FINRA Bars Wilmington, Delaware Broker for Alleged Client Theft

The Financial Industry Regulatory Authority announced that they barred Michael E. Donnelly.  Donnelly was terminated by Coastal Equities, Inc.   Coastal Equities noted that the reason for termination was “misappropriation of client funds.”

FINRA opened an investigation thereafter but Donnelly failed to cooperate in FINRA’s investigation.  FINRA barred Donnelly from association with any FINRA member.

Donnelly was also associated with Coastal Investment Advisors, Inc., an SEC registered investment advisor.

If you believe that you may be a victim of theft by Michael Donnelly, contact Place & Hanley, LLC for a no fee initial consultation at 866-318-4725.

(866) 318-4725
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Chapin Davis Fined and Censured by FINRA

Chapin Davis was fined $35,000 and censured by the Financial Industry Regulatory Authority

According to FINRA, from March 2010 to October 2012, Chapin Davis sold approximately $24.5 million in structured notes and FDIC-insured structured certificates of deposit to retail customers. In connection with the sale of the structured products, Chapin Davis’ supervisory system and written supervisory procedures (“WSPs”) were inadequate, in that there was no system or WSPs for evaluating find conducting due diligence on the products, including determining risks and suitability issues, as applicable, and approving the products; the Firm offered limited training on the products; the WSPs included general provisions on suitability requirements, but did not specifically address the products or provide guidance or restrictions unique to the products, including assessment or consideration of customer-specific suitability, as applicable; and the Firm did not sufficiently review transactions in the products, including monitoring of accounts for over concentration of the products.

If you lost money in structured notes purchased by Chapin Davis, call (866) 318-4725 for a no fee initial consultation.

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Attention Purchasers of SignPath Pharma, Inc.

The Financial Industry Regulatory Authority (FINRA) filed a complaint against Meyers Associates, LP; Bruce Meyers and Imtiaz A. Kahn.  FINRA alleges that from January 2011 through June 2011, Meyers Associates, L.P. and its President, founder and indirect owner, Bruce Meyers marketed an unregistered offering for SignPath Pharma, Inc. a company for which the Firm, B. Meyers and another senior officer of Meyers, Imtiaz (“Raana”) Khan were majority owners. Through general solicitation, Meyers and B. Meyers marketed the Series A Offering to more than 1,000 recipients of boiler-plate emails, without first establishing a substantive relationship with each recipient.

FINRA also alleges that in marketing the SignPath Pharma, Inc. investment, Meyers,  made exaggerated and unbalanced claims and improper predictions of price performance. In addition, they omitted material facts, including full disclosure of Bruce Meyers’s, Khan’s and Meyers’s ownership interest in the company.

If you purchased SignPath Pharma, Inc. contact Place & Hanley, LLC for a no cost initial consultation.  Call (866) 318-4725

 

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Naples Broker James Clifford Eastman Suspended for Nine Months

The Financial Industry Regulatory Authority suspended a Naples, Florida broker for nine months. James Clifford Eastman consented to a nine month suspension and a $20,000 fine for selling away.

Selling away means that Eastman participated in a private securities transaction without providing prior written consent to his firm. Eastman was registered with Westport Resources Investment Services, Inc. and operates from a business known as Regional Family Offices. Eastman referred three of his firm’s customers to invest $875,000 in limited partnership interests offered by a company that were not approved for sale by the firm. Eastman participated by assisting customers with obtaining the funds from their brokerage accounts at his firm to purchase the limited partnerships.

Westport permitted Eastman to resign on or about October 1, 2012.  Eastman was previously discharged from his position at Morgan Stanley Smith Barney, LLC in January 2010.

If you invested in a Limited Partnership or had investment losses with James Clifford Eastman, contact Place & Hanley, LLC for a no cost initial consultation.

(239) 455-1242 or toll free at (866) 318-4725

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Securities Class Action Attorneys

Security fraud is a serious crime and it’s important to hold responsible parties accountable, especially with everything that has been recently happening with the economy and stock market since the Great Recession. Investors are more passionate in seeking justice and citizens are banding together to hold Wall Street Brokers accountable for their methods of conducting business.

Investors and citizens banding together to file a claim is expected, especially since brokerage firms and their stockbrokers hold the financial futures of many lives. Why risk wrongful actions with the lives and futures of so many on the line? Unfortunately, it happens and when it does, a class action suit is often the solution to bring justice to those that have done wrong. Class action suits bypass numerous individual lawsuits and save the courts from clogging up.

No one wants to put up with nonreturnable losses and after the turmoil during 2008; investors are making it a priority to keep all parties accountable. If you’ve been a victim of security fraud, contact the Securities class action attorneys at Place & Hanley. We will help you in receiving the justice you deserve.

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SEC Charges Sarasota Florida Investment Adviser with Securities Fraud

The Securities and Exchange Commission filed an injunction against Wealth Strategy Partners, LC (“Wealth Strategy”), a Sarasota, Florida company, and its principal, Harvey Altholtz of Sarasota, Florida.  The SEC alleges that they committed securities fraud involving two investment funds – The Stealth Fund, LLLP and The Adamas Fund, LLLP. Wealth Strategy and Altholtz controlled and managed the two funds and later served as investment advisers to the funds.

Apparently, the Stealth and Adamas Funds raised approximately $30.8 million from over 143 investors between 2007 and November, 2009. The complaint alleges that, from October 2008 through April 2010, the defendants failed to disclose in offering materials distributed to investors that Stealth’s assets could be used to guarantee certain loans that Altholtz’s family made to two portfolio companies that Stealth invested in and that his family also made loans to Adamas and Stealth in violation of the funds’ operating agreements. The complaint also alleges that Wealth Strategy and Altholtz committed fraud by giving an Altholtz family trust, who was an investor in Adamas, preferential treatment with regard to redemptions over other investors. The complaint further alleges that the defendants made misstatements and omissions in newsletters to investors regarding the financial condition of some of the funds’ portfolio companies.

If you have losses in The Stealth Fund, LLLP or The Adamas Fund, LLLP, please contact Place & Hanley, LLC at (239) 455-1242 for a no cost initial consultation.

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SEC Charges former AXA Advisors Broker Dennis Fern Wright with Stealing Customer Funds

The Securities and Exchange Commission charged former AXA Advisors broker Dennis F. Wright with stealing client funds.   According to the complaint, for more than a decade, Dennis F. Wright of Lewiston, Pennsylvania lied to and stole over $1.5 million from at least 28 customers. Wright targeted his childhood friends and members of his community, unsophisticated and inexperienced investors who trusted Wright to honestly represent their financial interests.

Wright engaged in a scheme to defraud his customers by inducing them to withdraw funds from their existing AXA variable annuity accounts with the false promise to invest those funds in an AXA “managed account” that purportedly invested in mutual funds and yielded higher returns than their AXA variable annuities.

The AXA Managed Account was a fraud and merely a fiction created by Wright to defraud customers into transferring their funds so that he could steal their funds.

If you suspect that you are a victim of broker theft, contact Place & Hanley, LLC at (239) 455-1242 for a no cost initial consultation.

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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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