Category: Securities Fraud

Los Angeles Securities Attorney: Are Mutual Funds Right For Me?

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Before you invest, it is important that you know what you are investing in. Any good stockbroker should be able to explain not only what you are investing in, but also the positives and potential negatives of any investment. In fact, brokers are obligated to provide you with a balanced presentation regarding recommended investments.

In a nutshell, a mutual fund is an investment vehicle that invests in and holds a basket of securities, such as stocks and bonds. Generally speaking, shareholders contribute the money used for investment, and the fund is professionally managed. The various securities that make up the mutual fund are known as “the portfolio,” and investors can buy or sell shares in the portfolio.

The Advantages of Investing in a Mutual Fund from a Los Angeles Securities Attorney

Mutual funds are popular among investors because of they typically offer a diversified portfolio of securities. One positive aspect of diversification is that if one of the stocks or bonds drops in value, the fund shares often maintain some price stability because the fund is comprised of many securities. Another advantage is that many mutual funds offer low minimum investments, making a mutual fund an attractive investment for someone looking to invest without large amounts of capital. In addition, mutual funds generally can be sold without much difficulty.

The Disadvantages of Investing in a Mutual Fund from a Los Angeles Securities Attorney

Investments carry risk. Even if your fund is diversified to mitigate risk, you could lose some or all of your money if the securities held in the fund drop in value. Market conditions also can play a factor. Importantly, just because a fund did well in the past does not guarantee its future performance. You also should be aware of the securities that comprise the fund: the more volatile they are, the greater the investment risk is.

Call a Los Angeles Securities Attorney Today

If you invested in a mutual fund and suffered significant losses or were not made aware of the risks of investing, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles securities attorney today for a consultation to discuss your rights and options.

SEC Accuses California Attorney in “Pump And Dump” Scam

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The SEC has filed a lawsuit against an attorney and others for their involvement in a “pump and dump” scheme involving a shell company, an unwitting technology entrepreneur as CEO, and dumping (selling) shares after artificially inflating their value.

Attorney, Luke Zouvas, and his associates, Cameron Robb and Christopher Larson, Jason Schiprett, and Robert Jorgenson, crafted a plan to excite investors about their shell company, Crown Dynamics Corp. Larson alone netted nearly $865,000.

Zouvas was the legal advisor to the shell company, and assisted Larson by overseeing the transfers of stock certificates to and from buyers who were unaware that they even owned the stock. The buyers never invested funds nor received proceeds from sales.

Crown Dynamics underwent a sham IPO in 2011, in which 40 shareholders were listed as buyers without even knowing they invested funds in the project. Once the shell was set up, the team brought in an unwitting entrepreneur to generate enough excitement over their bogus enterprise to bring them a profit.

By claiming that the company was about to release a revolutionary new product to the market, share prices increased sufficiently to net Larson $865,000 in ill-gotten gains. For his involvement, Zouvas received over $10,000 in proceeds and fees.

Call a California Attorney Specializing in Securities Fraud Today

If you invested with Crown Dynamics, Christopher Larson, Luke Zouvas, or any of their associates, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles securities fraud attorney today for a consultation to discuss your rights and options.

California Sues Morgan Stanley Over Alleged Securities Violations

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California Attorney General, Kamala Harris, has filed a lawsuit against Morgan Stanley, claiming the financial services corporation violated provisions of the False Claims Act and securities laws by concealing the risks of mortgage-backed securities purchased by California state pension funds.

According to the lawsuit, the California Public Employees Retirement System and California State Teachers Retirement System lost hundreds of millions of dollars during the financial crisis on mortgage-backed securities along with “structured investment vehicles” – many of which were underwater.

The complaint alleges that between 2004 and 2007, Morgan Stanley and certain affiliates purchased loans from originators, who then pressured Morgan Stanley to purchase additional loans for securitization. Although Morgan Stanley performed due diligence, it lowered its underwriting standards in order to accommodate investments that once were believed to be too risky to bundle into the securities.

Attorney General Harris claimed that Morgan Stanley used exaggerated appraisals that overstated the values or properties securing the mortgages and was involved in efforts to “move” rating agencies to give the investment a high rating.

Morgan Stanley countered that the securities at issue were marketed and sold to sophisticated investors, and the performance of the mortgage loans was consistent with the sector as a whole. The company has already paid billions to settle claims brought by other investors and agencies, including $3.2 billion in February to settle claims brought by the U.S. Department of Justice and the state of New York, and just one week after the bank agreed to pay $63 million to settle claims with the FDIC to end claims it misrepresented residential mortgage-backed securities sold to three failed banks.

Did You Suffer From Securities Violations Due to Morgan Stanley?

If you are a part of the California Public Employees Retirement System or the California State Teachers Retirement System, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles securities fraud lawyer today for a consultation to discuss your rights and options.

Understanding Securities Fraud

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What is Securities Fraud?

Securities fraud is any type of deception used that is intended to induce an investor to make a trade on the basis of false or misleading information. The term is used interchangeably with investment fraud and stock fraud. Fraudsters target both unsophisticated investors and experienced, savvy investors.

The Different Types of Securities Fraud

Securities or investment fraud scams come in all shapes and sizes. Some common forms include insider trading, internet fraud, Ponzi schemes, and stock price manipulation.

How to Avoid Securities Fraud

Before you invest, make sure you do your homework. Do not be bashful about asking as many questions as you need to in order to fully understand what you’re getting involved with. Scammers rely on you not investigating before giving them your money. If the solicitor is someone whom you don’t know, look into their background and their license to sell securities. Are they registered and licensed to sell what they are promoting? You can find out who is soliciting you and what they are offering by using online tools, such as FINRA’s BrokerCheck and general Google searches.

If you cannot find enough information about an investment, you should get a second opinion from a qualified professional. Finally, if someone is pressuring you to invest without giving you the chance to perform your due diligence, or by guaranteeing significant rates of return or offering a free seminar with some incentive for your participation, these should all raise red flags.

Remember: when it comes to investing, if it sounds too good to be true, it probably is. 

Were You a Victim of Securities Fraud?

If you suffered investment losses because your broker or brokerage firm committed securities fraud, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles securities fraud lawyer today for a consultation to discuss your rights and options.

SEC Fines AIG Affiliates $9.5 Million Over Mutual Fund Fees

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The SEC fines three broker-dealers a total of $9.5 million to settle claims that they recommendeded more expensive mutual funds to customers that generated higher fees when less expensive funds were available.

As a result of the broker-dealers’ actions, American International Group Inc. (AIG) ended up collecting an additional $2 million in revenue for steering clients into mutual fund classes that charge 12b-1 fees for marketing and distribution of the securities.

It is generally accepted that it is in the customer’s best interest to be invested in a mutual fund that does not charge ongoing fees. The three AIG subsidiaries that collected these fees in this matter are: Royal Alliance Associates Inc., SagePoint Financial Inc., and FSC Securities Corp. According to the SEC, these firms collected the charges without advising investors of the higher fees.

In addition to disgorging the nearly $2 million in fees collected, the firms will pay an additional $7.5 million to the SEC. In addition to steering clients to these higher-expense funds, the firms failed to keep watch over certain accounts for “reverse churning,” when clients are placed in wrap-fee accounts that charge for services and costs even though they may rarely trade. The firms’ stated policies were to monitor for low activity accounts to make sure they remained in their clients’ best interests.

Did AIG’s SEC Fines Affect You?

If you invested with Royal Alliance Associates, SagePoint Financial, or FSC Securities Corp., you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles securities fraud attorney as soon as possible to discuss your rights.

California Man Sentenced to 40 Years in Oil and Gas Investment Scheme

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John Westine Jr. was convicted of orchestrating a fraudulent oil and gas investment scheme that took in more than $3 million across the nation from 240 investors. Westine was convicted of securities fraud, mail fraud, and conspiracy to launder funds. The Kentucky-based scam was supposed to be an investment in oil-producing wells throughout the state.

Kentucky’s Department of Financial Institutions (DFI) began receiving complaints in late 2012, at which time DFI began its investigation in conjunction with the U.S. Postal Service and the U.S. Attorney for the Eastern District of Kentucky.

Evidence presented at trial showed that Westine and his co-defendants raised money by misrepresenting and failing to disclose material facts about certain oil well investments; namely, representing that oil was being produced when it was not. Investors also were led to believe that the companies had been in the oil production business for decades.

Westine also failed to disclose that he previously served more than 20 years in prison for running a similar scheme in Ohio. In fact, he was on probation from his previous crime at the time he began orchestrating this scheme.

Westine’s co-defendant, Henry Ramer, was sentenced to 13 years on the same charges. He worked as a salesman and manager of two Los Angeles-based telemarketing sales operations. Westine’s half brother, Michael Hicks, was sentenced to three years for mail fraud. He opened bank accounts and deposited investor checks, then sent the money to his co-defendants in California.

Were you a Victim of an Investment Scheme?

Westine is not the first person to perpetrate such a investment scheme and will not be the last. If you were a victim of Westine’s scheme or a similar one, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles securities fraud attorney as soon as possible to discuss your rights.

SEC Enforcement Action Targets Municipal Securities Market

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The Securities & Exchange Commission has been stepping up enforcement actions against individuals accused of wrongdoing in the municipal securities market, a group that is usually not targeted by the SEC.

The SEC Enforces Action Against California’s Municipal Securities Market

The Wetlands Water District of California, which is California’s largest agricultural water district, was fined the largest penalty to-date: $125,000. The case revolved around allegations that the municipal issuer made a decision to cover up a revenue shortfall in advance of a $77 million bond offering in 2012.

In addition to the issuer, the SEC also named Wetlands’ general manager and general counsel, Thomas Birmingham, and his assistant, Louie Ciapponi, over their alleged role in the matter. Birmingham and Ciapponi agreed to pay fines of $50,000 and $20,000, respectively.

The SEC noted that although the men were driven by a “somewhat altruistic desire,” the agency did not want to penalize the water district’s customers with higher rates to make up for the shortfall – their failure to disclose the true financial condition of the district left investors in the dark about the true financial shape of the company.

The SEC also charged individuals in a Rhode Island matter related to Hall of Famer, Curt Schilling, handing out lifetime bans for failing to disclose material information in a problematic debt offering. In doing so, the SEC is sending a message to others that wrongful actions taken by individuals in the municipal securities market will no longer be tolerated.

Were You Wronged By an Individual in the Municipal Securities Market?

If you suffered an investment loss as the result of statements made by someone in the municipal securities arena, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles securities fraud attorney as soon as possible to discuss your rights.