Securities arbitration lawyer Robert W. Pearce, a Florida based securities lawyer with a practice that is primarily representing investors in FINRA arbitrations against broker dealers and advisors, answers one of the more frequently asked questions: What kind of stockbroker fraud cases are you working on today?
My name is Robert Pearce, and for the last six years, including this year, we have a heavy concentration of Puerto Rico investor claims involving the recommendation of misrepresented Puerto Rico bonds and closed-end bond funds, recommendations that over concentrated investors in these assets. When the Puerto Rico market crashed in September 2013, these investors lost billions.
We’re working on misrepresented GPB Capital Holdings private placements. These investments were made on a widespread basis throughout the United States, paying brokers very, very, very high commissions. They were often misrepresented and recommended without the stockbrokers doing due diligence on these companies. If they investigated, they would have seen the fraud.
We are working on UBS ETRAC, Exchange Traded Note cases. These notes were indexed notes. They were misrepresented. And often times investors did not know, as well as the stock brokers, anything about the mandatory redemptions that they experienced in March when the price of these notes declined below a certain level. Investors were forced to realize losses. There was no opportunity for investors to wait for a rebound and recover their losses.
Another area that we’re working on today involves the UBS Enhanced Yield Strategy, the UBS YES strategy, which was an option strategy where you collateralized your entire account and you were offered an enhanced yield using the option strategy known as the “Iron Condor” strategy which failed to limit losses. Investors suffered huge losses investing in that strategy, which was just like the Merrill Lynch Rampart strategy.
We’re working on cases involving the over concentration of investors’ portfolios in the oil and gas industry, in the travel industry, in the hospitality industry, which all crashed during the COVID-19 market crash in March of this year. Now the claims are not because the stockbrokers recommended investments in the oil and gas industry or the travel or the hospitality industry, it was that they over concentrated investors in those sectors. They invested their entire nest egg in these securities. And when they crashed, their entire portfolio crashed. They didn’t diversify customers’ investments. And this is a common claim that we’re seeing in representing investors this year.
Another claim that we are seeing commonly involves securities-backed lending. That is, over the last six, seven years, brokerage firms uniformly have been offering variable lines of credit or fixed income lines of credit. Whenever an investor wanted to take money out of their account, they wanted to keep the investor fully invested because that’s how they maximize their fees. That’s how they maximize their commissions. But what investors don’t understand is that their portfolio essentially becomes invested in a margin account. And it may not be the brokerage firm that makes margin calls when the market declines, but the bank does and forces the brokerage firm to liquidate securities to meet the margin calls, causing investors to realize losses. Those are common claims that we’re seeing this year.
Yes. The claims this year are concentrated in those areas, but we’re seeing the general misrepresentation, misleading statement, unsuitable investment recommendations, breaches of fiduciary duty, negligence, mismanagement claims that we’ve seen for the last four years, and we expect we’ll continue to see them because unfortunately not all stockbrokers are truly acting in your best interest. They’re acting in their own best interest! And that’s why you need a skilled, experienced FINRA securities arbitration attorney to represent you in these disputes.