unit investment trust

What is a Unit Investment Trust Switch?

Jun 1, 2020

Recently, the Financial Industry Regulatory Authority (“FINRA”) announced that it ordered Stifel, Nicolaus & Company, Incorporated

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Protection of Vulnerable Investors

Proposed Law Aims to Protect Elderly and Vulnerable Investors

Feb 24, 2020

Last week, the Florida House of Representatives unanimously approved an amendment to the securities laws to be titled the and Act for the Protection of Vulnerable Investors. The proposed law is designed to protect vulnerable investors, including persons who are more than 65 years old, but younger persons are included as well. Under the proposed bill, a vulnerable adult is a person 18 years of age or older whose ability to perform the normal activities of daily living or to provide for his or her own care or protection is impaired due to a mental, emotional, sensory, long-term physical, or developmental disability or dysfunction, or brain damage, or the infirmities of aging.  This provision is similar to other “hold and report” laws which have recently been adopted by many other states. These laws protect brokerage firms from being sued for freezing accounts and notifying a trusted contact and authorities where they have a reasonable belief of “financial exploitation” of a vulnerable investor by another. The proposed legislation applies where money or securities are taken out of an account or trades are made in the brokerage account of a vulnerable investor. The Florida House of Representatives unanimously approved the legislation, and it is widely believed that the bill will pass the Florida Senate. The proposed legislation currently is pending before the Rules Committee of the Florida Senate and must receive approval from that committee before it goes to the full Florida Senate for a vote.   Under the proposed Protection of Vulnerable Investors law, a securities dealer or investment adviser may place a hold of up to 15 business days on a transaction or distribution if it reasonably believes that financial exploitation of a vulnerable adult has occurred or been attempted, or is occurring or will be attempted. The proposed legislation permits a brokerage firm to extend the hold for up to 10 additional business days if the firm’s review of the underlying conduct continues to support the hold. The identical bills pending in the Florida House of Representatives and Florida Senate require the firm, within three business days, to report the initial hold to the Florida Office of Financial Regulation (OFR), as well as all persons authorized to transact business in, and any designated trusted contact for, the vulnerable investor’s account. The firm also must notify OFR of any extension of the original hold.    FINRA Also Has Rules to Protect Elderly or Vulnerable Investors The brokerage industry’s own regulators have put similar safeguards into place to protect elders or mentally incapacitated customers from financial exploitation. The Financial Industry Regulatory Authority (FINRA) allows broker-dealers to put a hold of up to 15 days on the disbursement of funds from seniors’ accounts if they believe that an individual is being financially exploited. Another recent attempt to prevent elder abuse is “trust contact” forms. Firms are now required to ask their retail clients to provide the name and trusted contact and provide information for a person who can be contacted in the event of suspected financial exploitation.  The 2018 Senior Safe Act protects brokers and their firms from liability when reporting possible exploitation to […]

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religious or group based fraud

Religious Group Fraudster Charged By SEC

Feb 10, 2020

The Securities and Exchange Commission, (“SEC”) on January 29, 2020, charged a Pennsylvania man with defrauding Amish and Mennonite community members when he falsely represented how he would use their funds and by guaranteeing returns on their investments. The SEC complaint alleges that Philip E. Riehl while providing accounting services to Amish and Mennonite communities, developed his own investment program using money raised by selling promissory notes to community members. According to the complaint, over a nearly ten year period, Riehl raised approximately $60 million by promising to invest the funds in business and real estate loans to others in their religious community. As alleged in the SEC complaint, Riehl falsely claimed that two co-signers would be on every loan, and he personally guaranteed repayment of the investments with interest. The SEC further alleges that Riehl sold Trickling Springs Creamery promissory notes, investments in a dairy business that he owned, concealing from investors the company’s financial difficulties. In his 2019 letter to investors, Riehl allegedly apologized for his dishonesty, admitting  that his statements created a “false sense of security, in that such a considerable percentage of the funds were channeled into my personal projects.” Trickling Springs Creamery filed for bankruptcy in December 2019, leaving Riehl unable to pay back investors. In the press release announcing the charges, the SEC warns  that  “Promises of guaranteed returns or investments without risk are classic warning signs of fraud.” It cautioned investors who invest with someone in their faith-based community stating that “[i]t is important to learn as much as possible about your investments, even if it means questioning someone you know and trust….” What is Affinity Fraud? Affinity fraud refers to investment scams that prey upon members of specific groups, such as religious or ethnic communities, the elderly, or professional groups. The scammers who run affinity frauds frequently are – or pretend to be – members of the group. According to the SEC, they often try to fool respected community or religious leaders from the group to spread the word about the scheme by convincing leaders that a fraudulent investment is legitimate. Many times, even those group leaders become unwitting victims of the fraudster’s scheme. Affinity scams exploit the trust and personal friendships in groups of people who have something in common. Because of the tight-knit structure of many groups, regulators and law enforcement officials have difficulty detecting an affinity scam. Sadly, victims often fail to notify authorities or bring legal claims and instead try to work things out quietly within the group. This is often the case when the fraudsters have involved respected community or religious leaders to convince others to join. Many affinity scams involve Ponzi or pyramid schemes, where new investor money is used to pay off earlier investors creating the impression the investment is profitable. Such tricks are used to lure new investors in the scheme and to lull existing investors into believing their investments are safe. In reality, in most Ponzi schemes,  the fraudster almost always steals investor money for personal use. Because each of these types of investment schemes depends on an unending supply of new investors […]

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investment fraud

3 Ways to Recover from Investment Fraud

Jan 20, 2020

Being the victim of investment fraud can be a catastrophic hit to you, your family, and your plans for the future. The money you have worked hard for your entire life can be taken away in an instant. Indeed, one of the best examples of how devastating the impacts of investment fraud can be is the Bernie Madoff case. Bernie Madoff perpetrated a Ponzi scheme that was based on nothing but his charm, his reputation, and the goodwill of his investment firm. As shocking as it may seem, Madoff was able to keep up a billion-dollar investment fraud Ponzi scheme for decades. The red flags were there, but the kind of power he wielded on Wall Street, allowed him to keep suspicion from the Securities and Exchange Commission (SEC) at bay. Once the Great Recession hit, however, Madoff was unable to keep up the façade. And, with surprising calmness, Madoff turned himself in, took responsibility for his massive financial crimes, and stated that he always knew the day would come when the authorities would put him in jail. Devastation from Madoff’s Actions The real tragedy, however, was not Madoff’s descent into the criminal punishment that always awaited him, but the victims left in the wake of his massive fraud. Many believe that Madoff only defrauded investors who either were too wealthy to really be hurt by Madoff’s crimes, or should have known that on some level that he was nothing but a fraudster. That, however, is far from the truth. In fact, many of Madoff’s clients were people of limited means or solidly middle-class individuals. At his sentencing, victim after victim told the court of their poverty solely because of Madoff’s crimes. There was a retired police officer who put all of his life savings into a Madoff account and was left with nothing. There was an elderly gentleman who did not know how he was going to pay for life-saving treatment for his illness without the money he invested with Madoff. And, there are thousands of other stories like that. Investor fraud lawyer Melanie Cherdack understands the plight of those who are victims of investment fraud. She has “seen it all” when it comes to the schemes that investment brokers use to defraud their clients. So, if after reading this article you want to learn more about whether you need an investment fraud lawyer for your current situation, then we invite you to contact us today on our online contact form, or by calling 888-768-2499. We are the investment fraud lawyers who will be leveling the playing field for you. Now, let us get to the 3 ways you can recover investment losses if you were the victim of fraud. 1. Mediation or Arbitration FINRA – the Financial Industry Regulatory Authority – the public/private organization that creates a forum for investors to recover damages from fraud, allows for a number of dispute resolution avenues. To be qualified to use the services of FINRA, the alleged occurrence or event forming the basis of the fraudulent act must have happened within the last six years. If that is the case, then you may want to file an arbitration with FINRA. Compared to going to court, arbitration can be a less costly, easier, and faster option to […]

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