Category Archives: Investor Beware

The below link is to the OCIE Risk Alert released this week on August 24th.

National Exam Program Risk Alert

On July 17, 2015, The Wall Street Journal reported on a growing number of investors who are concerned as to whether a crisis is brewing in the expanding world of exchange-traded bond funds. (“Carl Icahn Fuels Criticism of Bond ETFs”)

Bond ETFs have emerged as one of Wall Street’s most lucrative niches in recent years, promising buyers the steady income of bonds in a package that is as easy to trade as stocks. Now, a building chorus of investors – including activist investor Carl Icahn – is warning that this best-of-all-worlds pitch may be a mirage. They argue that troubles could arise if the bond market has a sharp showdown, perhaps due to higher interest rates, and investors in ETFs start heading for the exits.

At a hedge-fund conference in New York on July 15^th, Mr. Icahn is reported to have said that “some ETFs have bought so many riskier and infrequently traded bonds that it isn’t clear who will buy them, or at what price, should the funds be forced to sell during a market panic.” In doing so, he joins skeptics who say “ETF selling could spread the effects of a downdraft, because the ETFs are widely held by individual investors, who often flee in a market downturn.”

As noted in the Wall Street Journal article, Bill Gross, who helped found bond giant Pacific Investment Management Co. and now runs a fund for Janus Capital Group Inc., sent a note to investors last month bemoaning the lack of liquidity and how “mutual funds, ETFs, and even index funds” might be hit in a downturn. “The obvious risk – perhaps better labeled the ‘liquidity illusion’ – is that all investors cannot fit through a narrow exit at the same time,” Mr. Gross wrote.

If you are an individual or institutional investor who has any concerns about Bond ETF investments having been recommended for purchase in either your retirement or non-retirement accounts, please contact us for a no-cost and no-obligation evaluation of your specific facts and circumstances. You may have a viable claim for recovery of your investment losses by filing an individual securities arbitration claim with the Financial Industry Regulatory Authority (FINRA).

President Obama, one of the most prominent critics of Americans being taken advantage of by brokers and advisors for their retirement planning needs. Renewing his call for stricter rules in an effort to guard investors planning for retirement from conflicts of interest, proclaimed a new push to increase access to retirement plans.

http://www.onwallstreet.com/news/regulatory_compliance/fiduciary-rule-will-be-a-vital-consumer-protection-obama-says-2693511-1.html?zkPrintable=1&nopagination=1

Our firm will be looking into investor complaints against John Cody Miller, a City Securities broker and investment adviser in Indiana, as a result of his suspension for executing trades without written consent, going against his company’s policies. For more on this broker and his suspension checkout the below link.

http://www.ibj.com/articles/53717-federal-authorities-suspend-city-securities-broker

According to Craig McCann, principal of Securities Litigation & Consulting Group, shareholders are about $50 billion worse off for having put money into non-traded real estate investment trusts rather than exchange-traded versions. McCann said his calculation of a roughly $50 billion “wealth loss” to investors from non-traded REITs is detailed in a paper he co-wrote that will be published in a few months by Investments & Wealth Monitor, a trade journal of the Consultants Association, which offers credentials to brokers and financial planners.

After a review by the Wall Street watchdog revealed problems, The Financial Industry Regulatory Authority cautioned brokerage firms about the way they market non-traded REITs. Investing in a wide range of real estate from apartments to hotels to strip malls, Non-traded REITs tend to have higher fees for investors than publicly-traded REITs and can be tougher to cash in.

A new warning was just released targeting the sales incentives for ‘Indexed’ Annuities. Exotic trips and other perks are being offered to agents for selling them. Sen. Elizabeth Warren (D., Mass.) has been looking into this form of investment and is focusing on the indexed annuity, widely known within the industry for the perks available to agents, according to industry executives and financial advisers. This type of annuity is a controversial investment that promises returns tied to the stock-market index, guarantees against losses if the market falls, and is much more complicated with serious limitations on the upside potential.

Sen. Warren issued letters to 15 of the nation’s largest annuity issuers back in April, with concern over marketing materials aimed at agents for high-volume annuity sales receiving trips to California’s Wine Country, South Africa, or even a private yacht tour on the Mediterranean. Cash Rewards, car leases, and jewelry were also mentioned as perks listed in the letters.

Sen. Warren’s says, “That annuity sellers who are “more interested in earning perks than in acting in their clients’ best interest can place Americans’ savings and retirement security at risk.”

Our firm will be looking into investor complaints against Joseph Yanofsky and Brooke Clements and the Yanofsky Group as a result of their termination from Bank of America Merrill Lynch.

http://www.reuters.com/article/2015/05/05/moves-bank-of-america-merrill-lynch-yano-idUSL1N0XV0Y020150505

Indianapolis Securities Firm, Veros Partners, has been sued by the SEC for an assumed Ponzi scheme that raised $15M in two farm-loan offerings. The lawsuit states that, Veros owes millions of dollars to over 80 investors in past payments. Named in the suit are Veros President Matthew Haab, Fishers attorney Jeffery Risinger, and CEO of Pin Financial Tobin Senefeld. All the assets of those named in the suit have been frozen. This is not Senefeld’s first time being pursued by the SEC. In 1999, he paid a $25,000 fine and 12 month suspension with working with broker dealers, as a result of securities violations.

Investors are rushing into the uncertain and most volatile corner of the U.S. government bond market in search of bigger returns. Zero-coupon Treasury bonds, mature in more than 25 years have handed investors a return of 5.79% year to date, according to data from Barclays PLC, while not offering a steady stream of income. With expected delay in rising interest rates, fund managers are shrugging off the risks of these government bonds as well. Click here for more information.

FINRA launched their toll-free FINRA Securities Helpline for Seniors^TM this week. Senior investors can call the new toll-free number at (844-57-HELPS or 844-574-3577) from 9:00 a.m. – 5:00 p.m. ET, Monday through Friday, and get neutral, knowledgeable assistance from FINRA staff related to concerns they have with their brokerage accounts and investments.

Susan Axelrod, FINRA’s Executive Vice President for Regulatory Operations, says “Protecting senior investors has been an important priority for FINRA for several years. Our goal in setting up this Helpline is to build on these efforts and provide an additional resource to senior investors. FINRA’s Helpline means that older investors are only a phone call away from getting help with questions or concerns they may have regarding their investments. FINRA staff will point seniors to educational tools that can help them better understand investing, savings and investment products, as well as resources like BrokerCheck that can provide valuable information about securities firms and financial professionals.”

A key priority for FINRA, the protection of senior investors has sparked the need for FINRA Securities Helpline for Seniors, along with their recently published paper captioned Report on National Senior Investor Initiative.