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J.P. Morgan Sued pela alegada má conduta de Edward Turley: 55 milhões de dólares!

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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Investidores com Linha de Crédito "Blown-Out" e Contas de Margem "Blown-Out": Como você recupera suas perdas de investimento?

Se você está lendo este artigo, estamos supondo que teve uma experiência ruim recentemente, seja em uma linha de crédito garantida por títulos ("SBL") ou em uma conta margem que sofreu chamadas de margem e foi liquidada sem aviso prévio, fazendo com que você percebesse perdas. Normalmente, os investidores com chamadas de margem recebem 3 a 5 dias para atendê-los; e se isso acontecesse, o valor dos títulos em sua conta poderia ter aumentado dentro desse período e a firma poderia ter apagado a chamada de margem e poderia não ter liquidado sua conta. Se você for um investidor que tenha experimentado chamadas de margem no passado, e esta é sua única reclamação então, não leia mais porque quando você assinou o acordo de conta com a corretora com a qual você escolheu fazer negócios, você provavelmente deu a ela o direito de liquidar todos os títulos em sua conta a qualquer momento sem aviso prévio. Por outro lado, se você é um investidor com pouca experiência ou com uma condição financeira modesta que foi convencido a abrir uma linha de crédito de títulos sem ser avisado sobre a verdadeira natureza, mecânica e/ou riscos de abrir tal conta, então você deve nos ligar agora! Alternativamente, se você é um investidor que precisava retirar dinheiro para uma casa ou para pagar seus impostos ou educação de seus filhos, mas foi convencido a manter uma carteira de ações e/ou junk bonds de risco ou concentrada em uma conta garantida por uma linha de crédito ou uma conta margem, então provavelmente podemos ajudá-lo a recuperar suas perdas de investimento também. A chave para uma recuperação bem sucedida de sua perda de investimento é não se concentrar na liquidação dos títulos em sua conta pela corretora sem aviso prévio. Em vez disso, o foco em seu caso deve estar no que lhe foi dito e se a recomendação foi adequada para você antes de abrir a conta e sofrer a liquidação.

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FINRA Arbitragem: O que esperar e por que você deve escolher nosso escritório de advocacia

Se você está lendo este artigo, provavelmente é um investidor que perdeu uma quantia substancial de dinheiro, pesquisou no Google "FINRA Arbitration Lawyer", clicou em vários sites de advogados, e talvez até falou com um chamado "Securities Arbitration Lawyer" que lhe disse após um telefonema de cinco minutos que "você tem um grande caso"; "você precisa assinar um contrato de retenção com base em 'taxa de contingência'"; e "você precisa agir agora porque o estatuto de limitações vai funcionar".

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Introdução de um corretor de bolsa aos exames e investigações da FINRA

Os corretores e consultores financeiros muitas vezes não entendem quais são suas responsabilidades e obrigações e o que pode resultar de um exame ou investigação da Autoridade Reguladora do Setor Financeiro (FINRA). Muitos corretores nem mesmo sabem o papel que a FINRA desempenha dentro do setor. Isto pode ser devido ao fato de que a FINRA, uma organização auto-reguladora, não é uma entidade governamental e não pode condenar profissionais financeiros a penas de prisão por violação das regras e regulamentos do setor. No entanto, todos os corretores-empresários que fazem negócios com membros do público devem se registrar na FINRA. Na qualidade de membros registrados, os corretores e os corretores que trabalham para eles concordaram em cumprir as regras e regulamentos do setor, que incluem as regras da FINRA.

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FINRA Rule 8210 Letter: Everything You Need to Know

If you have landed on this article, most likely because you probably just received a letter from FINRA via certified mail that states, “You are notified that the FINRA office is conducting an inquiry to determine whether violations of the federal securities laws or FINRA, New York Stock Exchange, MSRB rules, have occurred.” In the following paragraph, you’re being urged to submit a number of papers, respond to a number of queries, and/or provide on-the-record testimony to FINRA employees as required by FINRA rule 8210. The chances are you’ve never received or seen one of these letters before, and it can be very intimidating and cause a lot of anxiety. Robert W. Pearce, a nationwide regulatory defense lawyer with a practice that includes representation of broker-dealers and financial advisors answers one of the more frequently asked questions: What is a FINRA 8210 letter? What is a FINRA Rule 8210 Letter? Receiving a Rule 8210 letter implies that FINRA is seeking documents, information, or testimony from you regarding an investigation of a broker-dealer or a person who is registered or associated with a broker-dealer. Whether or not you are a person of investigation is uncertain. Need Legal Help? Let’s Talk. or, give us a ring at 800-732-2889. At this point, it would be a good idea to contact a lawyer who specializes in securities law and is familiar with FINRA regulations. Independent of whether you believe you are the subject of investigation, you are obligated to respond. Failure to do so can have dire consequences. In the case that you are the individual under investigation, you will be glad that you spoke with an attorney now rather than later. An attorney can help ensure that your rights are protected throughout the process and help guide you in providing the appropriate information and documents to FINRA investigators. What is a FINRA 8210 Request? FINRA Rule 8210 Provision of Information and Testimony and Inspection and Copying of Books gives FINRA the authority to request and examine and make copies of the books, records, and accounts of a member firm related to any matter being investigated, complained about, examined, or processed. In addition, this rule can seek and require testimony from any person associated with the member firm and require production of documents relating to FINRA-regulated activities. FINRA Rule 8210 is an important tool for ensuring compliance in the securities industry. It allows FINRA to keep a vigilant watch over potential violations and misconduct, ultimately providing customer protection and investor confidence. This request applies to firms as well as registered brokers, registered representatives, and other associated persons of the firm. FINRA may direct its 8210 requests to any person who is a member or associated with a member firm, such as officers, directors, employees, shareholders, and partners. As a registered representative, it is important to understand the implications of a FINRA 8210 request. These are rules that you choose to abide by when you become a part of the securities industry and registered with FINRA. A failure to comply with FINRA Rule 8210 could result in disciplinary action by FINRA. What Happens with the Information that I Provide to FINRA? The information obtained by FINRA through its Rule 8210 request can be used in a variety of ways, including enforcement investigations and proceedings. It also may be used to assess whether disciplinary action is necessary, as well as for market surveillance purposes. The information that FINRA obtains can be shared with other regulatory organizations, law enforcement, and government agencies. The information may also be disclosed by way of a subpoena in civil litigation. Responding to a FINRA Rule 8210 letter can be intimidating. There are a lot of things to consider and evaluate carefully before responding. When faced with a FINRA 8210 letter, it is in your best interest to seek a securities lawyer who is familiar with FINRA regulations to help you navigate the process. An experienced securities attorney will provide guidance and advice to ensure your rights are protected throughout the investigation. Do I Have to Respond to a FINRA Rule 8210 Letter? Yes, you must respond to the letter and provide any requested documents or on-the-record testimony. The consequences of not responding can be serious, including suspension or permanent bar from the securities industry. Do not jeopardize your career by failing to respond in a timely manner. You may not even be the target of the investigation, but your cooperation will still be essential in order to provide information that may help FINRA uncover any violations of the federal securities laws. It can be difficult to comprehend exactly what is expected from you when you receive a FINRA rule 8210 notice. An experienced FINRA defense attorney can answer your questions and guide you through the process so you understand your rights and responsibilities. The Law Offices of Robert Wayne Pearce, P.A. have over 40 years of experience defending FINRA inquiries, investigations and disciplinary proceedings. Contact our office today for a free consultation to discuss how we can help you respond to the FINRA 8210 letter. What are the Consequences of Not Responding to a FINRA Rule 8210 Letter? The consequences of not responding to a FINRA Rule 8210 letter are serious. And, more often than not, if the individual does not comply with this information request, the individual will be barred from the securities industry. If a registered broker or registered representative does not comply with FINRA Rule 8210 request, they will no longer be able to be associated with a member firm. If a registered firm does not comply with FINRA Rule 8210 request, then normally that firm is going to be expelled from the securities industry. The consequences are steep, and you should strongly consider the options available in responding to the FINRA Rule 8210 letter. FINRA has jurisdiction over all FINRA-registered firms, brokers, and associated persons. They can take disciplinary action against those who do not comply with the rules set forth in FINRA Rule 8210. If you are currently registered with a firm or you have been currently registered with a firm in the past 2...

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Ex-Centaurus Financial Broker Joseph Michael Todd Sued

The Law Offices of Robert Wayne Pearce, P.A. is currently representing a Client of Joseph Michael Todd who has filed an arbitration claim against his employer, Centaurus Financial, Inc. Joseph Michael Todd Formerly With Centaurus Financial, Inc. and Investors Capital Corp. Has Three (3) Customer Complaints For Alleged Broker Misconduct. IMPORTANT: We are providing information about our clients’ allegations and seeking information from other investors who did business with Joseph Michael Todd 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. Update: SEC Files Suit Against Joseph Michael Todd The SEC finally filed suit against Joseph Michael Todd (“Todd”) engaging in a fraudulent scheme from at least August 2016 through at least November 2022, where he allegedly misappropriated at least $3 million from at least 20 customers of Centaurus Financial, LLC (“Centaurus”), a dually registered broker-dealer and investment adviser that employed Todd as a registered representative. Todd obtained investor funds through deceptive means by instructing his Centaurus customers to write checks payable to his entities Todd Financial Services, LLC (“TFS”) and/or TFS Insurance Services LLC (“TFS Insurance”) or to Todd himself by falsely assuring customers that he and his entities would invest their funds in various securities. Instead, Todd commingled investors’ funds and kept the money for his own personal use, spending it on lavish real estate, boating, hunting, casinos, and adult entertainment. Todd perpetuated the fraud by making material misrepresentations to customers regarding the use of their funds in meetings that took place in person, in phone conversations, and in documents that he prepared and provided to customers. The SEC accused Todd and his entities because of their conduct, Todd, TFS, and TFS Insurance knowingly or recklessly committed securities fraud. In violation of Section 17(a) of the Securities Act of 1933 (the “Securities Act”) [15 U.S.C. §§ 77e(a), 77e(c), and 77q(a)] and Todd, TFS, and TFS Insurance violated Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]. The SEC brought the lawsuit to prevent further harm to investors and to seek disgorgement, civil penalties, permanent injunctions, and conduct-based injunctions stemming from the Defendants’ wrongdoing, and a permanent officer-and-director bar against Todd. Joseph Michael Todd Was Terminated by Centaurus Financial, Inc. On July 21, 2022, Joseph Michael Todd was terminated by Centaurus Financial, Inc. for not cooperating with an ongoing investigation into whether Joseph Michael Todd violated firm policy and industry rules with respect to allegations of selling away and the receipt of customer funds. Our law firm was contacted by a customer of Joseph Michael Todd alleging misappropriation or theft of funds. We are currently investigating such claims and are accepting clients who were victims of Joseph Michael Todd’s alleged misconduct. Joseph Michael Todd was fired from Centaurus Financial in July 2022, according to FINRA’s BrokerCheck. Michael Todd was terminated from Centaurus Financial because of claims he sold investments not authorized by the company, a common practice known as “selling away.” Did Joseph Michael Todd Cause You Investment Losses? Joseph Michael Todd, also known as Michael Todd, Formerly With Centaurus Financial, Inc. and Investors Capital Corp. Has Three (3) Customer Complaints For Alleged Broker Misconduct. If you believe you have suffered investment losses resulting from the conduct of Joseph Michael Todd at Centaurus Financial and Investors Capital Corp. you can contact the securities attorneys at The Law Offices of Robert Wayne Pearce, P.A. for a free consultation to discuss your rights. Joseph Michael Todd Customer Complaints Joseph Michael Todd has been the subject of three (3) customer complaints that we know about, one (1) of those complaints was filed in 2022 to recover investment losses. And One (1) of Joseph Michael Todd’s three (3) customer complaints were settled in favor of investors. However, one (1) of Joseph Michael Todd’s customer complaints was closed, and the customers have not taken any further action. There is currently one (1) pending customer complaint filed against Joseph Michael Todd’s former employer Centaurus Financial, Inc. for investment losses caused by alleged misconduct.  Allegations Against Joseph Michael Todd A sample of the allegations made in the FINRA reported arbitration claim settlements and/or pending complaints for investment losses are as follows:  We currently represent a Client of Joseph Michael Todd who have filed an arbitration claim against his employer, Centaurus Financial, Inc. A summary of the allegations made in the FINRA arbitration filed for investment losses realized by the Claimant were as follows: 1. Introduction Respondent Centaurus employed Joseph Michael Todd (hereafter referred to as either “Mike” or “Mr. Todd”) and held him out as registered representative, investment adviser, investment manager, financial adviser, and financial planner with special skills and expertise in the management of securities portfolios and financial, estate, retirement, and tax planning matters. Centaurus hired Mr. Todd after he was terminated by two prior broker-dealers for violations of industry rules, firm policies and procedures, including allegations of selling unapproved investments and misappropriation. It also permitted Mr. Todd to operate his Centaurus branch offices under the name “Todd Financial Services” as “a DBA for branding purposes.” The Respondent is being sued in its capacity as broker-dealer and investment adviser, investment portfolio manager, financial planner, and/or as an employer whose employees and agents, including, but not limited to, Mr. Todd, committed the acts and omissions which are the subject of this Statement of Claim.  Claimant is a 62-year-old single woman back working 3 months after she had retired and discovered that her Centaurus’ stockbroker and investment advisor Mr. Todd did the following: 1) Stole $425,000 of her funds that were supposed to have been invested in safe, liquid, fixed income securities for her retirement security and income; 2) Acted in his own “best interest” instead of Claimant’s “best interest” in soliciting her to sell $420,000 of her investment grade municipal bonds and reinvesting the sales proceeds in illiquid and high-risk...

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Você precisa de um corretor de bolsa da Flórida e de um advogado especializado em fraudes de investimentos?

The Florida Stockbroker & Investment Fraud Lawyers at Law Offices of Robert Wayne Pearce, P.A. have been helping investors recoup their losses incurred due to unethical and illegal stockbroker activity for over 40 years. As an investor in Florida, you have the right to expect that your stockbroker or investment advisor will always act in your best interests. Unfortunately, this is not always the case. The Law Offices of Robert Wayne Pearce, P.A. is dedicated to representing investors nationwide who have been the victims of stockbroker fraud, investment fraud, and misconduct by broker-dealers. Our Florida stockbroker & investment fraud lawyers have recovered millions of dollars for our clients through securities arbitration and litigation. If you have suffered investment losses, we can help. Contact us today at (800) 732-2889 or fill out one of our short contact forms. What is Investment Fraud? When an entity, such as a brokerage firm, takes your money with the promise of investing it and then uses it for other purposes, you have been the victim of investment fraud. Investment fraud scams are frequently characterized by promises of guaranteed profits and low- to no-risk investments. Chances are if it looks too good to be true, it might be. Is Stockbroker Fraud Different from Investment Fraud? Stockbroker fraud is a type of investment fraud that occurs when your stockbroker or other financial professional makes false or misleading statements to you in order to sell you securities, such as stocks, bonds, or mutual funds. Stockbroker fraud is a form of investment fraud, but not all investment fraud is stockbroker fraud. IMPORTANT: If you are a victim of stockbroker or investment fraud, you may have a limited time to take action. The Florida stockbroker & investment fraud lawyers at The Law Offices of Robert Wayne Pearce, P.A. can help you recover your losses and hold the responsible parties accountable. Contact us today at (800) 732-2889. Recognizing the Signs That You May Be the Victim of Investment Fraud There are several signs that may indicate that you have been the victim of investment fraud. If you have experienced any of the following, you should speak with an attorney as soon as possible: The hardest part of investment fraud is often recognizing that it has occurred. Many times, people do not realize they have been the victim of fraud until they suffer a significant loss. Do Not Delay – Time May Be Running Out The statute of limitations, or the time you have to take legal action, may be shorter than you think. If you believe that you have been the victim of stockbroker fraud or investment fraud, contact an investment fraud attorney as soon as possible to discuss your legal options and to protect your rights. What is the Statute of Limitations for Investment Fraud in Florida? In the state of Florida, there are two separate timelines for investment fraud in violation of the Florida securities statutes: a two-year (2) statute of limitations and a five-year (5) statute of repose. The two-year statute of limitations for investment fraud in Florida begins to run on the day that you discover or reasonably should have discovered, the fraud. The five-year statute of repose for investment fraud in Florida begins to run on the day that the fraudulent activity occurred, regardless of when you actually discovered it. This means that if more than five years have passed since the fraudulent act occurred, you will not be able to bring a claim, even if you only recently discovered the fraud. There are other claims for common law fraud, breach of fiduciary duty, breach of contract with different statutes of limitation that may be longer under the facts of your case. For this reason, it is important to contact an experienced Florida investment fraud attorney as soon as possible if you believe that you may have been the victim of investment fraud. Do You Need to Hire an Investment Fraud Lawyer “Near Me”? Since securities are primarily a federally regulated industry, it is not necessary to hire a local Florida investment fraud lawyer. It is still important to find an attorney with experience handling investment fraud cases in Florida, as they will be familiar with the state’s securities laws. These state laws, also known as Blue Sky Laws, may differ from federal securities laws and can potentially provide additional protections for investors. Note: When hiring an investment fraud attorney, it is important to choose one who regularly practices in the field of securities law and arbitration. Securities law is a complex and ever-changing area of law, so you want to be sure that your attorney is up-to-date on the latest legal developments. Are You Dealing with Investment Fraud in Florida? Contact our Florida investment fraud lawyers at the Law Offices of Robert Wayne Pearce, P.A. today at (800) 732-2889. We represent investors nationwide who have been the victims of stockbroker fraud, investment fraud, and broker-dealer misconduct. We Have a History of Helping Investors Recover Their Losses The Law Offices of Robert Wayne Pearce, P.A. has helped investors recover their losses in securities arbitration and litigation for over 40 years. We are one of the most experienced FINRA arbitration law firms in the country and have recovered more than $170 million on behalf of our clients. In fact, we have recovered funds for over 99% of his investor clients through various avenues of recovery, including settlements, arbitrations, and court litigation.  Attorney Pearce is a well-respected advocate for investors throughout the legal community, known as a fierce litigator throughout Florida and across the country. Some of our past results include: $21,041,285 FEDERAL COURT FINAL JUDGMENT In 2010, Robert Pearce won a case in federal court for $21,041,285. The final judgment was entered against the defendant for fraud, breach of fiduciary duty, and civil theft pursuant to Florida Statutes Sections 812.014 and 772.11. $7,840,000 FINRA ARBITRATION SETTLEMENT In this FINRA arbitration, Robert Pearce effectuated the resolution of the case through mediation on the eve of trial. This case involved a complex options trading strategy in the oil and gas sector against one of the largest Midwest broker-dealers in the...

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David Barnes of UBS Financial Services: Investor Complaints

DID DAVID RAY BARNES CAUSE YOU INVESTMENT LOSSES? David Barnes Of UBS Financial Services And Formerly With Credit Suisse Securities (USA) Has A Customer Complaint For Alleged Broker Misconduct Recent News: The Law Offices of Robert Wayne Pearce, P.A. Helps Investor Recover Investment Losses Caused by David Barnes The Claimant is a 73-year-old widow residing in Dallas, Texas. She was married until her husband passed away on March 30, 2016.  The Respondent, UBS Financial Services, Inc. (“UBS”), is a Delaware corporation with its principal headquarters in Weehawken, New Jersey.  The Respondent UBS employed David Barnes (“Barnes”) and held him out and other UBS employees on his team as investment advisers, investment managers, financial advisers, and financial planners with special skills and expertise in the management of securities portfolios and financial, estate, retirement, and tax planning matters. Barnes held several professional certifications which would indicate he knew or should have known his conduct in managing Claimants accounts was below the acceptable standard of care, namely: Chartered Financial Analyst (“CFA”), Certified Financial Planner (“CFP”), and Chartered Alternative Investment Analyst (“CAIA”). The claims in this arbitration included but were not limited to: (1) Barnes’ failure to employ modern portfolio techniques such as asset allocation and diversification to protect Claimants’ assets from unreasonable risk of loss beginning March 2019; (2) Barnes’ and others’ failure safeguard and protect Claimants’ assets from an unreasonable risk of loss in July 2019 and thereafter; (3) Barnes’ and others’ failure to perform their fiduciary and contractual duties to sell securities and reduce the debt promptly and in a manner to serve the best interest; (4) Barnes’ false and misleading Claimants about the performance of securities and accounts; (5) Barnes’ false and misleading statements about his investment strategy and availability of alternative strategies; (6) Barnes false and misleading Claimants about risk of continuing to “hold” an unsuitable, undiversified, and over-leveraged investment strategy in Claimants’ UBS managed accounts; (7) Barnes’ unsuitable “hold” recommendations in connection with the undiversified and over-leveraged securities accounts managed by Barnes on February 13, 2020 and thereafter; and (8) UBS’ and Barnes’ failure to refrain from self-dealing and conflicts of interest relating to the investment advice given regarding Claimants’ variable credit-lines and investment strategy recommendations. Obviously, the arbitrators thought that UBS’s David Barnes engaged in misconduct because after considering the pleadings, the testimony and evidence presented at the hearing, and any post-hearing submissions, the Panel decided in full and final resolution of the issues submitted for determination as follows: Respondent is liable for and shall pay to Claimant the sum of $380,158.00 in compensatory damages. Respondent is liable for and shall pay to Claimant interest on the above-stated sum at the rate of 5% per annum from August 9, 2022, through and including the date this Award is paid in full. Respondent is liable for and shall pay to Claimant the sum of $152,063.20 in attorneys’ fees pursuant to the Texas Civil Practice & Remedies Code. If you had a similar experience with David Barnes then you may want to consider contacting our law firm about the viability of your claims and ability to recover your investment losses.

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How to Handle an SEC Subpoena: Step-by-Step

No one ever wants to receive an SEC subpoena, but when you do it is important to take action immediately so as to protect your future. In this article we will review what an SEC investigation subpoena is, the different types of SEC subpoenas you can receive, and what to do, step-by-step, if you receive an SEC investigatory subpoena. What is an SEC Subpoena? An SEC subpoena is a legal order for recorded testimony that is issued by the Securities and Exchange Commission in connection with one of its investigations. The subpoena requests documents, data, or both which are relevant to an ongoing investigation. Investment Losses? Let’s Talk. or, give us a ring at 800-732-2889. Note: If you get served with an SEC subpoena, it means you’re likely under suspicion of committing or witness to securities fraud even though the SEC will tell you not to conclude anything from the fact you were served with a subpoena. It is strongly encouraged that you consult with a SEC defense lawyer. SEC Subpoena Power The Securities and Exchange Commission (SEC) is the federal agency responsible for enforcing securities laws, proposing new securities rules, and regulating the securities industry. The SEC has the power to investigate almost any company or individual for securities fraud. The SEC is primarily interested in issues involving potential stock manipulation, false or misleading statements in offering documents, insider trading, and other areas where investors are being cheated out of money. The staff of the SEC has subpoena power which they can use to compel individuals and companies under investigation to produce requested documents and/or testify at hearings under oath about their involvement with certain companies or businesses. If you receive an SEC subpoena, your life could be turned upside down until the issue is resolved. There are two types of SEC subpoenas: Subpoena ad testificandum: This subpoena compels the person to whom it is addressed to appear at a specific time and place and testify under oath or affirmation. Subpoena duces tecum: This subpoena compels the person to whom it is addressed to produce documents in his possession or control, either at a designated location or before the person who signed the subpoena. What happens when you get an SEC Subpoena?  When you get served with an SEC subpoena, it means that your records are being requested by a federal agency for an investigation. Generally, you’ll be told that you have 30 days from the date of service of this document to provide all records related to whatever it’s requesting. IMPORTANT: You will likely have to appear in front of a SEC enforcement official who may ask you questions under oath and subject to the penalty of perjury and/or making false statements to a government official. Do not lie about not having any records because if they come back and say you lied about having them, you could be charged with obstruction of justice. What should I do if I get an SEC Subpoena? Unfortunately, investigations by the SEC does happen from time to time. If you receive an SEC subpoena, it’s important to act quickly and be proactive. Below are the steps to take after receiving a subpoena from the SEC: Step 1: Consult a SEC defense lawyer who is experienced with SEC subpoenas immediately. Your lawyer will be able to guide you through the process and represent you during the investigation. An attorney can determine how to respond to your subpoena, what information you should immediately turn over, and help you avoid making any mistakes that could result in additional scrutiny or legal consequences. Step 2: Know your rights under the concept of “privileged” information. Under the attorney-client privilege, for example, you do not have to provide anything to the SEC if it would be between you and your lawyer. Step 3: Read the terms of the subpoena thoroughly. Make sure you understand them and determine what information must be turned over. If your subpoena requests specific documents, the SEC will likely want to review all of those documents. Step 4: Respond to the subpoena as soon as possible with an attorney by your side. Returning things too quickly without consulting a lawyer first could look bad for you during the rest of the investigation process. And if they ask for something that is difficult or unrealistic to produce, you can let them know that upon receiving their request. Some items may take longer than 30 days to find/produce depending on how easy it is for you to obtain (i.e., if there are thousands of emails it could take some time). Step 5: Keep a detailed record of all aspects of the process, including any contact or communication with an SEC investigator(s) so that you can protect yourself down the road with evidence in case there is any uncertainty about what happened during the investigation process. Step 6: Keep the details of your case confidential with yourself and your legal representation. Do not discuss or share information about your case with anyone who isn’t an attorney because you do not want to risk incriminating yourself. Step 7: Be proactive and do not engage in any activity that could be considered obstruction of justice, such as lying or concealing information. What types of records might the SEC subpoena? The Commission may subpoena documents related to financial transactions (including transfers of money between accounts), communications (including e-mails), photographs, videos, and other data like employment history or company policies/employee handbooks/training manuals. For example, the SEC may subpoena communications related to specific stock sales or actions taken during an acquisition. Schedule a Consultation with an Experienced SEC Defense Attorney If you are served with an SEC subpoena, you should promptly contact a lawyer experienced in representing parties dealing with federal investigations to guide you through how to handle your case and protect yourself. The Law Offices of Robert Wayne Pearce, P.A. has over 40 years of experience dealing with the SEC subpoenas and enforcement actions. Our attorneys can help you determine what information needs to be turned over, provide advice on how to handle the...

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What is Considered a Breach of Fiduciary Duty?

Breaches of fiduciary duty are unfortunately common. Given that fiduciary duty is the highest legal standard of care, any failure to uphold this responsibility can have severe consequences for those who have been entrusted with a fiduciary duty. In this article, we will cover what is a breach of fiduciary duty, common examples, and whether or not you have a legal claim. An investment loss recovery attorney can help you take action against a fiduciary who has acted negligently or wrongly. What is a Breach of Fiduciary Duty? Breach of fiduciary duty occurs when an individual, such as a financial advisor, that has been entrusted with managing the affairs of another fails to act in good faith and is negligent or malicious in their duties. Investment loss? Let’s talk. or, give us a ring at 561-338-0037. A fiduciary is bound to act in the best interests of their client, and when they fail to do so, it can lead to significant financial losses. If you believe you are dealing with investment loss due to a breach of fiduciary duty, you should strongly consider hiring an investment loss attorney. The quicker you reach out, the quicker you can begin the process of recovery. The Law Offices of Robert Wayne Pearce, P.A., offers free consultations. Give us a call at (800) 732-2889. Let’s discuss your case and see what we can do to help you get the compensation you need and deserve. Four Elements of a Breach of Fiduciary Duty Case To prove a breach of fiduciary duty, four key elements must be demonstrated: the existence of a fiduciary duty, a violation of that duty, resulting harm, and a causal connection between the breach and the harm. Duty – There Exists a Fiduciary Duty There must be an established fiduciary relationship between you and the other party for the fiduciary to owe you a duty. To hold a fiduciary accountable to their standard of care, it is essential to demonstrate that they knowingly accepted the role. This is typically shown through a written agreement between the parties, such as a customer agreement. Breach – There Was a Violation of This Duty Fiduciaries are required to work in the best interests of their clients, and any deviation from this standard may constitute a breach. To demonstrate a breach of fiduciary duty, one must have evidence that the individual holding this responsibility acted negligently or maliciously—or prioritized their own interests over yours. This can include lost investments, diminished value of your assets, outright theft, decisions made without your consent, or failure to carry out one’s fiduciary responsibility. You can also prove a breach through the fiduciary’s failure to act—for example, not disclosing a conflict of interest. It is best to speak with an investment fraud lawyer to determine if your fiduciary failed in their responsibility and contributed to your losses. Damages – The Breach of Duty Resulted in Harm to You For there to be a legitimate claim of breach of fiduciary duty, the breach must have caused you to suffer damages. Proving there was a breach is not enough for a valid claim of breach of fiduciary duty. Unless you can demonstrate how the violation of fiduciary duty directly caused you to suffer damages, your claim may not be successful. Damages can be either economic or non-economic, such as mental anguish.  Causation – There is a Connection Between the Breach and the Harm There must be a direct link between the fiduciary’s breach and harm to you. If you incurred damages that cannot be connected to the individual’s breach, your claim may not be successful. Breach of Fiduciary Duty Examples Breaches of fiduciary duties can take many forms. A fiduciary must act in the best interests of their client. When they fail to do so, serious harm can result. Examples of a breach of fiduciary duty include misrepresentation or failure to disclose information, excessive trading, unsuitable investments, failure to diversify, and failure to follow instructions. Misrepresentation or Failure to Disclose Information If a financial advisor does not present a client with all material information about an investment, this is a breach of fiduciary duty. Material information is what a reasonable investor would consider important when deciding whether to invest.  Sometimes financial advisors will mislead investors by omitting information, such as risk factors or any negative information about a stock.  Excessive Trading Excessive trading, also known as churning, in your account is a breach of fiduciary duty. Financial advisors will make large numbers of trades solely to generate more commissions for themselves.  Unsuitable Investments Financial advisors must “know their customer” before making investment recommendations. This includes understanding the client’s investment objectives, risk tolerance, time horizon, financial standing, and tax status. The advisor breaches their fiduciary duty if they make an unsuitable investment, even with the best intentions.  Failure to Diversify Your financial advisor must recommend a mix of investments so that your assets are properly allocated among various asset classes and industries. Failing to diversify your portfolio puts you in a position of great risk and is a breach of fiduciary duty. If your assets are over-concentrated in a particular stock or sector, you may experience significant losses if the company or industry does not perform well.  Failure to Follow Instructions When you give instructions to your financial advisor, they have the fiduciary duty to promptly perform your orders. If your advisor fails to follow your instructions in a timely manner and you suffer financial losses, you can recover. Can You Pursue a Lawsuit for a Breach of Fiduciary Duty? Yes, you can pursue a lawsuit for a breach of fiduciary duty. You will need to speak with an investment fraud lawyer to determine if your fiduciary failed in their responsibility and contributed to your losses. It is important that you prove there was a breach, damages were caused, and the breach was directly connected to the harm you suffered in order for your lawsuit to be successful. Do you believe you’ve been the victim of a breach of fiduciary duty? Don’t wait – contact an experienced investment fraud attorney as soon as possible to learn more...

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What Can a Securities Lawyer Do for Investors and Brokers?

The term “securities attorney” refers to an lawyer who concentrates his/her practice on assisting clients in navigating the laws and regulations that govern the purchase and sale of securities. If you’re having difficulties with your financial advisor or broker and suffered investment losses, you might want to hire a securities attorney who knows the securities laws and securities industry rules inside and out.  Brokers and advisors provide investment advice and sell securities products such as stocks, bonds, and mutual funds. When you work with an advisor or broker, you probably signed an agreement that required them to comply with Federal and state securities laws and securities industry rules, including the rules requiring an advisor or broker to only make suitable investment recommendations and to act in your best interest. IMPORTANT: If your financial professional isn’t doing what was agreed to, or if you think they’ve committed securities fraud, you can file a complaint with the Financial Industry Regulatory Authority (FINRA). But before you do, you might want to talk to a securities lawyer. You have the right to seek compensation from the parties responsible if you were an investor who lost money as a result of broker misconduct. What Does a Securities Lawyer Do? A securities lawyer specializes in securities laws and regulations that apply to investors, brokers, and financial advisors. Securities lawyers represent investors claiming losses as a result of misconduct or fraud, as well as brokers and financial advisors accused of misconduct by their clients or their employers. Investment Losses? Let’s Talk. or, give us a ring at 800-732-2889. What Are Securities Laws? Securities laws are the laws that regulate the securities industry. The SEC (Securities and Exchange Commission) is the government agency that oversees the securities industry and enforces the Federal securities laws. These rules are designed to protect investors from fraud and other abuses, and to ensure that the securities industry operates fairly and transparently. Federal law requires companies that sell securities to register with the SEC. This registration process provides important information about a company’s business, its financial condition, and its management. It also gives the SEC important information about the people who sell the company’s securities. The federal securities laws also require those who sell securities to be licensed and to meet other standards of conduct. Investors and brokers use this information to make informed investment decisions. When brokers don’t disclose important information, or make false or misleading statements, they may have committed securities fraud. Further, the SEC provides a forum where investors can bring SEC complaints. The SEC may use these complaints to assist them in SEC investigations and the detection of securities fraud. In comparison to other areas of the law in the United States, there are few securities lawyers. Most lawyers who practice in this area work for the government, regulating or prosecuting firms and individuals who have violated securities law. It’s Important To Find A Good Securities Lawyer Who Represents Investors! There are a few lawyers who represent investors in private lawsuits and arbitrations against firms or individuals who have committed fraud and violated other securities laws. In order to sue someone for securities fraud, you must be able to prove that they made false or misleading statements, and that you relied on those statements to your detriment. Proving fraud can be difficult, and you should talk to a securities lawyer before you decide whether to sue. If you are an investor who suffered losses due to broker misconduct, you have the right to seek reimbursement from the parties responsible. Broker misconduct exists in multiple forms, including: While some forms of broker misconduct are easy to recognize, others are not. A financial advisor who stole funds out of your account and transferred them to a personal account clearly misappropriated your funds and committed misconduct. It’s more difficult to prove that a financial advisor recommended unsuitable investments, however, because the suitability of an investment depends on a number of different factors.  If you suffered investment losses and believe it was a result of broker misconduct, contact a good securities fraud lawyer today to evaluate your case.  Securities Laws are Complex and Numerous The laws that govern the securities industry are complex and numerous. This is partially due to the fact that the securities industry is complex and ever-changing. As new technologies and products are developed, they must be regulated. And as the markets change and evolve, the rules must change with them. This complexity can make it difficult for investors to understand their rights and what they should do if they think their broker has committed securities fraud. Below are just a few of the securities laws that may be relevant to your case: The Securities Act of 1933 Often called the “truth in securities” law, the Securities Act of 1933 has two main objectives: You can read more about the Securities Act of 1933 here. The Securities Exchange Act of 1934 The Securities Exchange Act of 1934 is often called the “most important securities law in the United States.” It created the SEC and gave it broad authority to regulate the securities industry. Among other things, the Securities Exchange Act of 1934 requires companies that sell securities to the public to disclose important information about their business, financial condition, and management. It also requires brokers and dealers who trade securities to be licensed and to meet other standards of conduct. You can read more about the Securities Exchange Act of 1934 here. Trust Indenture Act of 1939 The Trust Indenture Act of 1939 is a federal law that regulates the sale of municipal securities. Municipal securities are debt obligations issued by states, cities, and other government entities. The Trust Indenture Act of 1939 requires state and local governments to disclose important information about their finances before they sell municipal securities. It also prohibits them from selling municipal securities unless they comply with certain conditions. You can read more about the Trust Indenture Act of 1939 here. Investment Company Act of 1940 The Investment Company Act of...

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O que é fraude de títulos? Definição, Exemplos, & Como relatar

Securities fraud, which can also be referred to as investment fraud or stock fraud, is the deceptive practice by an individual or group in the securities markets that typically involves a victim (an investor) losing investment capital due to false or misleading information perpetuated by the perpetrator (the fraudster). If you’ve been the victim of securities fraud, you may be able to take legal action. 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. 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. 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...

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Margin Call: Definition, Triggers and How to Handle One

Increased volatility in the market can sometimes bring about uncomfortable and surprising situations for investors, especially when it comes to a margin call. You may find yourself asking when do margin calls happen and how do they work. When you buy stock on a margin, you’re essentially borrowing money from your broker to finance the purchase. While this is a strategy that can amplify your gains if the stock price goes up, it can also lead to painful losses if the stock price falls and you’re forced to sell other assets or put more money into your account to meet the margin call. In this article, you will learn everything there is to know about margin calls, including: IMPORTANT: If you have suffered significant investment losses as a result of being forced to liquidate a margin account, you should speak to an experienced securities fraud attorney about your legal options. What is a Margin Call? A margin call is a demand from your broker that you must deposit more money or securities into your margin account to cover potential losses. This typically occurs when a margin account runs low on funds, usually due to heavy losses in investments. Investment Losses? Let’s Talk. or, give us a ring at 800-732-2889. In most, but not all cases, your broker will notify you of a margin call and give you a set amount of time to deposit more funds or securities into your account. You typically will have two to five days to respond to a margin call. Timeframes for responding to a call may vary depending on your broker and the circumstances. Regardless of the time frame, it is important that you take action as soon as possible. IMPORTANT: If you aren’t able to meet the margin call fast enough or don’t have any extra funds to deposit, your broker may also force you to sell some of your securities at a loss in order to free up cash. This is known as forced liquidation. In fact, many margin account agreements allow brokerage firms to liquidate your portfolio at their discretion without notice. What Triggers a Margin Call? There are several things that can trigger a margin call, but the most common is when the value of securities in your account falls below a certain level set by your broker (house maintenance margin requirement) or securities exchange where securities are traded (exchange margin requirement). When this occurs, your broker will issue a margin call in order to protect themselves from losses and to ensure that your account has enough funds to cover potential losses. You’re then required to deposit additional funds or securities into your account to meet the call to bring your account back to the maintenance margin level. If you don’t make a deposit, your broker may sell some of your securities at a loss to cover the shortfall. Margin calls can occur at any time, but tend to occur during periods when there is high volatility in the markets. What happens when you get a margin call? A margin call is most often issued these days electronically, through your broker’s online platform. You can also receive an email or other notification from your broker informing you of the margin call and how much money you need to deposit by a certain time. What happens next depends on your broker and the situation. If your broker is not worried about the situation, they may give you some time to raise the extra funds to deposit into your account. If they are worried, they may demand that you meet the call immediately or they may even sell some of your securities to cover the shortfall if you don’t have the extra cash on hand without notice. Yes, a broker can sell your securities without your permission if you don’t have enough money in your account to meet a margin call. All of this depends upon the contract you signed when you opened your account which outlines the broker’s rights in these situations. It’s important to remember that your broker will most likely be interested in protecting their own financial interests rather than yours, so you should make sure that you understand your rights and obligations before entering into a margin agreement. Because they are not always required to give you time to meet a margin call, unless they are under contractual agreement to do so, they may not notify you before liquidating assets in your account to pay off any margin debt. If this happens, your investment portfolio may suffer significant losses. Unfortunately, even if you are in a position to meet the call, you may not be able to get your securities back if they have already been sold by your broker. When you opened up your margin account, you likely signed an agreement that gave your broker the right to sell your securities without notifying you first. This is why it’s important to understand the terms of your margin agreement before signing it. You should also be aware of the risks involved in trading on margin. MPORTANT: If your broker decides to sell your highly appreciated securities, you can be left with large deferred-tax liabilities as well as major capital gain tax expenses that must be paid in the relevant tax year. In addition, brokers can sell your securities within the margin account at an undervalued price, leaving you with even more investment losses. How long do you have to pay a margin call? The time frame for responding to a margin call can vary depending on your broker and the circumstances. Typically, brokers will allow from two to five days to meet the call. You will need to review your account agreement with your broker to be sure. Beware, most margin account agreements do not require the broker to give you any amount of time or notice before they liquidate. What happens if you cannot pay the margin call? Not meeting a margin call can have long-term consequences for...

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Insider Trading: Definition, Rules, Punishment 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 a privileged individual (insider) 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...

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