broker. Common examples of wrongful actions by a broker or brokerage firm include: Of course, not all actions by a broker constitute fraud for which you can file a complaint with the SEC. Remember, the stock market is inherently volatile, so the fact that you lost money does not necessarily mean your broker took any wrongful actions.  An experienced investment fraud attorney can help you determine whether filing a complaint with the SEC against a broker might be warranted. Filing a Complaint with the SEC Against a Broker: What You Need to Know If you suffer financial losses due to the negligence or misconduct of a broker or brokerage firm, filing a complaint with the SEC against the broker can be an important step to take.  Not only can this help prevent future investors from being subject to the same fraudulent and predatory actions, but it may also provide you with an avenue to recover your losses. How to File a Complaint Against a Broker The first step in reporting your broker for fraud or misconduct is to file your formal complaint with the SEC.  The SEC provides an opportunity for members of the public at large to submit broker complaints electronically using the SEC’s Investor Complaint Form.  What to Include in Your Complaint The Investor Complaint Form may appear simple to complete. However, there is more to it than you might think.  The form requires basic information such as: The complaint form can play a vital role in whether the SEC allows your case to move forward. Thus, the more information you are able to provide, the better equipped the SEC will be to investigate your complaint. An experienced investment fraud attorney can be a great benefit to you as you complete your Investor Complaint Form and move forward in the process.  What Happens After Submitting My Complaint to the SEC After the SEC receives your complaint, they will thoroughly investigate your claim and all relevant evidence.  Central to the process is confidentiality. The SEC conducts its investigations in a manner that will protect the parties and preserve the integrity of the complaint process.  Then, depending on the allegations asserted in your form, the complaint will be referred to the appropriate SEC office. The Office of Investor Education and Advocacy The Office of Investor Education and Advocacy handles basic investor questions regarding securities law and complaints related to financial professionals. These SEC officers will also advise complainants of possible remedies and, in some cases, will intervene on your behalf and reach out to brokers or other financial advisors concerning the issues raised in your complaint. This office may also refer your complaint to another division of the SEC for resolution. Enforcement Division The Division of Enforcement, on the other hand, employs attorneys to review information and tips regarding securities law violations.  Officers in this office investigate the claims in their entirety, retrieving whatever evidence may be necessary. Again, it is important to note that the investigations conducted by the SEC are typically confidential unless made a matter of public record.  After completing a thorough investigation, the Enforcement Division may recommend that the SEC bring civil actions in federal court or before an administrative law judge to prosecute securities law violations.  Why Hire an Investment Loss Attorney to Assist with Complaints Against Your Broker? Reporting the fraudulent misconduct of a broker to the SEC is important. However, filing an SEC complaint is not the only way to hold a broker or brokerage firm accountable.  In fact, in some cases, filing an SEC complaint may not be enough to get you the compensation you need to recover from your investment losses. In these cases, it is imperative that you contact an attorney to help you fight for the recovery you need and deserve.  An experienced investment and securities fraud attorney or FINRA arbitration lawyer can help you evaluate your case and determine how best to move forward.  At the end of the day, reporting...

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Mar 2, 2023

How to Sue a Financial Advisor or Stockbroker Over Investment Losses

Can I Sue My Financial Advisor? Yes, you can. You may file an arbitration claim with FINRA to seek financial compensation if your investment advisor, stockbroker, or brokerage firm violated FINRA’s regulations and rules, resulting in financial losses on your part. Investment Losses? Let’s Talk. or, give us a ring at (800) 732-2889. If you’ve lost a significant amount of money in your investment portfolios, you could be wondering if you can sue your financial advisor or broker to help recover those losses. While every case is different, there are a number of factors that will influence whether or not you have a successful lawsuit. In this article, we will discuss some of the key things to consider if you are thinking about suing your financial advisor or stockbroker. IMPORTANT: If you are considering suing your advisor, it is important to seek legal counsel. Do not file without legal representation. Securities is a complex area of law, and without an experienced investment loss attorney, you may not be able to recover the full extent of your losses. A Financial Advisor’s Duty of Care People hire financial advisors and brokers to grow and protect their money. Financial advisors have advanced education and training, which should provide their clients with valuable insight and accurate financial advice. Individual investors expect that their advisors will not defraud or harm them in any other way. Market volatility is difficult to predict with any certainty. Markets dip and rebound over time. A financial advisor must guide you through those difficult times and offer you sound investment advice to minimize or avoid losses.  Some investments are riskier than others. Brokers and financial advisors need to understand their clients’ risk tolerance, as well as their clients’ investment needs. Losses could ruin years of hard work and financial planning.  Market volatility is one thing—negligence, deception, and fraud are something else entirely. Therefore, you should review your portfolio closely to see if you are a victim of misconduct.

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Feb 28, 2023

What is FINRA Arbitration? Disputes, Process, and Guide

This is your definitive guide to FINRA arbitration in 2023. In this article you will learn: how disputes are handles under FINRA arbitration, the FINRA arbitration process, and what to expect if you are involved in a FINRA arbitration case. We will also cover the most important information that you will need to know about FINRA arbitration in 2023 so that you can be prepared if you find yourself involved in a case. What is FINRA Arbitration? FINRA arbitration is a forum for resolving disputes between investors and their brokerage firms or brokers, outside of court. It involves presenting evidence and arguments to a panel of arbitrators, who make a binding decision, called an award, on the dispute. Need Legal Help? Let’s talk. or, give us a ring at 561-338-0037. As an investor, if you have suffered considerable investment losses caused by the behavior of your broker, then FINRA arbitration may be a viable solution. By filing for arbitration with FINRA, you could be entitled to recoupment or compensation from the brokerage firm responsible. It is highly recommended by FINRA that all investors seek the advice of a qualified FINRA attorney before filing for arbitration. FINRA Overview FINRA, the acronym for Financial Industry Regulatory Authority, governs disputes between investors and brokers and disputes between brokers. In this article, we solely concentrate on how an individual private investor files a claim to recover losses against their broker or financial advisor.  We will explain how FINRA fits into the securities regulatory scheme. We will discuss how FINRA provides services designed to resolve disputes in a cost-effective manner that is quicker than a traditional court and give some insight into how FINRA‘s arbitration procedure works. Next, we will examine the pros and cons of FINRA arbitration. Lastly, we will discuss how a highly experienced lawyer who has represented numerous clients successfully at FINRA arbitration can help you recover your damages from your broker or financial advisor.  What Is FINRA? FINRA is not a government agency. Unlike the Securities and Exchange Commission (SEC), FINRA is an organization established by Congress to oversee the brokerage industry. FINRA is a self-governing body and operates independently from the U.S. government. By contrast, the SEC more broadly regulates the buying and selling of securities on various exchanges such as the New York Stock Exchange, NASDAQ, and the American Stock Exchange. The SEC approves initial public offerings and secondary offerings and can halt trading to avoid a crash if necessary.  Additionally, the SEC has law enforcement powers. Along with the FBI and the U.S. Attorneys Office, the SEC can investigate acts surrounding the buying, selling, and issuing of securities. The U.S. Attorney can pursue charges for crimes relating to the stock market, such as insider trading and wire fraud. While the SEC has the authority to file civil lawsuits against any person or organization violating the securities statutes and the SEC’s rules. How Is FINRA Different from the SEC? FINRA has a different function than the SEC altogether. FINRA is a regulatory agency designed to promote public confidence in the brokerage industry and the financial markets as well. People will not invest if they believe they have trusted unscrupulous financial advisors to protect their economic interests. FINRA ensures that its members comply with the ethical rules of their profession, similar to a state bar for attorneys or a board of registration for medical professionals.  Congress granted FINRA authorization to investigate complaints investors make concerning misconduct, fraud, or potentially criminal behavior. As a result, FINRA can discipline its members if the agency determines that a broker violated its professional code. FINRA can assess fines, place restrictions on a broker’s authority, or expel the member from its ranks for an egregious violation. Anyone who suspects their broker or their financial advisor of wrongdoing should file a complaint with FINRA’s complaint center for investors.  You should be aware that FINRA’s rules do not restrict you from filing a complaint seeking an investigation into wrongdoing and pursuing monetary damages in arbitration.  FINRA Alternative Dispute Resolution FINRA provides a forum for investors to resolve their disputes with their brokers or financial advisors. In fact, FINRA boasts the largest securities dispute resolution forum in the US. FINRA offers arbitration services, as well as mediation services, as a means to avoid costly and inefficient litigation in courts. FINRA provides a fair, effective, and efficient forum to resolve broker disputes. FINRA’s goal is to settle disputes quickly and efficiently without the standard procedural and discovery requirements that bog down cases filed in courts.  How Does Arbitration Work with FINRA? Arbitration is an alternative to filing a case in civil court. Arbitration tends to be less formal and is designed to process claims more quickly than filing a lawsuit in court.  FINRA’s arbitration process involves resolving monetary disputes among brokers and investors. FINRA’s arbitrators can issue monetary judgments and have the authority to order a broker to deliver securities to you if that is a just resolution of the case.  An arbitration hearing is similar to a trial in court. The parties admit evidence and argue their side to a neutral person or panel of arbitrators who will decide the case. The arbitrator’s decision, called an award, is the judgment of the case and is final. You should know that you do not have the right to appeal the award to another arbitrator. You may have an opportunity to pursue an appeal in court under limited circumstances. However, you cannot elect to arbitrate your case and then file a complaint in court seeking a trial on the issues decided by the arbitrator.  FINRA’s arbitration forum operates under the rules set forth by the SEC. FINRA ensures that the platform serves as it should and facilitates ending disputes. No member of FINRA participates in the arbitration. FINRA merely provides the forum and enforces the rules. Arbitrators decide the cases.  The arbitrators typically need about 16 months to issue an award. This is a lot quicker than court, where cases...

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