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.

On September 28, 2010, at the outset of the sex scandal that ripped through New Birth Missionary Baptist Church, we posted a blog post entitled, Bishop Eddie Long's New Birth Church Members Are Sitting Ducks For An Affinity Fraud Investment Scam. In that posting, we warned that church members were at risk of becoming victims of financial fraud.

After reading the Atlanta Journal Constitution reports over the last couple days about Bishop Eddie Long going "viral" in an attempt to recover lost money on behalf of trusting church members, it is clear that our warning came too late.

If you fear that you have been a victim of Ephren Taylor and Capital City Corp, you need to take immediate steps to help regain control of the untenable situation you face. Hopefully, the tips below will also assist you in recovering your losses.

Tip 1: Do not accept any settlement offer without first consulting with an attorney.

Based on some quick research, it appears that Capital City Corporation is a business development company authorized under the Investment Advisors Act of 1940 to make loans and equity investments in developing business enterprises. According to today's AJC article, Capital City Corp. stated, "the legal team has been working with individuals to legally and privately resolve, refund, and restructure any potential losses."

As an attorney who represents defrauded investors, I interpret "refund and restructure" to mean small refund now, long wait to get back the rest of your money. Because Capital City makes loans and equity investments in developing business enterprises, my guess is that it was hit pretty hard during the recession. As a result, Capital City may be cash poor right now and does not want to refund all of the investment losses right now. In their settlement sales pitch, the legal team hired by Capital City will likely paint a rosy picture of Capital City's future business opportunities. This will make the settlement offer look like a low risk proposition. Do not trust them. They are not looking out for your best interests. They are only interested in limiting Capital City's exposure to liability.

Tip 2: Do not sign any documents provided to you by Capital City Corp. and/or Ephron Taylor.

When parties settle disputes, the defendant always wants the plaintiff to sign a release. A release typically is a paragraph contained in the settlement agreement that looks like boiler-plate words. Its function is to absolve the defendant of any and all sins it committed in the past. The release has the effect of prohibiting a plaintiff from filing a subsequent lawsuit. Importantly, the language of the release will not be limited solely to Capital City Corp. It will also include New Birth Missionary Baptist Church, Bishop Eddie Long and any other person or entity and anyone else Capital City's attorneys can think of.

Tip 3: Get copies of any recorded church services where Capital City Corporation and/or Ephron Taylor was discussed.

I have never attended New Birth but like many churches, it is likely that the church records its services. These recording will provide crucial evidence about the representations that were made about Capital City Corp. and/or Ephren Taylor.

I once represented a woman from Atlanta that was defrauded (along with a group of others) in an affinity fraud scheme at her church. The pastor of her church was very vocal in his support of the fraudster and made many statements during church service that were recorded. These recordings provided crucial evidence in her case because they contained many misrepresentations about the nature of the investment opportunity.

To recap - (1) Get a lawyer; (2) Do not sign anything; and (3) Get the tapes!

Tip 4: Create a written chronology of events.

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 an 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 did Capital City Corp. and/or Ephren Taylor gain your trust?

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

Tip 5: Did I mention that you should hire an attorney?

All victims of investment scams have suffered from the breach of a trust relationship. The trust relationship is a very powerful force. It frequently causes victims to blame themselves and it can also skew your memories. As a result, individuals who are in this position need to acknowledge and accept that they need the help of a disinterested representative. Attorneys serve this function well.

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.

Last Sunday, as I drove home from my church in Marietta, Georgia, I thought about Bishop Eddie Long, a person who prior to last week I had never heard of much less ever thought about. My wife had told me that he was speaking to his congregation Sunday morning, the media would be in attendance, and that he planned to address the sex scandal allegations. Needless to say, like many, I was curious to find out what he was going to say and I hoped that by listening and/or watching his sermon, I could utilize my skills to detect whether he committed the terrible things alleged.

When I got home, I immediately went to my computer and pulled up the CNN website and there it was - a section of his sermon there for the viewing. I am an Atlanta-based attorney who has a national practice of suing financial advisors for investment fraud and garden variety portfolio mismanagement. I have witnessed many slick stockbrokers lie under oath. The trick to catching them is to drag them through the details because liars hate details. Much to my dismay, Bishop Long did not go into any details. He did not even directly deny the allegations. Most of what I saw was rhetoric and citations to bible stories meant to energize the audience. If nothing, Bishop Long is a dynamic speaker - even while wearing a white jumpsuit that looked like it was pulled out of a Star Trek closet.

I do not know whether Bishop Long is guilty but what was painfully clear is that the vast majority of his congregation blindly follow him. Trust permeated from my computer screen. A quote on CNN.com today stated, "People come to believe that to turn on him is to not be committed to God." Judging from that video, I believe it.

I also could not help but think that those same members of the New Birth Church are sitting ducks for an affinity fraud investment scam. What is affinity fraud? Affinity fraud is the single most effective technique used by unscruplous financial advisors to defraud investors. The plan is simple - gain investors' trust and they will follow you to the ends of the earth. Churches have long been the breeding ground for many affinity fraud scams because church is a place that is rooted in trust. Last month, the North American Securities Adminstrators Association (NASAA), an organization comprised of current and former state securities regulators listed affinity fraud as the top scam technique. NASAA also stated that the best way to avoid this trap is to seek more information about the investment from an unbiased, unaffiliated third party.

I hope that BIshop Long's congregation follows NASAA's advice and looks beyond New Birth for godly advice.

CBS Atlanta News reported today that customers who rent movies from Red Box in the Atlanta area are complaining of being overcharged. According to the report, Red Box charges a dollar a night with no late fees but some customers are complaining that they were charged over a hundred dollars by the time they were through dealing with the company. The primary complaint is that the company continues to charge customers even after the movies are returned.

If you were overcharged by Red Box, please contact us for a free consultation. The Doss Firm, LLC is a law firm that is devoted to protecting the rights of consumers.

On February 16, 2010, Financial Industry Regulatory Authority (FINRA) fined H&R Block Financial Advisors, Inc., (n/k/a Ameriprise Financial) $200,000 for failing to establish adequate supervisory systems and procedures for supervising sales of a unique and relatively new investment called reverse convertible notes to retail customers. FINRA also fined and suspended H&R Block broker Andrew MacGill, a Tampa-based financial advisor, for making unsuitable sales of reverse convertible notes to a retired couple. The firm was ordered to pay $75,000 in restitution to the couple for losses they incurred.

The Doss Firm, LLC, a law firm that focuses on representing investors against financial firms like Ameriprise Financial, may have uncovered that the circumstances surrounding Andrew MacGill's suspension and Ameriprises's $200,000 fine is not an isolated incident. The problem is regional, if not firm-wide and involves Ameriprise's financial advisors targeting senior citizens to purchase high-risk reverse convertible notes. These products are sold to investors as safe cash-alternative investments.

Today, the law firm filed suit on behalf of an elderly couple from Sun City Center, Florida (80 years old and 75 years old), who claim that they also were victimized by H&R Block Financial Advisors, Inc./Ameriprise Financial in connection with sale of reverse convertible notes. The elderly couple opened accounts at the firm after attending a free lunch seminar sponsored by H&R Block at an upscale restaurant in Apollo Beach, Florida.

In the press release announcing the fine and suspension, FINRA Chairman and CEO Richard Ketchum stated, "For the typical retail investor, for instance, it would be unwise to put anything more than a small portion of life savings into riskier structured products such as reverse convertible notes." In the case filed today, at one point over 40% of the elderly couples retirement accounts were invested in reverse convertible notes.

What is a reverse convertible note?

A reverse convertible note (RCN) is a structured product that typically consists of a high-yield, short-term note of an issuer and effectively a put option that is linked to the performance of an unrelated, or "linked," asset - usually a single common stock, but sometimes a basket of stocks, an index or some other asset. As a general rule, upon maturity of an RCN, the investor will receive either his full principal investment or a predetermined number of shares of the linked equity (which may be worth less than the principal investment), depending on the performance of the linked equity. Generally speaking, the higher the coupon rate, the higher the expected volatility of the linked equity and the greater the likelihood of the investment resulting in payment of shares. Reverse convertibles not only come with the risks that fixed income products ordinarily carry, such as issuer default and inflation risk, but with additional risks of the underlying asset, which can depreciate or even become worthless. The initial investment for most RCNs is $1,000 per unit and most RCNs have maturity dates ranging from three months to one year.

In the enforcement matter against Ameriprise, FINRA found that during the period from January 2004 through December 2007, H&R Block engaged in sales of RCNs without having a system or procedures in place to effectively monitor customer accounts for potential over-concentrations in RCNs. As a result, the firm failed to detect and respond to indications of potential over-concentration in RCNs in numerous customer accounts.

FINRA found that H&R Block utilized an automated surveillance system to facilitate its suitability review of securities transactions and to monitor customer accounts for potentially unsuitable positions and activity. The system would flag for review any transaction or account meeting certain parameters established by the firm relating to, for example, account turnover and concentration levels in a particular security or class of security. The firm's system, however, was not configured or designed to monitor RCN transactions or RCN positions in customer accounts and the firm did not establish an effective alternative means to do so. As a result, H&R Block failed to detect and respond to indications of potentially unsuitable RCN concentration levels in numerous customer accounts. Additionally, the firm failed to provide sufficient guidance to its supervising managers on how to assess suitability in connection with their brokers' recommendation of RCNs.

The Doss Firm, LLC is currently investigating whether Ameriprise Financial f/k/a H&R Block Financial Advisors violated industry rules on a wide-spread basis in connection with the unsuitable sale of reverse convertible notes to senior citizens.

FINRA fined the firm as well as Andrew MacGill, a broker with the firm, this week for making unsuitable sales of reverse convertible notes to a senior couple. Andrew MacGill practices out of Tampa, Florida. The Doss Firm, LLC has been retained by other Ameriprise clients who are complaining they too were sold reverse convertible notes.

Reverse convertible notes are inherently very risky investments. Unfortunately, in many instances they were sold as safe income-producing alternative investments, which is why FINRA has taken action against H&R Block Financial Advisors.

A reverse convertible note is a type of structured product. According to Notice To Members ("NTM") 05-59, structured products are securities created by investment banks that are derived from or based on a single security, a basket of securities, an index, a debt issuance, and/or foreign currency. As such, these investments come in many shapes and sizes.

Most structured products pay an interest or coupon rate substantially above the prevailing market rate. Structured products also frequently cap or limit the upside participation in the referenced asset. These unique financial instruments are typically issued by investment banks or their affiliates and have a fixed maturity date. Some structured products are listed on a national securities exchange and some are not. Because they are so unique, however, even those listed on a national exchange are thinly traded.

As a result, once an investor purchases such an investment, it is difficult to get out of it prior to the maturity date without suffering a substantial penalty. Structured products typically have two components - a note and a derivative (often an option). The note pays interest to the individual at a specified rate and interval. The derivative component or option component establishes the payment upon maturity.

Most reverse convertibles sold to consumer are linked to a single stock in a household name company (e.g. Jet Blue, Norfolk Southern, Lowes and Bristol Myers to name a few.) Prior to the maturity date, which was typically only a few months, investors receive interest payments at a rate that is higher than the prevailing market rate. Importantly, the reverse convertible notes do not allow investors to participate in any upside in the referenced underlying stock. Investors fully participate, however, in all downside market risk of that stock, because upon maturity (i.e. at the expiration of the option), if the price per share of the underlying stock falls below a predetermined value, the note converts into shares of underlying common stock at the eroded price per share. In other words, in exchange for receiving some income, investors risk losing some or all of their principal investment by assuming all of the downside risk of the underlying stock and by giving up all of the upside potential.

If you believe you have been sold unsuitable reverse convertible notes and suffered losses, you may have a claim to recover damages. Please contact The Doss Firm, LLC at 770-578-1314.

Virtually every homeowner purchases title insurance when they buy a home. Stuart Title Guaranty is one of the nation's largest providers of title insurance. According to a recent Atlanta Journal Constitution article entitled Title insurance company accused of overcharging, the Georgia Department of Insurance filed a regulatory action against the company alleging that Stuart Title Guaranty violated Georgia law more than 600,000 times between 2003 through 2007. The Department alleged that the violations caused consumers to pay more than they should have for title insurance. Specifically, the Department alleged that Stuart illegally permitted closing attorneys to charge what ever they wanted to charge. The company also permitted agents to charge consumers with the same risk profiles different premium amounts. The formal adminstrative hearing is scheduled to begin sometime in February. The article also stated that the average overcharge was about $200 per consumer.

Even though the overcharge amount per individual is small, collectively it amounts to a lot. If you are a customer of Stuart Title Guaranty, you have legal rights to collect for the overcharges. Most likely, the best way to proceed against the company is on a class-wide basis.

The Doss Firm, LLC has handled mutiple large class actions on behalf of Georgia consumers. Please feel free to contact us if you feel that you have been aggrieved.

The Financial Industry Regulatory Authority (FINRA) has issued an Alert warning individuals about "modeling" and "mystery shopper" scams. These scams involve checks that appear to be from legitimate companies, but turn out to be counterfeit. In summary, both scams involve an authentic-appearing check that is sent to the individual. This check often has the name of a real company with both account and routing numbers. The scammer instructs the individual to deposit the check into their personal bank account and then to transfer part of the money to another person. In a few days, the individual learns from the bank that the check was counterfeit. This individual is then liable for the amount of money that was withdrawn, which is often several thousand dollars. This becomes a very expensive lesson learned for the individual scammed. Additionally, more than likely, it would be impossible to track down the scammers to recover the loss.

The "mystery shopping" scam leads individuals responding to a classified add to believe that they have been hired as a mystery shopper to "evaluate the services of money transfer companies, such as Money-Gram." The victims are then sent checks that seem to be from real companies, including FINRA. They are then asked to deposit the money in their personal account and then told to withdraw a substantial portion of the money and then wire it to another individual. The remainder of the money, which is generally a few hundred dollars, goes to the victim as compensation for being a mystery shopper. Later, the victim is notified by their bank that the check is counterfeit and the bank seeks reimbursement of the money withdrawn from the victim.

The "modeling" scam convinces victims that they are being hired to model. The victim is sent an email with instructions on what they are to do. A counterfeit check is sent to the victim "model" and then they are told to cash the check and wire the majority of the money to another individual. The victim is told that the remainder of the money is their compensation for being a "model." In the same manner as the "mystery shopper" scam, the bank then notifies the victim that the check is not legitimate and the victim is then liable for the amount of money withdrawn.

Also, this scam also takes place on an individual basis, with individuals running the same scam on sellers on such websites as Craigslist. In this instance, the individual wants to purchase something from you and send you a check for an amount greater than the amount of what is being sold. The seller is then asked to send money left over from the purchase either back to them or to another individual. The check here also turns out to be counterfeit.

FINRA has warned that it is very difficult to determine whether a check is counterfeit. Therefore, they "(urge) consumers to be cautious if someone they don't know asks them to cash a check and then transfer the money." Further, they point out that "no legitimate company will overpay you and ask that you wire the difference back to the company or to some third party."

FINRA does suggest some tips to avoid these scams. Prior to cashing any check you are sent by a seemingly legitimate company, call the company directly to verify the check. However, make sure that you do not use any telephone number on the check, you need to obtain the number via directory assistance. Further, look out for emails that are filled with typographical and grammatical errors. This could also be a red flag that the email is a scam. In addition, compare the name of the company from the posting to the name of the check. If the names don't match, this is also a red flag. Finally, do not be pressured to deposit the check and wire the money quickly. Wait until the bank confirms that the check clears before you withdraw or transfer any money. Remember you will be liable to the bank for any amount withdrawn on a counterfeit check.

In summary, beware of any offers which seem to go to be true. Further, look out for red flags and question any offer prior to agreeing to perform any task involving wiring money to another unknown individual. Ask yourself why! Why is this company giving me money to cash a check and then wire the majority of the money to someone else?