teacher investment losses

Are You a Teacher With Investment Losses?

Aug 17, 2020

As recently stated by the Securities and Exchange Commission (“SEC”) in reaching a  $40 million settlement, “Too often educators are targeted with misconduct related to their investments. Our nation’s educators, and our Main Street investors more generally, are entitled to full and accurate information about the incentives and conflicts affecting their financial advisors.” In a scheme targeting teachers, the SEC recently charged VALIC Financial Advisors Inc. (VFA) in two actions for failing to disclose to Florida teachers and other practices that generated millions of dollars in fees and other financial benefits for VFA. VFA settled claims for failing to disclose payments to a for-profit entity owned by Florida K-12 teachers’ unions to exclusively promote its services to teachers. In a related action, VFA settled claims for failing to disclose conflicts of interest by receiving millions of dollars of financial benefits from advisory client mutual fund investments that were generally more expensive for the teachers than other mutual funds. VFA  settled all of the charges for approximately $40 million. In the settlement, VFA agreed to cap advisory fees for all Florida K-12 teachers participating in its advisory product in Florida’s 403(b) and 457(b) retirement programs, resulting in huge savings for thousands of Florida teachers. According to the SEC’s orders, VFA and its affiliate earned more than $30 million on the products it sold to Florida K-12 teachers.   VFA Did Not Disclose Payments Made in Exchange for Teacher Referrals In the first of the two orders, VFA is charged with undisclosed referral payments. VFA acted as a financial services vendor in almost every Florida school district. According to the SEC,  for 13 years VFA’s parent company, The Variable Annuity Life Insurance Company (VALIC), made payments to a company owned by the Florida teachers’ unions so that the entity would exclusively endorse VFA as its preferred financial services partner, excluding all competitors. In addition, VALIC supplied three full-time employees to  the entity owned by the teachers’ unions to act as “member benefit coordinators.” These so-called coordinators deceptively presented themselves as employees of the entity owned by the teachers union. The coordinators promoted VALIC and VFA to Florida K-12 teachers at benefits fairs and financial planning seminars and referred teachers to VFA for their investment recommendations.  The order charges that the member benefit coordinators increased VFA’s access to K-12 teachers in Florida and that VFA did not disclose that the teacher’s union-owned entity was paid to make VFA its preferred financial services provider. VFA Did Not Disclose Millions of Dollars It Received for Investing Teachers in Certain Funds The SEC separately charged VFA for failing to disclose its receipt of millions of dollars of financial benefits from client investments in mutual funds. According to the SEC, VFA’s wrap agreements stated that the advisory fee the client paid included the costs to execute securities trades. The order states that VFA chose new mutual fund investments for clients that were part it’s clearing broker’s no-transaction-fee program (NTF Program), and thus would not incur any transaction fee which VFA would be responsible for paying. The NTF Program mutual funds were generally more expensive than other mutual funds […]

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Securities arbitration

Do You Need an Attorney for Securities Arbitration?

Apr 13, 2020

As an investor, you depend on your broker or brokerage firm to put your interests first when handling your investments. After all, that is why you chose them, because they are supposed to be experts in the field of investing your money wisely. But what happens when they fail you? What happens when they put their interests over yours? What happens if instead of your financial gain, they use your money to their own benefit instead of yours? Or, if they are negligent in making recommendations that are not in your best interests or are unsuitable for you? The answer is that you should complain about this conduct and seek damages.   If You Have a Brokerage Account, Most Likely You Agreed to FINRA Arbitration  Most brokerage firm contracts have a clause requiring that all disputes with customers be handled through FINRA arbitration. Notwithstanding this, all brokers and firms who are FINRA members are required to arbitrate their customer’s claims through their forum. So, most likely, any dispute you have with your broker or firm will be handled in a securities arbitration proceeding before FINRA. Accordingly, you would be wise to consult with a securities arbitration attorney familiar with the FINRA rules and processes to assist you in that process.  In this article, we will discuss the securities arbitration process, and what an attorney’s role in that process. If, after reading this blog, you have additional questions or feel that you may have a claim, we invite you to contact Former Wall Street attorney Melanie Cherdack. Ms. Cherdack is a securities arbitration attorney who understands the plight of those who were victims of investment fraud. She has represented hundreds of investors and has “seen it all” when it comes to the schemes that investment brokers use to defraud their clients. We invite you to contact us today on our online contact form, or by calling 888-768-2499. The Importance of FINRA The purpose of the Financial Industry Regulatory Authority, or “FINRA,” is to protect investors, regulate brokers, and guarantee integrity in all stages of the investment process. FINRA provides investors with protections and avenues for recouping lost dollars when brokers are negligent, break the rules, or cheat investors. FINRA provides the forum of securities arbitration for those wronged by brokers. It is a process that is faster than filing a lawsuit, geared towards the issues that investors have with brokers and is private. Laws and regulations governing these issues can be complex, and you will need to prepare your case, file documents, meet deadlines, know which issues are paramount to your case, figure out how to show they breached a contract or violated rules and regulations or any other numerous issues. That is why you need a good attorney to help you through the securities arbitration process.     Your Attorney’s Help During Arbitration Although you are not required to hire an attorney for securities arbitration, it is in your best interest to do so. There are numerous benefits to having an attorney assist you. Even the FINRA website suggests hiring an attorney, as follows:   “You should consider hiring an attorney to represent you […]

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FINRA arbitration case

Do I Need an Attorney to Represent Me in a FINRA Arbitration Case?

Dec 23, 2019

It is completely understandable to be very protective of the money that you worked hard, day in and day out, to earn. In fact, your nest egg is the culmination of years of focus, discipline, and time spent in your life’s work. Your nest egg is something to be very proud of. It is the thing that helps your kids get through college and will be there for you in your sunset years. That is why coming across an unscrupulous investment professional or financial advisor is so emotionally, as well as financially, hurtful. It is hard to find out that the person or brokerage company in which you trusted your hard-earned savings is improperly using that which is rightfully yours.  Therefore, if you find evidence that your financial advisor is unfairly taking your money, then you need to take action. Of course, investing your money always has risks. But if you have a legitimate concern that your financial advisor is abusing his or her trust in administering your finances, then you need to consider a FINRA arbitration or FINRA mediation.   Then the important question becomes: Do you need an attorney to represent you in the FINRA arbitration or FINRA mediation? The answer is that you do not need an attorney, but you will definitely want one once you realize the stakes.  This article will discuss those stakes with you. We will first talk about some securities arbitration fundamentals, and then we can consider whether it is a good idea to hire a securities attorney. Of course, if you have additional questions about your own circumstances after reading this article, we welcome you to contact us today on our online contact form, or by calling 888-768-2499. We are the investment fraud lawyers who can help you.    The Fundamentals of Securities Arbitration First and foremost, FINRA stands for the Financial Industry Regulatory Authority. It is a government-authorized, not-for-profit organization that regulates financial broker-dealers in the United States. The mission of FINRA is to: 1. Provide investors with basic protections; 2. Ensure that securities sellers are tested, qualified, and licensed; 3. See that securities advertisements are truthful and not misleading; and 4. Make sure that securities products sold to an investor are suitable for that investor.   FINRA is a regulatory body that protects the investing public through investigations and enforcement actions. It also provides an exclusive forum for resolving disputes between investors and their brokers. If you have opened a brokerage account at a FINRA member firm ( which is basically all major brokerage firms)–you have agreed to have FINRA be the sole forum to file any claims you have regarding your brokerage account. Now, you have likely heard the terms “arbitration” and “mediation” before. They are essentially less formal ways in which to resolve disputes, in which a court of law is not involved. Specifically, with regard to securities disputes, FINRA provides the forum for those arbitrations and mediations.   While less formal, arbitration is very similar to a court proceeding. Yet, the difference is in the fact that arbitrations do not generally have depositions, are concluded more quickly, and are generally cheaper […]

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