FINRA Issues New Investor Alert, Frontier Funds—Travel With Care

The Financial Industry Regulatory Authority (FINRA) issued a new Investor Alert called Frontier Funds—Travel With Care cautioning investors interested in funds that invest in frontier markets to carefully consider the heightened risks in these markets. While there is no precise definition of a frontier market, frontier funds generally invest in companies located in countries with developing securities markets such as Argentina, Lebanon, Nigeria, Slovenia and Vietnam.

“Investors seeking potentially higher returns in frontier funds should understand that the promise of higher returns always carries more risk—and the past performance of any fund is never a guarantee of future results,” said Gerri Walsh, FINRA’s Senior Vice President for Investor Education. “Before investing in a frontier fund, investors should consider whether and how such an investment might fit as part of a well-diversified portfolio.”

As with any investment, frontier funds have their pros and cons. Frontier Funds—Travel With Care, provides investors with a series of tips to avoid problems.

• Know which frontier markets the fund invests in. Risk factors vary by country—and no two countries share identical risk elements.
• Monitor changes in index components. If you are investing in a frontier ETF or index mutual fund, make sure you know and understand the index that the fund tracks and also the components of that index. The countries included in a frontier index can change over time.
• Geopolitical and currency risks are real. Be aware that some frontier markets are located in parts of the world with unstable political or market environments.
• Factor in costs and fees. Frontier fund costs and fees can be higher than their emerging market peers, and significantly higher than broadly diversified domestic and international managed funds.
• Consider Performance History. Frontier funds are relatively new, and most have limited performance histories.

Frontier Funds—Travel With Care
“Frontier funds” that invest in securities of companies in countries with developing securities markets—like Argentina, Lebanon, Nigeria, Slovenia and Vietnam—are gaining investor attention. Some see investing in frontier funds as a way to diversify assets—going beyond funds that invest in established international and other more developed emerging markets. Frontier funds are also sparking the interest of some investors who are lured predominantly by potential gains.

FINRA is issuing this alert to caution those interested in funds that invest in frontier markets to carefully consider the heightened risks in these markets. Frontier fund investments may provide potential diversification and periods of higher returns than can be obtained through more traditional investments. But products or asset niches that promise higher returns nearly always carry more risk—and the past performance of any fund is never a guarantee of future results.

Frontier Markets

There is no precise definition of a frontier market, or a country classified as such—but words like “small” and “illiquid” are often used to describe these markets.

Frontier economies tend to be smaller, and their markets for trading securities less developed, than emerging economies such as Brazil, Russia, India and China. In addition, compared to more established markets, the legal, financial accounting and regulatory infrastructure of frontier markets may be weaker or less developed, and political stability may be more of a concern. Financial market depth and breadth also may be more limited, and capital flows may be more restricted. Frontier markets may have less investor participation, fewer large global companies and limited international trade compared to established and emerging economies.

At the same time, frontier market countries are often characterized by populations that are making strides in education and entrepreneurship, an expanding economy and a rising standard of living.

Frontier Funds

Currently, there are a limited number of funds that focus specifically on frontier markets. Just as every frontier market is different, so is every frontier fund. Some funds invest in more than 30 frontier markets around the globe. Others invest more narrowly, perhaps focusing on only one region such as Asia, Africa or the Middle East—or even one country. Some mutual funds and exchange-traded funds (ETFs) may concentrate their holdings in a single or small number of economic sectors—such as banking, energy or agriculture—within various frontier markets. Others may track an index that encompasses virtually all of the countries in the frontier market universe. Still other funds invest in both frontier and the generally larger and more developed emerging markets, and some global or international funds may allow for sizable allocations to frontier markets.

A frontier fund that is registered under U.S. law—whether it is a mutual fund, ETF or closed-end fund—is required to provide investors with a prospectus that details the fund’s investment objective, major holdings or index that it tracks, historical returns and information about fees and risks. Think of this prospectus as your “frontier market guide,” complete with advisories and warnings. Read it carefully before you invest. Most frontier funds are designated for “aggressive growth” and described as high risk. Investors interested in frontier funds should carefully consider whether and how such an investment might fit as part of a well-diversified portfolio.

Before You Invest

Like any investment, frontier funds have their pros and cons. Before you invest, here are some tips to help you avoid problems:

• Know which frontier markets the fund invests in. Risk factors vary by country—and no two countries share identical risk elements. Read the fund’s prospectus to determine whether you are buying a fund that is or may become broadly diversified across many frontier markets, or that narrowly invests in only a few frontier markets, sectors or a single region or country.

• Monitor changes in index components. If you are investing in a frontier ETF or index mutual fund, make sure you know and understand the index that the fund tracks and also the components of that index. Be aware that the components or “constituents” of an index can change, potentially affecting the return of the fund. For example, components of the MSCI Frontier 100 Index are undergoing changes after Qatar and the United Arab Emirates—which accounted for more than 30 percent of the value of the MSCI index—were reclassified from “frontier” to “emerging” markets. Following a transition period over several months, these markets will no longer be represented in the index.

• Geopolitical and currency risks are real. Be aware that some frontier markets are located in parts of the world with unstable political or market environments. Regional conflict, civil unrest and regime change are all significant risk factors, as is the risk that currency exchange rates may fluctuate, resulting in changes in the value of a given fund.

• Factor in costs and fees. Frontier fund costs and fees can be higher than their emerging market peers, and significantly higher than broadly diversified domestic and international managed funds. Even small differences in expenses can make a big difference in your return over time, so it’s important to know just how much you are paying for your investment. Use FINRA’s Fund Analyzer to help you compare how sales loads, fees and other fund expenses can impact your return. ETFs have a fee structure that includes trading fees, which can add up if you plan to actively buy and sell.

• Learn as much as you can about the fund manager. Understanding frontier markets and managing investments is a specialized skill. Research the fund manager’s professional experience, including fund management tenure and performance record. Research the professional background of a fund manager and the broker selling you the fund using FINRA BrokerCheck.

• Performance History. Frontier funds are relatively new and most have limited performance histories. Like all investments, performance may fluctuate. You can lose money.

As with any investment that holds out the potential for greater returns, it pays to ask whether you are willing to take on the higher risk that comes with it. In short, are you comfortable with a higher risk of significant investment losses? If not, an investment in frontier funds may not be a destination you want for portfolio.

If you suffered investment losses, please contact the Law Offices of Place & Hanley, LLC to explore your legal options. The Law Offices of Place & Hanley, LLC is dedicated to helping investors who have been victims of securities fraud. If you have lost money as a result of securities fraud, you may be able to recover your financial losses. Contact us today toll free at (866)318-4725 for a free initial consultation.

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FINRA Bars Spring Hill Florida Broker Edward James Wendol

The Financial Industry Regulatory Authority barred Edward James Wendol from association with any FINRA member.  FINRA was investigating Wendol for outside business activities and undisclosed private securities transactions.

Apparently, FINRA had requested documents in their investigation of Wendol and he informed FINRA that he would not provide the documents.  FINRA has authority to bar a broker who fails to comply with their requests.

Wendol worked for the following broker-dealers:

09/2013 – 07/2014            WTS PROPRIETARY TRADING GROUP  -  NEW YORK, NY

12/2011 – 08/2012            STERLING ENTERPRISES GROUP – ST. PETERSBURG, FL

11/2008 – 10/2009            AMERICAN CLASSIC SECURITIES, INC. – PONTE VEDRA, FL

06/2005 – 11/2006            PEAK SECURITIES CORPORATION – LARGO, FL

Apparently, Wendol conducts business as Total Retirement Security Planning & Mentoring Group at http://totalretirementsecurity.com/us/

If Edward James Wendol was your broker and you have investment losses, please contact Place & Hanley, LLC for a no cost initial consultation.  Call (239) 455-1242

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Jeffries & Company Trader Sentenced to Prison

The Securities and Exchange Commission announced today that Jesse Litvak, a former managing director of Jefferies & Co., Inc. (Jefferies), a New York-based broker-dealer, was sentenced to 24 months in prison followed by three years of supervised release and a fine of $1,750,000 following his conviction on 10 counts of securities fraud, one count of Troubled Asset Relief Program (TARP) fraud, and four counts of making false statements.

The SEC had also charged Litvak separately in a civil action with making misrepresentations and engaging in misleading conduct while he sold mortgage-backed securities (MBS) in the wake of the financial crisis.

If you suffered investment losses in mortgage-backed securities contact Place & Hanley for a no fee initial consultation at (866) 318-4725.

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Place & Hanley Investigating Claims Involving Mark Rosenberg and UBS Financial Services

Place & Hanley is currently investigating claims against Mark Rosenberg (CRD No.: 1103799)  and UBS Financial Services, Inc. (CRD No.: 8174).  The Law Offices of Place & Hanley, LLC recently filed a FINRA Arbitration claim on behalf of a Claimant in which it was alleged that Mark Rosenberg failed to recommend and implement a suitable investment strategy for Claimant in breach of the duties and obligations owed to Claimant under industry rules and regulations.  It was further alleged that Respondent UBS Financial Services, Inc, through their registered representative Mark Rosenberg, informed Claimant that they would meet his investment objectives. Instead, Claimant alleged that Respondent recommended an overly risky and unsuitable investment strategy which resulted in needless losses. It has also been alleged that Respondent encouraged Claimant to entrust his account to their care based on representations and assurances that Respondent would invest the money suitably for the investment objectives and risk tolerance of Claimant’s account.  Claimant also alleged that Respondent made material misrepresentations and omissions to Claimant regarding the investment products and undisclosed commissions. Moreover, it has been alleged that Respondent materially misrepresented and omitted to disclose the principal risk inherent in the recommended investment strategy.  Furthermore, it has been alleged that Respondent UBS was negligent in their supervision, retention and hiring of Mark Rosenberg.  Due to Respondent’s misconduct, Claimant has suffered out-of-pocket losses for which he seeks a recovery.

FINRA Rule 3010 requires each member to establish and maintain a system to supervise the activities of each registered representative and associated person in order to achieve compliance with the securities laws, regulations, and FINRA rules.  Rule 3010 requires broker dealers to ensure that their associated persons adhere to FINRA’s suitability guidelines.

In the recently filed arbitration claim, the Claimant alleged that Respondent, UBS Financial Services through its registered representative Mark Rosenberg, violated industry rules, including but not limited to, FINRA’s customer suitability standard (Rule 2310) as well as FINRA rules 3010 and 2110 and that Responded violated their duty of care and was negligent.  Furthermore, it has been alleged that Respondent breached the contract that was entered into between Claimant and Respondent and that Respondent also breached the fiduciary duty that a securities firm and its employees/agents owe to their clients.  Lastly, it has been alleged that Respondent’s misconduct constitutes common law fraud and that the Claimant’s account at issue were handled negligently and UBS Financial Services was negligent in their hiring, retention, and supervision of their employees.

If you were a client of Mark Rosenberg or UBS Financial Services and have suffered investment losses, please contact the Law Offices of Place & Hanley, LLC to explore your legal options.  The Law Offices of Place & Hanley, LLC is dedicated to helping investors who have been victims of securities fraud.  If you have lost money as a result of securities fraud, you may be able to recover your financial losses.  Contact us today toll free at (866)318-4725 for a free initial consultation.

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Law Office of Place & Hanley Investigating Claims Involving Ronald Gavin and Common Wealth Financial Network

Place & Hanley is currently investigating claims regarding Ronald B. Gavin (CRD No.: 2486224) and Common Wealth Financial Network (CRD No.: 8032). The Law Offices of Place & Hanley, LLC recently filed a FINRA Arbitration claim on behalf of two investors in which it was alleged that Ronald B. Gavin engaged in risky and overly aggressive options trading strategies in the clients’ accounts. It was further alleged that the reason Gavin engaged in the overly aggressive options trading strategy is that he earned a commission per trade on options, in addition to his management fee. As a result of Gavin’s discretionary trading, the clients alleged that they suffered investment losses.

It has been further alleged that the investment strategy utilized by Mr. Gavin ensured that only he would benefit from the trading strategy he employed in the Claimants’ accounts. In fact, it has been alleged that while Mr. Gavin represented to the clients that the costs for trades were included in the management program fees, in actuality the majority of the trades Gavin executed were outside of the management trading strategy, and therefore were subject to an additional commission. It has been further alleged that Respondent Commonwealth Financial Network admitted in their Form ADV Part II that the fees and transaction charges on their managed accounts created a potential conflict of interest because Commonwealth advisors may have a greater incentive to recommend (or make investment decisions regarding) investments that provide additional compensation to Commonwealth and the advisor.

FINRA Rule 3010 requires each member to establish and maintain a system to supervise the activities of each registered representative and associated person in order to achieve compliance with the securities laws, regulations, and FINRA rules. Rule 3010 requires broker dealers to ensure that their associated persons adhere to FINRA’s suitability guidelines.

In the recently filed arbitration claim, the Claimants’ alleged that Respondent, Commonwealth Financial Network through its registered representative Ronald B. Gavin, violated industry rules, including but not limited to, FINRA’s customer suitability standard (Rule 2310) as well as FINRA rules 3010 and 2110, that Responded violated their duty of care and was negligent. Furthermore, it has been alleged that Respondent breached the contract that was entered into between Claimants and Respondent and that Respondent also breached the fiduciary duty that a securities firm and its employees/agents owe to their clients. Lastly, it has been alleged that Respondent’s misconduct constitutes common law fraud and that the Claimants’ accounts at issue were handled negligently and Commonwealth Financial was negligent in their hiring, retention, and supervision of their employees.

If you were a client of Ronald B. Gavin or Commonwealth Financial Network and have suffered investment losses, please contact the Law Offices of Place & Hanley, LLC to explore your legal options. The Law Offices of Place & Hanley, LLC is dedicated to helping investors who have been victims of securities fraud. If you have lost money as a result of securities fraud, you may be able to recover your financial losses. Contact us today toll free at (866)318-4725 for a free initial consultation.

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Arbitration Resolution Process

What are the typical resolutions or results of arbitration?

Arbitration resolution typically varies. Most of the time, investors receive monetary or non-monetary relief from an award by the panel or a party settlement. Other times, cases are decided by arbitrators or are resolved through settlements by mediation.

Arbitrator Selection

Arbitrator selection is the process in which the parties receive lists of potential arbitrators and select the panel to hear their case. The number of arbitrators appointed to a case depends on the amount and type of relief requested in the Statement of Claim.

The process in which both parties receive lists of potential arbitrators and select the panel to hear their case is known as Arbitrator Selection. The number of arbitrators appointed to a case depends upon the amount and relief requested in the Claim Statement.

FINRA will appoint one arbitrator for claims less than $50,000. These type of claims will be subjected to a simplified arbitration procedure. For claims more than $50,000 but less than $100,000, parties select their arbitrators and FINRA will appoint one arbitrator, unless there is a written agreement limiting the number of arbitrators to three. Claims that are $100,000 and up will result in parties selection and FINRA appointing three arbitrators.

The arbitrator selection process begins after the answer is due. It matters not if the Respondent has answered a claim. Once the answer is due, FINRA generates a list of arbitrators complete with background information. This information is known as arbitrator disclosure reports. FINRA uses the Neutral List Selection System (NLSS) to generate random lists of arbitrators from the arbitrator rosters to appoint a panel. FINRA will send the lists and reports to both parties for review. Parties will then choose from the lists by ranking their choices, then submit their lists to FINRA. FINRA will then combine both ranked lists and appoint the highest ranked available arbitrator to serve on the panel.

If you’ve lose money as a result of securities fraud, contact the Law Offices of Place & Hanley, LLC as you still might be able to recover your losses. We’re dedicated to helping investors who have been victims of securities fraud.

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Securities and Exchange Commission Issues Investor Bulletin

The SEC has issued an Investor Bulletin entitled, How to Check Out Your Financial Professional.

The SEC informs investors that they should check-out brokers at www.finra.org/brokercheck.com.

A potential red flag is that the broker may have other customer complaints. Those complaints may be reflected on the brokercheck record.

If the broker has other customer complaints, this may be a sign to take your money elsewhere.

If you lost money with your stockbroker, contact Place & Hanley, LLC at (866) 318-4725 for a no cost initial consultation.

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Securities Arbitration – When Experience, Expertise Matters

The Law Offices of Place & Hanley, LLC is a nationally recognized securities and commodities arbitration law firm representing investors nationwide in claims against brokers, broker dealers, financial advisors, and insurance companies, The Naples Securities Lawyers at the Law Office of Place & Hanley are experienced in providing the focused and aggressive representation needed to represent investors who have been victims to financial fraud and unsuitable investments. Our Naples Securities lawyers represent investors who have lost their savings due to mishandled broker accounts.

Our firm has experience in handling class action litigation securities matters and group arbitration claims. Our attorneys have prosecuted claims against major Wall Street firms, including but not limited to, Wells Fargo, UBS, Oppenheimer, Morgan Stanley Smith Barney, and many mid-sized broker-dealers. With each case, our team provides skills, values, and detailed client services for each and every client. Our attorneys will cater to you and your needs. We will take time to travel and answer any questions or concerns you may have. Your case will garner personalized attention no matter how simple or complex. You will have 24/7 direct contact and access with the attorneys handling your cases. We are committed to our clients and we will fight to obtain the results you deserve. We take pride on our personalized approach to client services, high level of accessibilities, integrity, and case results. We’ve recovered millions of dollars for individual investors, and we have recovered punitive damages and attorneys’ fees for our clients.

At Place & Hanley, we handle securities cases on a contingency fee basis, meaning you’ll only pay if we successfully recover the money on your behalf. Prosecuting a securities claim is complex, but our experienced Naples securities lawyers can and will ensure your interests are protected throughout the process.

The Law Offices of Place & Hanley, LLC is a nationally recognized securities and commodities arbitration law firm that is committed to representing investors who’ve lose money because of the deceitful acts of a once trusted advisor.

If you’ve been victim to stock fraud, contact the Securities Arbitration Lawyers at the Place & Hanley, LLC.

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