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The U.S. Supreme Court has agreed to hear the appeal of a man convicted for insider trading, taking up the question of what sort of personal benefit needs to be shown in order to hold someone liable for trading on inside information.

Bassam Salman was convicted of trading on insider information learned from a close friend, who in turn received the information from his brother, a former investment banker. At issue here is whether it is enough for the government to allege that the tipper and tippee shared a close familial relationship for grounds to exist for insider trading charges.

Salman alleges that the government showed no proof that Michael Kara bestowed any benefit on his brother, Maher Kara, for the information received, which is the standard in the Second Circuit, in the now famous Newman case.

In the Ninth Circuit, where Salman’s case was heard, the conviction was upheld on the ground that the information was a gift, which is in with a 1983 Supreme Court holding on insider trading. Salman is asking the court to resolve the split, and if there always needs to be an exchange of significant personal benefit or if it is enough for an insider to simply have a close family relationship with the tippee.

This will be the court’s first insider trading case in more than three decades, and only a few months after the Court declined to hear the Newman appeal from the Second Circuit.

Call a Los Angeles Securities Attorney Today

If you have been charged with trading on insider information, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles securities attorney as soon as possible to discuss your rights.

What is a Securities-Backed Line of Credit

A securities-backed line of credit (SBLOC) allows an investor in need of cash the ability to borrow against the value of the securities in their portfolio, giving investors a source of liquidity. The securities in the portfolio serve as collateral for the loan. Proceeds from SBLOCs can be used to purchase or pay for almost anything, except more securities.

One major benefit of a SBLOC is that it gives an investor access to cash without having to alter his or her investment strategy. This allows you to leave your portfolio intact and can avoid the unintended tax consequences that occur when liquidating certain assets.

As with any type of security or investment, there are risks to be aware of if you are considering a SBLOC loan. In fact, the Financial Industry Regulatory Authority (FINRA) recently issued an investor alert on the subject, designed to make sure you are fully of any potential pitfalls beforehand.

Consider asking the following questions before taking out a SBLOC, including: what are you agreeing to (including broker compensation), and who will the lender be? What will happen to my portfolio? What will happen if the value of my portfolio decreases?

Call a Los Angeles Securities Attorney Today

If you have questions about SBLOCs or believe your broker misrepresented or omitted material information about your SBLOC, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles securities attorney as soon as possible to discuss your rights.

An investment advisor or broker is someone whose job it is to give prudent investment advice that is consistent with an investor’s risk tolerance and investment objectives. While many brokers are honest and good at their jobs, some may be dishonest, ethically challenged, intent on committing fraud or even just not particular good. Knowing how to find the right investment advisor can make the difference between a stable and sensible investment portfolio and potentially suffering major losses. Be mindful of the following before you entrust someone with your money:

Check Their History

Advisors are divided into stockbrokers or Registered Investment Advisors, depending on their fee structure. The Financial Industry Regulatory Authority (FINRA) has a handy “BrokerCheck” tool that can be utilized to make sure that a) your broker is properly registered, and b) whether that the potential broker has a customer complaint history or disciplinary history.

Using a Clearinghouse

Some brokers use a third-party institution to hold money and provide account statements to investors. Some institutions take care of their own reporting, but third-party clearinghouses can minimize the possibility of fraud by maintaining neutrality and handling their own reporting. Noted Ponzi schemer Bernard Madoff did not use a clearinghouse.

Your Advisor’s Style and Advice

Above all else, your advisor should provide advice based on your risk profile and investment objectives, which should be thoroughly discussed and identified before any investments are made. Are you being steered toward certain investments outside of your comfort zone, or are you feeling that your broker is making transactions just to generate commissions? These can be potential warning signs, even if your broker has a perfectly clean record.

Call a Los Angeles Securities Attorney Today

If you feel you may have been misled by your investment advisor or suffered losses based on their advice, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles securities attorney as soon as possible to discuss your rights.

For nearly 15 years, two men from Woodland Hills convinced clients to invest nearly $125 million in their company, Nationwide Automated Systems. The company purportedly “sold” ATM machines for about $12,000 to $19,800, and investors were to receive $.50 per transaction and 20 percent annual returns on their investment. Instead, money from new investors was used to pay purported “investment returns” to earlier investors, in true Ponzi scheme fashion.

Joel Barry Gillis and Edward Wishner already have pleaded guilty to conspiracy; two counts of mail fraud and one count of wire fraud. In a complaint filed last week, plaintiffs allege that City National Bank had a hand in helping the two commit fraud by failing to perform adequate due diligence.

According to the complaint, the bank was the primary institution that the two admitted fraudsters used for deposits and wire transfers. Under the Bank Secrecy Act, banks are required to monitor for evidence of money laundering or fraud, keep diligent records, and report any suspected fraud. ATM leasebacks, such as the ones in question here, are also some of the most common forms of Ponzi schemes dating back to as early as 2001.

According to the lawsuit, City National started monitoring Nationwide Automated Services as far back as 2005, and should have known that Nationwide was issuing sham checks and using new investors’ money to make payments to earlier investors. But according to the complaint, City National turned blind eye to the obvious fraud, and even spoke to potential investors on Nationwide Automated’s behalf.

The plaintiffs are seeking class certification, $125 million in compensatory damages, and punitive damages for aiding and abetting Nationwide Automated’s fraud.

Call a Los Angeles Ponzi Scheme Attorney Today

If you invested with Nationwide Automated Systems, Joel Gillis, or Edward Wishner, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles Ponzi scheme attorney as soon as possible to discuss your rights.

Arrowhead Investors Trial Likely to Proceed

A judge has refused to dismiss a putative shareholder class action lawsuit against Arrowhead Research Corp. over claims that the drug manufacturer misled investors regarding the progress of Hepatitis B vaccine trials in humans, causing an increase in the price of Arrowhead stock. The suit hinges on whether statements made to Arrowhead investors regarding the status of their progress caused an increase, and subsequent decrease, in the stock price.

According to the complaint, statements made during a conference call in August 2014 were allegedly ambiguous and misleading, suggesting that human trials for the drug were seeing similar results to those in chimpanzees. Because of these statements, the stock price increased and then later took a 44 percent drop two months later when updated results showed less effectiveness in humans.

According to the attorney representing the investors, subsequent attempts to downplay the statements “rang hollow.” In October of 2014, Arrowhead’s updated announcement that the effectiveness of the virus fell short of original expectations caused the stock price to drop from $7.03 to $5.48 per share.

Call a Los Angeles Securities Attorney Today

If you invested with Arrowhead, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles securities attorney as soon as possible to discuss your rights.

A class action lawsuit has just been filed against Fitbit, Inc. in California for fraud and making a series of false statements, among other claims. The company is well known for its activity-tracking, wearable devices aimed at improving one’s fitness via measuring various personal metrics.

The lawsuit alleges that from June 2015 through the filing of the suit, Fitbit made false and misleading statements regarding their business, operational, and compliance policies. Specifically, the complaint alleges that the company made inaccurate statements or failed to disclose that its monitoring technology was inaccurate and did not deliver consistent readings during exercise, that the inaccuracies posed serious health risks to its users, and that as a result of the inaccuracies, Fitbit’s public statements were false and misleading during the time in question.

Other claims against Fitbit include violations of the Unfair Competition Law and Consumers Legal Remedies Act, unjust enrichment and common law fraud.

Call a Los Angeles Securities Attorney Today

If you invested with Fitbit, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles securities attorney as soon as possible to discuss your rights.

If you already maintain an investment portfolio or are looking to start investing, here are some investment tips that may help you avoid potential investment pitfalls down the road:

Have a Defined Strategy

Your goals are going to be different than your friends and neighbors, based on a variety of circumstances that affect your ability and willingness to not only invest your funds, but how much risk you’re willing to take. For example, some younger investors might be more risk-tolerant because of their longer income-earning lifespan than someone about to retire. Other factors that may affect your investment strategy include:

• Age
• Income
• Family needs

Diversify Your Investment

The age-old adage warning you not to put “all your eggs in one basket” applies to the securities market. If your sole investment underperforms – or worse, goes under – you can lose your entire investment. Investing in a mutual fund, for example, is a great way to invest in an already diversified fund.

Perform Your Due Diligence

Last, but certainly not least on the list, is making sure you do your homework prior to investing. If it sounds too good to be true, it probably is. If you are thinking about putting your hard-earned money in the hands of a broker, there are free online tools to make sure your broker is properly licensed. If your broker is pushing you hard for your money, be wary. Always feel free to ask hard questions – remember it is your money!

Call a Los Angeles Securities Attorney Today

If you have questions about a particular investment or have been the victim of a bad stock or securities investment, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles securities attorney as soon as possible to discuss your rights.

The Financial Industry Regulatory Authority (FINRA) will be issuing grades to brokerage firms for the first time based on how much spoofing and other phony trades slip through the cracks in an effort to crack down on manipulative trading.

These so-called “report cards” were announced this week in FINRA’s annual regulatory and examinations priorities letter. Details of what the report cards will include are vague, but FINRA has stated that they will identify when potentially manipulative activity on the firm’s trading systems occur.

By issuing the card, the hope is that brokerages will act before it is too late – and potentially face additional consequences as a result. Spoofing has increasingly grown in importance as U.S. regulators and prosecutors have taken aim at trading strategies that involve flooding the market with phony bids or offers in an effort to dupe others into trading at artificially lower or higher prices.

Although long illegal under the Dodd-Frank Act, regulators have been increasingly bringing charges for this type of activity, and hope to halt spoofing. Some experts believe the report cards will be used as a preventative measure, at least at first, to help curb illegal activity and alert firms when manipulative trading appears to be taking place.

It remains to be seen what action, if any, will be taken when a firm receives a report card from FINRA.

Call a Los Angeles Stockbroker Fraud Attorney Today

If you believe you have dealt with spoofing, you may have certain legal rights that require your immediate attention. You should contact an experienced Los Angeles stockbroker fraud attorney as soon as possible to discuss your rights.

In a commission-based brokerage account, a commission is charged every time a security (stocks, bonds, options, etc.) is bought or sold. The commission is split between the broker and the brokerage firm. Churning occurs when a stockbroker buys or sells securities for the primary purpose of generating commissions, and not because the trade makes financial sense for the investor. Churning is one of the most egregious forms of investment fraud and stockbroker misconduct. Churning is essentially stealing from an investor, as the broker and brokerage firm line their pockets with excessive commissions taken out of the investor’s account.

How to Identify Churning

The commissions generated from excessive trading can make it difficult for an investment portfolio to be profitable, and contravenes the principle that the investor’s interests come first. While it can be difficult to identify churning, investors should be wary when there are numerous trades in their accounts on a regular basis.

According to FINRA, “A member or an associated person must have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the member or associated person to ascertain the customer’s investment profile. A customer’s investment profile includes, but is not limited to, the customer’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance, and any other information the customer may disclose to the member or associated person in connection with such recommendation.”

How to Avoid Churning

• Maintain control over your portfolio and require your authorization before any transaction.
• Review each trade confirmation and review your monthly account statements to catch any pattern of frequent trading by your broker.
• Consider using a fee-based account instead of a commission-based account, since this will help make sure your interests are looked after and not as a means for financing your stockbroker’s personal accounts.

Call a Los Angeles Securities Lawyer Today

If you believe you have been a victim of churning, you may have certain legal rights that require your immediate attention. You should contact an experienced Los Angeles securities lawyer as soon as possible to discuss your rights.

Unregistered Brokers or Brokerage Firms

Most stockbrokers and broker-dealers are required to register with the Securities & Exchange Commission (SEC) and the appropriate state securities regulators, as well as join the proper regulatory organizations, in order to transact and conduct business. If you suspect that something may be amiss with your stockbroker or brokerage firm, you may want to investigate whether the stockbroker or firm is properly registered.

According to the SEC, a broker is defined broadly as any person engaged in the business of effecting transactions in securities for the accounts of others, including investment advisers, finders, those who operate securities trading platforms, financing, and even those who provide support services to registered broker-dealers.

Potential Registration Warning Signs

• Stock Fraud
• Failed investments
• Sales of unregistered securities

Both state and federal securities laws exist, among other reasons, to protect consumers from unlicensed activity. Certain situations can provide grounds for a securities lawsuit through which investors can seek to rescind transactions involving unregistered securities, unregistered brokers, or unregistered brokerage firms.

Further still, even if your broker is registered, but you believe that he or she may have a checkered background, the Financial Industry Regulatory Authority (FINRA) has an online tool where you can find out about a broker’s history of customer complaints or disciplinary action. It can be found at brokercheck.finra.org.

Call a Los Angeles Stockbroker Fraud Attorney Today

If you believe you have dealt with an unregistered broker or brokerage firm, you may have certain legal rights that require your immediate attention. You should contact an experienced Los Angeles stockbroker fraud attorney as soon as possible to discuss your rights.