Wall Street Investment Fraud Lawyer Blog

Apparently since David Lerner began selling Apple REIT investments to moms and pops across the country ($6.8 billion), it has consistently listed the price per share of the various Apple REIT investments as $11. The accuracy of this $11 per share amount is undermined, however, by the fact that the values and profitability of the hotels held in these Apple REITs has been hit in recent years with historic market downturns. Many reputable sources including FINRA, the organization in charge of regulating David Lerner, has charged the company with misleading its customers by publishing an over-inflated $11 per share price in Apple REITs Six, Seven, Eight, Nine and Ten.

The questions, therefore, are as follows:
1. Why did David Lerner not change the price per share of the Apple REITs?
2. Was David Lerner required to change the price per share of these REITs?
3. What is the true value of Apple REITs Six, Seven, Eight, Nine and Ten?

1. Why did David Lerner not change the price per share of the Apple REITs?

Only discovery obtained in lawsuits filed against the company will uncover the true extent behind the reasons that the company failed to reflect the true value. Our experience in representing investors, however, points to conflicts of interest as being the culprit. According to the FINRA complaint recently filed against David Lerner, 60-70 percent of the company's annual business was generated from selling Apple REITs. David Lerner has earned over $30 million in commissions and marketing allowances since January 2011 alone. Why bite the hand that feeds you?

Also, it seems reasonable to think that investors might make a run on the REITs to liquidate their positions if they noticed a drastic downturn in share values. If David Lerner does not re-price, however, investors won't know the true value of their REIT shares. If they don't know the true value of their REIT shares, they probably won't liquidate as long as the shares are paying the same dividends. This is important because the Unit Redemption Program discussed in the prospectuses of these investments limit the total amount of redemptions to three percent of the weighted average number of Units outstanding during the 12-month period immediately prior to the date of redemption. If a large number of investors now make a run on the Apple REIT investments and seek to liquidate their positions, many will not be able to get their money back and lawsuits will likely begin.

2. Was David Lerner required to change the price per share of these REITs?

With regard to Apple REITs Six, Seven, Eight and Nine, the answer is yes.

In 2009, FINRA issued Notice to Members 09-09 reminding David Lerner and other FINRA members selling unlisted REITs (e.g. Apple REITs) that the firms selling the investments are prohibited from using information that is more than 18 months old to estimate the value of a nontraded REIT. Apple REITs Six through Nine are no longer open to new customers and were offered more than 18 months ago. A review of the 10k reports issued by these Apple REIT entities shows that performance has been down over the last couple of years and that the entities have resorted to borrowing money to pay the investor dividends. Surely, the value of these investments have dropped below $11 per share.

With regard to Apple REIT Ten, it appears that David Lerner is permitted to reflect the $11 per share price on the monthly statements because the investment is still in the offering phase and has not been available for 18 months. This fact should not be construed to suggest that recommendation to invest in Apple REIT Ten were suitable for you. These are illiquid investments and are not suitable for investors who may need to liquidate the funds on short notice (i.e. retirees fall into this category). Furthermore, if you own more than one of these Apple REITs, you may be over-concentrated and being exposed to too much risk in your portfolio. David Lerner has a fiduciary duty to recommend suitable investments to all of its customers. If they fail to satisfy these duties, the firm can held liable for damages related to the breach.

Continue reading "Did David Lerner Associates Violate The Law By Failing To Re-Price Apple REIT Investments?" »

Last week, FINRA's complaint filed against David Lerner & Associates triggered a storm of media attention scrutinizing the brokerage firm's alleged sales practices violations related to its distribution of Apple REITs investments. The FINRA complaint also exposed that the $11 price per share of all Apple REITs offered are overvalued and that each REIT has been borrowing money to pay dividends. To view the FINRA complaint, click here.

Since 1992, David Lerner has served as best efforts underwriter and sole distributor of a series of ten REITs that have issued nearly $6.8 billion in securities to date. A REIT is a company that owns and usually operates income-producing real estate. To qualify as a REIT, a company must have most of its assets and income tied to a real estate investment and must distribute at least 90% of its taxable income to shareholders annually in the form of dividends. Several of the earlier Apple REITs have been acquired by other companies. However, Apple REIT Six, Apple REIT Seven, Apple REIT Eight and Apple REIT Nine continue to operate but are closed to new investors. Apple REIT Ten opened in January 2011 and is still open to new investors.

Since the complaint was filed, we have received multiple calls from aggrieved investors who want to withdraw their investments from Apple REIT Six through Ten but are concerned that the REITs will not honor their redemption requests. So the question is whether investors will be able to get their money back from the Apple REITs?

First of all, the Apple REITs are illiquid investments because there is no market to sell them to third parties. From a suitability standpoint, these investments are not appropriate for investors who may need access to cash in the short-term (e.g. retirees). Unfortunately, however, the FINRA complaint alleges that David Lerner targeted retirees to sell them Apple REITs. Obviously the risks associated with illiquidity are magnified as more of the investment is purchased. Since there is no market to sell Apple REITs on the open market, investors generally must rely on Apple REIT to honor redemption requests.

Each of the Apple REITs Six through Ten has rules described in the product prospectus regarding whether units of the REITs can be redeemed. The applicable Apple REIT program is referred to in the prospectus as the "Unit Redemption Program" and the language describing how the program works is very difficult to follow.

The language in each of prospectuses does state, however, that the company will not consider any redemption requests made within the first 12 months of purchase. Therefore, since the Apple REIT Ten did not open until January 2011, investors in Apple REIT Ten currently are not eligible to receive any of their money back. To view orginal Apple REIT prospectus, click here.

With regard to Apple REIT Six, Seven, Eight and Nine, it appears that those investors may be eligible to receive redemptions. Approved redemptions are paid quarterly and are considered on a first come, first serve basis. Therefore, if you have already decided that you want to make a redemption request, you have to get in line. Given the negative publicity surrounding these REITs, all of this increases the risk that redemptions will be limited and/or suspended altogether in the coming months. To go to the Apple REIT companies website and view additional information regarding each of these REITs, click here.

Another fact that increases the risks that redemption requests will be denied in whole or part is that the fact that the Unit Redemption Program limits the total amount of redemptions to three percent of the weighted average number of Units outstanding during the 12-month period immediately prior to the date of redemption. Also, the prospectuses state that the company has complete authority to deny redemption requests and to unilaterally change the rules on redemptions at any time. For example, the FINRA complaint alleges that in May 2011, after redemption requests exceeded the 3 percent limit in the first quarter of 2011, Apple REIT Eight raised the redemption percentage to 5 percent but lowered the redemption payout on non-reinvested shares to 92% of the purchase price. In other words, the company unilaterally imposed an 8% redemption charge on the Apple Eight REIT.

Continue reading "Will FINRA's Complaint Against David Lerner Cause Apple REIT To Deny Redemption Requests By Investors?" »

If you are a David Lerner customer who is invested in Apple REITs and have read the newspapers this week, you have probably been searching for quality information to help you assess whether: (1) your REIT investments have lost money; (2) you are in danger of losing money and (3) there are any steps that you can take to avoid losing money.

As an attorney who represents investors, there are steps that you need to take to help protect yourself just in case things go from bad to worse. These tips will help you organize your thoughts and make you feel like you are gaining control of the situation. Should you contact an attorney, these tips will make it easier for the attorney to evaluate your case.

Tip 1: Create a written chronology of events.

It is our understanding that many of David Lerner's customers have attended one or more investment seminars. The statements made during these seminars as well as the documents provided by the financial advisor may turn out to be extremely important. For example, did the financial advisor hand out marketing materials describing the Apple REIT investments? Were they described to you as safe? Were any guarantees made?

Our memories are flawed and they become even more flawed as time passes. As a result, it is in your best interest to write down as much as you can remember now. You can add to it over time. Next week, you may see a television advertisement that triggers another helpful memory. Write it down. Focus on writing down things that you remember being told about the investment opportunity. Was it described as a safe investment? When were you told it was a safe investment opportunity? How many times were you told that it was a sure thing? How was the Apple REIT investments described to you?

All of these facts are very important should it become necessary to take legal action at some point in the future.

Tip 2: Begin to organize the key documents provided to you by David Lerner

Over the course of your relationship with David Lerner, you have probably received scores of documents. Below is a list of a few key documents that will help an attorney evaluate your case.

- Account opening documents: When you opened your David Lerner account, you signed documents that asked you to state your investment objectives and risk tolerance. For example, you or your financial advisor may have checked "income" as your investment objective and "moderate" as the risk tolerance. Furthermore, each year, David Lerner may have sent you a form asking you to update this information. Gather these documents together and place them in a seperate folder.

- Marketing Materials related to Apple REITs

- Handwritten notes and correspondences provided to you by your financial advisor: Notes by brokers can pop up in strange places like on the backs of folders, a torn piece of paper, etc. These could turn out to be a crucial pieces of evidence.

-Notes and correspondences from you to your advisor.

- Organize monthly account statements.

Tip 3: Beware of writing complaint letters

You may feel the need to write a complaint letter to David Lerner or a state regulator. Keep in mind that anything you say in those letter can be used against you later in a lawsuit.

The New York headquartered brokerage firm David Lerner & Associates has marketed Apple REIT's to its customers as investments that provide safe income. Since 1992, David Lerner has sold more than $6 billion of Apple REITs into over a hundred thousand of its customer accounts. More specifically, since January 2011, David Lerner has sold over $300 million of Apple REIT Ten and since 1996, the firm has received $600 million from sales. This comprises of 60-70% of David Lerner's business during that time period. The firm has branch offices in New York, Connecticut, New Jersey and Florida.

Based on our preliminary investigation, David Lerner conducts investment seminars to entice investors to open accounts and purchase these investments. This week, FINRA, the entity responsible for regulating the brokerage industry, filed an action against the firm for allegedly failing to satisfy its due diligence and suitability obligations in connection with the sale of Apple REITs.

According to an article in today's New York Times entitled, Statements Skip Over REIT's Woes, for many years the price per share of Apple REITs listed on David Lerner's customer monthly statements has remained constant- $11 per share. The problem is that the market for the commercial real estate investments held inside of Apple REITs, extended stay hotels, has not been consistent. After all, the commercial real estate market has suffered historic losses in recent years. So, how can the price per share legitimately remain the same? It can't.

Unfortunately, Apple REITs appear to be the on the verge of collapsing despite its $11 per share price stated on the monthly statements issued to customers of David Lerner. The New York Times article states for example, that Apple REIT Eight has significant problems. It has failed to make mortgage payments on four hotels it owns. Furthermore, a day after FINRA filed its lawsuit, an investment management company began a tender offer for up to 5% of the outstanding Apple Eight shares. The offering price was only $3, not $11.

More bad news may be on the way for investors in these REITs and David Lerner will likely be right in the middle of the legal storm. After all, David Lerner was the underwriter on these investment and had a duty to conduct due diligence analysis on the viability of these investments. It was also the primary distributor of the investments to the public and marketed them as safe and conservative products.

Our firm represents investors who suffer investment losses and is investigating into this matter. If you purchased Apple REITs, feel free to contact us for a free consultation.

The Wall Street Journal reports that FINRA filed suit against David Lerner Associates, Inc. for allegedly failing to satisfy its due diligence and suitability obligations in connection with the sale of Apple REITs. Since 1992 David Lerner has sold more than $6 billion in Apple REITs to its investors.

The FINRA complaint alleges that the Apple REITs are illiquid and heavily concentrated in extended stay hotels and that a substantial number of its customers were invested in more than one Apple REIT. This fact raises concerns about whether such recommendations were suitable for David Lerner's customers especially since FINRA alleges that the firm targeted its elderly unsophisticated clients for these income producing investments.

Even more concerning is the fact that several of these Apple REITs have maintained an $11 price per share even though the commercial real estate market (i.e. the sector invested in by the REITs) has declined considerably over the last few years. Furthermore, the FINRA complaint states that a substantial portion of the distributions paid by all Apple REITs comes from loan proceeds. In other words, the investments do not appear to be generating sufficient income to sustain the 7%-8% distributions, which suggests that the $11 per share price is over-inflated.

If you have been sold any Apple REIT by David Lerner Associates, Inc., you may have legal rights that could entitle you to recover your losses. Please feel free to contact us for a free consultation.

Investment News reports that Richard Ketcham, FINRA's chairman and chief executive last week warned an audience of more than 900 industry professionals at the regulator's annual meeting in Washington that the regulator is focusing on broker-dealers that sell structured products such a reverse convertible notes.

This news comes on the heels of our blog post last week that the Massachusetts' state regulators is also targeting firms who are selling these products to retail investors. As we reported, structured products like reverse convertible notes are very complex investments that are rarely suitable for the average investor.

In this low interest environment, however, reverse convertibles are attractive to retirees seeking income because they provide above-average yields and resemble corporate bonds given that they are often linked to well known companies (e.g. AT&T, Verizon, Apple, etc.) What investors often do not know is that reverse convertibles involve complex and risky options trades which is often not adequately disclosed during the sales process. In general, when the stock price falls below a pre-determined price during the term of the note, upon maturity, investors receive shares of stock at a depressed price instead of their principal investment. To make matters worse, the products pay above-average commissions to a sales force who by in large are only knowledgeable about the sales points, not the intricate risks.

According to the article, more than 8,000 different structured products are currently offered and last year's sales hit a record of $55 billion, up 61% from $34 billion in 2009. This shocking sales data and the historically volatile stock market spell danger and losses for investors. Regulators do need to be watching carefully this developing story.

According to a Bloomberg News article today entitled, Massachusetts Investigates Sales of Reverse Convertible Notes, the state securities regulator appears to be positioning itself to potentially take action against the brokerage industry on its sales practices related reverse convertible notes.

Reverse convertible notes are very complex structured investments that are rarely suitable for retail investors. To the average investor, they look like corporate bonds issued by large well-known corporations (e.g. Bank of America, John Deere, Apple, etc) that pay above-average yields over a period of three to twelve months. As a result, they are an easy sell to retirees looking for an investment to provide supplemental income.

In reality, however, reverse convertible notes are not corporate bonds and investors are not investing in large corporations. The investments are actually created by investment banks and investors in these products are actually purchasing an option to receive shares of stock in the large company at a depressed price upon maturity.

For example, an individual invests $25,000 into a hypothetical reverse convertible note linked to Bank of America that pays monthly interest of 8% and matures in twelve months. Therefore, during the twelve month period, the investor receives income payments amounting to 8% per month.

The key question is, however, does the investor receive his or her principal investment back at the end of the twelve months as in a corporate bond? The answer is that it depends on whether the price of Bank of America stock dropped below a pre-determined value during the course of the twelve months. If not, then the investor receives his or her principal investment back in full. If so, then the investor does not get his or her principal investment back. Instead, he or she receives shares of Bank of America stock at a depressed price per share.

This is just one example of a myriad of ways these products are structured and the riskiness is not always clear from the amount of interest the investment pays. For example, a reverse convertible paying 15% over three months may be less risky than a note paying 6% over twelve notes. Therefore, it is very difficult for even very experienced options investors to know whether they are getting a good deal.

To make matters worse, reverse convertibles pay above-average commissions and the financial advisors selling the products often do not fully understand what they are selling. They may know the selling points but that is not sufficient, which is why Massachusetts appears to be positioning itself to take action.

Our firm has represented investors who lost money in these investments. If you have suffered losses, feel free to contact us for a free consultation.

This month, FINRA announced that it ordered Schwab to pay $18 million to investors for improperly marketing its YieldPlus Bond fund to retail investors. The order requires Charles Schwab to pay the money into a Fair Fund that will be established by the Securities Exchange Commission (SEC) to repay investors in YieldPlus fund, an ultra short term bond fund managed by Charles Schwab Investment Management. According to the disciplinary report, $17.5 million of the $18 million consists of fees that Schwab collected on sales of the fund. The other $500,000 constitutes a fine.

The FINRA investigation found that despite changes in the fund's portfolio that caused the fund to be disproportionately affected by mortgage backed securities, Schwab continued to market the fund as a low-risk alternative to money market funds. Between September 1, 2006 to February 29, 2008, Schwab sold over $13.75 billion in shares of the YieldPlus to customers.

The Doss Firm, LLC represents investors who lost money in the YieldPlus fund. For a free consultation, please feel free to contact us.

On January 6, 2011, Bloomberg news published an article entitled Wall Street Turns Stock Gains Into Losses With Structured Notes. The article criticizes reverse convertible notes, a type of structured note, for their high fees and poor performance even in an up stock market. According to the article, on average reverse convertible notes lost 1 percent last year while the S&P stock index gained 8% and corporate bonds gained 11.1%. One commentator quoted in the article described reverse convertible notes as "really a toxic product."

The article also suggests that the only ones winning in these investments are those who are selling them. For example, some of the reverse convertible notes issued by JP Morgan charged fees and commissions that exceeded the returns to the investors.

Attorney Jason Doss with The Doss Firm, LLC along with his clients Mr. and Mrs. Conklin were also mentioned in the article. The clients are senior citizens who filed suit against Ameriprise Financial for allegedly misrepresenting the essential features of these products.

The Doss Firm, LLC is currently representing other investors who were wrongfully sold reverse convertible notes. If you believe that you were a victim of bad financial advice or worse fraud in connection with the sale of these products, please feel free to contact us for a free consultation.

The Securities and Exchange Commission (SEC) has issued a press release stating that the SEC has charged Paul T. Mannion, Jr., of Norcross, Georgia, and Andrews S. Reckles, of Milton, Georgia, two hedge fund portfolio managers, with defrauding investors in the Palisades Master Fund, L.P. Specifically, it is alleged by the SEC that these individuals, along with their investment advisory businesses, PEF Advisors LLC and PEF Advisors Ltd., overvalued illiquid fund assets that were placed in a "side pocket." A side pocket is defined as "a type of account that hedge funds use to separate particular investments that are typically illiquid from the remainder of the investments in the fund." Robert Kaplan, Co-Chief of the SEC's Asset Management Unit explained that "side pockets are not supposed to be a dumping ground for hedge fund managers to conceal overvalued assets. Mannion and Reckles deceived investors about the fund's performance and extracted excessive management fees based on the inflated asset values in a side pocket."

The SEC also alleges that Mannion and Reckles used investor funds to fund their own personal investments. Further, it is alleged that these individuals made false representations to a securities issuer about their trading positions so that they could participate in a private offering.

Scott Friestad, Associate Director of the SEC's Division of Enforcement stated that "Mannion and Reckles put their own selfish interests ahead of Palisades' investors, treating the fund like their own personal bank account by stealing and improperly borrowing millions of dollars in fund assets."

The SEC's complaint alleges that investors were defrauded over at least a three-month period in 2005 and that Mannion and Reckles took more than one million warrants in World Health that were worth approximately $1.6 million. Further, it is alleged that these individuals took out a personal undisclosed loan totaling $2 million in order to finance their own personal investments. In addition, the complaint states that they used approximately $13,000 from the fund for services allegedly not rendered to the fund. The SEC also alleges that in 2004 Mannion and Reckles made misrepresentations in connection with a PIPE (private investment in public equity) offering which was conducted by Radyne ComStream Inc.

The SEC's complaint charges these men with "violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940." The SEC seeks financial penalties, disgorgement of profits, prejudgment interest, and injunctive relief.

If you would like further information on investment fraud, please visit our website at www.dossfirm.com. If you believe that you may be a victim of investment fraud and would like to speak with us, please call our firm for a free consultation.

This month, FINRA announced that it fined Merrill Lynch $500,000 and ordered the firm to pay over $2 million in restitution to its customers for failing to provide them with sales charge discounts on eligible purchases of Unit Investment Trusts (UITs).

A UIT is a type of investment company that offers redeemable units that terminate on a specific date. Much like mutual funds, UIT sponsors offer sales charge discounts to investors, known as "breakpoint discounts" and "rollover and exchange discounts." A breakpoint discount is a reduced sales charge based on the amount of the purchase. According to FINRA's October 2010 disciplinary release, breakpoints usually begin at $25,000 or $50,000 purchases.

FINRA stated that between October 2006 and June 2008, the firm failed to appropriately apply discounts on rollover and breakpoint purchases resulting in customers being overcharged on their UIT purchases.

If you believe that you have wrongly lost money in UIT investments due to bad financial advice or worse, financial fraud, please feel free to contact us for a free consultation.

AARP recently issued a warning to veterans, warning of fraudsters claiming "instant eligibility for additional benefits through a quick overhaul of [their] investments." This growing scam can lead to serious financial harm and can often cause other difficulties for the veteran victims.

The scammers claim that the purchase of investments with them will make the veterans eligible for additional Department of Veteran Affairs pensions and other benefits. However, these individuals, often describing themselves as "veterans advocates," are likely dishonest investment advisors.

In most instances, the investment advisor tells the veteran that they need to transfer their retirement assets into an irrevocable trust to make it appear as though the veteran is impoverished. The fraudsters promote that by doing this the veteran will be eligible for a VA pension and other benefits such as Aid and Attendance, which allows for everyday living expenses. However, the fraudsters neglect to mention that by doing this the veteran's eligibility for other benefits like Medicaid may be jeopardized. Medicaid does conduct historical reviews of your assets and will look at prior transfers of your assets.

Furthermore, the new trust held by the veteran often holds unsuitable investments. The trust will often contain annuities that are very often considered inappropriate for retirees. In fact, in some cases the annuity must be held for a decade or even longer before the investor can receive monthly income. Often the investor does not understand the terms of the annuities and realize such terms too late.

Unfortunately, these annuities are often recommended by the advisor because of the commission it will generate for the advisor. In fact, a $500,000 annuity could provide a commission of $75,000. A huge payoff for a small amount of work.

There are some things that Veterans should remember. First, they should make sure that they contact their state veterans affairs agency for credible information regarding benefits and not rely on the word of investment advisors making a sales pitch. Further, veterans should not rely on official sounding titles or feel good descriptions such as "veterans advocate." Information is key and all investors should do research prior to trusting an investment advisor and prior to making any investment decisions. Finally and unfortunately, veterans CANNOT rely on community centers, social groups, or assisted living facilities or nursing homes to do the research on individuals offering seminars. In some cases, the investment advisors pay a fee to make their presentation. Just because the group or facility allows for the seminar doesn't mean that they have investigated the individual or have reviewed the seminar materials and/or the investments being touted.

If you believe that you are a victim of an investment scam and would like more information as to your legal rights, please do not hesitate to contact our firm for a free consultation. Also we invite you to visit our website at www.dossfirm.com for further information regarding investment fraud.

According to a Securities and Exchange Commission (SEC) press release, the SEC has charged Barbra Alexander along with two other executives at APS Funding with misappropriating $2.5 million in investor funds.

It is alleged that Alexander, former president of APS Funding and former host of an internationally syndicated radio show, MoneyDots, lured investors using her radio host status into purchasing interests in two real estate investment funds. Investors believed that their funds would be used in funding short-term loans which were secured by real estate. Instead, it is alleged by the SEC that Alexander, along with Beth Pina, the firm's secretary/chief financial officer, and Michael Swanson, the firm's vice president, took investor funds and paid themselves $1.2 million. Additionally, $1.3 million was allegedly used to finance the radio show MoneyDots and other unrelated businesses.

The SEC's complaint alleges that Alexander, Pina, and Swanson were able to raise almost $7 million dollars from approximately 50 investors. Investors were allegedly told they would receive 12% in annual returns from their investments. In order to further the scheme, the investors allegedly received fraudulent monthly statements, which showed the promised returns. In total, the SEC alleges $2.5 million was misappropriated by these individuals.

Alexander, Pina, and Swanson are charged with violating the anti-fraud provisions of federal securities laws and with the unregistered sale of securities. The SEC is seeking disgorgement of ill-gotten gains, financial penalties, and injunctive relief. Further, the U.S. Attorney's Office has filed criminal actions against the same individuals based on the same alleged fraud.

For further information on investment fraud, please visit our website at www.dossfirm.com. Additionally, if you believe you have become a victim of investment fraud and would like to discuss your legal rights, please do not hesitate to contact our office for a free consultation.

Last month, FINRA, the organization that regulates the securities industry, ordered SunTrust Investment Services of Atlanta, Georgia to pay $1.44 million to resolve charges related to the unsuitable recommendations of unit investment trusts, closed-end funds and mutual fund investments sold to some of its elderly and disabled clients. Of that amount, $900,000 is a fine that includes $224,000 in disgorgement of commissions earned from unsuitable trades. The remaining $540,000 represents restitution to 17 customers who incurred losses.

The settlement also required that SunTrust review all UIT purchases and provide remediation to all customers that did not receive the maximum sales charge discount. This could mean that the problem at SunTrust is wide-spread and not simply limited to the 17 customers who received restitution. "Suntrust failed to meet [its] obligations which caused its customers, including elderly customers to incur significant losses," stated James S. Shorris, FINRA Executive Vice-President and Acting Chief of Enforcement.

According to FINRA's disciplinary summary, the two financial advisors involved were David Bredenberg of Timonium, Maryland and Donald Mattran of Bel Air, Maryland. Bredenberg is now permanently barred from the securities industry and Mattran is suspended until February 15, 2011.

In sum, both advisors engaged in short-term trading of unit investment trusts, closed-end funds and mutual funds in accounts held by elderly and disabled investors. Also, they traded many of the accounts on margin, which means that the brokers borrowed against the assets in the accounts to purchase more UITs, closed-end funds and mutual funds. This is an extremely risky investment strategy. FINRA found that the short-term trading strategy did not benefit the clients and served to generate big commissions to the brokers.

If you believe that you are a victim of a similar incident with SunTrust Investment Services, please feel free to contact us for a free consultation.

According to Investment News, the brokerage firm Securities America, Inc. and the Massachusetts Securities Division squared off over charges that the firm misled 60 investors in the state who bought $7.2 million in MedCap notes from the firm's brokers.

In total, 400 Securities America reps and advisors sold about $700 million of the private placement notes from 2003 to 2008. Investors lost approximately $1 billion through their purchases of the MedCap notes. Medical Capital is a lender to hospitals and health care facilities and it is now in receivership. In 2009, the SEC charged Medical Capital and its two top executives with securities fraud.

Massachusetts alleges that Securities America failed to disclose red flags to advisors and clients about the failing Medical Capital.

If you believe that you are a victim of this alleged fraud, feel free to contact us for a free consultation.