Securities Lawyers Blog

Allianz Structured Alpha 1000 Fund – Investor Loss Recovery Options

May 25, 2020 | by Staff Attorney

The investment attorneys with Gana Weinstein LLP are investigating investors who were inappropriately recommended the Allianz Structured Alpha 1000 and Structured Alpha 1000 Plus Funds. Investors may have potential legal remedies due to unsuitable recommendations by their broker to invest in these speculative and volatile investment offerings. Allianz Global Investors told investors that they are liquidating the two hedge funds after they took heavy losses due to COVID related stock volatility on the portfolios stock-options trades.

The Structured Alpha 1000 and Structured Alpha 1000 Plus apparently had been net buyers of puts, or options giving the holder the right to sell an asset at a predetermined price in the future. These put investments were designed to hedge against losses the funds might endure in a market downturn. However, the strategy did not work and as the market continued declining the funds were forced to lock in losses.

The 1000 in the Structured Alpha Fund names refers to their return targets: 1,000 basis points, or 10 percentage points, above their benchmarks. However, the Funds advertised themselves as relatively safe and stable investments that were specifically designed to perform well during market downturns.

The Funds’ three-pronged investment objective is to (1) profit during normal market conditions; (2) protect against a market crash, hedging against extreme downside market moves; and (3) navigate as wide a range of equity market outcomes as possible. In fact the fund advertised that volatile markets would be beneficial to the strategy and that the higher volatility levels would enable increased outperformance potential and better risk control. The Funds claimed that a protracted bear market is a highly favorable environment for the strategy.

Leveraged ETFs – Loss Recovery Options

May 24, 2020 | by Staff Attorney

The investment attorneys with Gana Weinstein LLP are investigating investors who were inappropriately recommended leveraged exchange-traded funds (ETFs). ETFs, also called exchange-traded notes (ETNs) when backed by a note rather than underlining assets, are speculative and volatile investment offerings.

An ETF is a registered investment trust whose shares represent an interest in a portfolio of securities that track an underlying benchmark or index. Shares of ETFs are typically listed on national securities exchanges and trade throughout the day at prices established by the market. These non-traditional ETFs differ from other ETFs in that they seek to return a multiple of the performance of the underlying index or benchmark or the inverse or opposite performance.

To accomplish their objectives non-traditional and leveraged ETFs typically contain very complex investment products, including interest rate swap agreements, futures contracts, and other derivative instruments. Moreover, non-traditional ETFs are designed to achieve their stated objectives only over the course of one trading session, i.e., in one day. This is because between trading sessions the fund manager for a non-traditional ETF generally will re-balance the fund’s holdings in order to meet the fund’s objectives and is known as the “daily reset.” As a result of the daily reset the correlation between the performance of a non-traditional ETF and its linked index or benchmark is inexact and “tracking error” occurs. Over longer periods of time or pronounced during periods of volatility, this “tracking error” between a non-traditional ETF and its benchmark becomes compounded significantly.

Kayne Anderson MLP/Midstream Investment Company – Investor Loss Recovery

May 19, 2020 | by Staff Attorney

The investment attorneys of Gana Weinstein LLP are investigating investor claims of unsuitable investments in oil and gas related products. Our firm is currently representing a number of investors who lost substantial savings due to poor advice to concentrate holdings in speculative commodities investments like master limited partnerships (MLPs). Kayne Anderson MLP/Midstream Investment Company (NYSE: KYN) is a non-diversified, closed-end fund with an investment objective to obtain a high after-tax total return for its shareholders by investing at least 85% of our total assets in energy-related master limited partnerships and in other companies that operate assets used in the gathering, transporting, processing, storing, refining, distributing, mining or marketing of natural gas, natural gas liquids, crude oil, refined petroleum products or coal.

Year to date Kayne Anderson MLP/Midstream Investment Company has returned a -57.97% return as of April 30, 2020.

As a background, MLPs are publicly traded partnerships. About 86% of the total MLP securities market, a $490 billion sector, can be attributed to energy and natural resource companies. There are about 130 MLPs trading on major exchanges that focus on energy related industries and natural resources.

Wall Street loves MLPs because they provide high yields to investors and require companies to pay Wall Street in order to continue to grow. In 2013 banks earned fees of $890.3 million from MLP issuance. Bloomberg quoted an analyst stating that “MLPs are Wall Street’s dream,” because “[t]hey’re fee machines.” Naturally, in order to entice investors to continue to invest in MLPs Wall Street pumps up MLPs every chance they get. According to Bloomberg, in May 2014 “[a]nalysts predict that 93 of the 114 MLPs in existence will rise in value in the next year…” Astonishingly, “all but five MLPs are recommended by the majority of the analysts who cover them.” At that time professionals without conflicts called MLPs “the next great investment debacle” and warned that “many MLP shareholders…may not understand what they’ve gotten into.”

ClearBridge MLP and Midstream Fund – Investor Loss Recovery

May 19, 2020 | by Staff Attorney

The investment attorneys of Gana Weinstein LLP are investigating investor claims of unsuitable investments in oil and gas related products. Our firm is currently representing a number of investors who lost substantial savings due to poor advice to concentrate holdings in speculative commodities investments like master limited partnerships (MLPs). ClearBridge MLP and Midstream Fund, Inc. (NYSE: CEM) is a mutual fund that provides a single investment for accessing a portfolio of energy-related MLPs and midstream entities.

Year to date ClearBridge MLP and Midstream Fund has returned a -68.73% return as of April 30, 2020. The price of the fund has fallen to $3.19.

As a background, MLPs are publicly traded partnerships. About 86% of the total MLP securities market, a $490 billion sector, can be attributed to energy and natural resource companies. There are about 130 MLPs trading on major exchanges that focus on energy related industries and natural resources.

Wall Street loves MLPs because they provide high yields to investors and require companies to pay Wall Street in order to continue to grow. In 2013 banks earned fees of $890.3 million from MLP issuance. Bloomberg quoted an analyst stating that “MLPs are Wall Street’s dream,” because “[t]hey’re fee machines.” Naturally, in order to entice investors to continue to invest in MLPs Wall Street pumps up MLPs every chance they get. According to Bloomberg, in May 2014 “[a]nalysts predict that 93 of the 114 MLPs in existence will rise in value in the next year…” Astonishingly, “all but five MLPs are recommended by the majority of the analysts who cover them.” At that time professionals without conflicts called MLPs “the next great investment debacle” and warned that “many MLP shareholders…may not understand what they’ve gotten into.”

Mewbourne Energy Partners Investor Loss Recovery

May 18, 2020 | by Staff Attorney

The investment attorneys with Gana Weinstein LLP are investigating and representing investors who were inappropriately recommended oil and gas and commodities related investments. Investors may have potential legal remedies due to unsuitable recommendations by their broker to invest in this speculative and volatile area.

Mewbourne Oil Company claims on its website to have grown into one of the more prominent independent oil and natural gas producers in the Anadarko and Permian Basins of Texas, Oklahoma and New Mexico. The company focuses its efforts in the Anadarko and Permian Basins. Mewbourne clamis that the Anadarko and Permian Basins have produced more than 42 billion barrels of oil and 220 trillion cubic feet of natural gas and contain many of the largest oil and natural gas fields in the United States.

Mewbourne raises funds from investors through brokerage firms by selling interests in private placement partnerships. Those offerings include:

Mewbourne Energy Partners 11-A, L.P.

Mewbourne Energy Partners 12-A, L.P.

Mewbourne Energy Partners 13-A, L.P.

Mewbourne Energy Partners 14-A, L.P.

Mewbourne Energy Partners 15-A, L.P.

Mewbourne Energy Partners 16-A, L.P.

Mewbourne Energy Partners 17-A, L.P.

Mewbourne Energy Partners 18-A, L.P.

Mewbourne Energy Partners 19-A, L.P.

Scot Fairchild Has Complaints Over Alternative Investment Sales Practices

May 18, 2020 | by Staff Attorney

Advisor Scot Fairchild (Fairchild), currently employed by Lucia Securities, LLC (Lucia Securities) has been subject to at least two customer complaints during the course of his career. According to a BrokerCheck report one of the customer complaint concerns alternative investments such as direct participation products (DPPs) like business development companies (BDCs), non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and private placements. The attorneys at Gana Weinstein LLP have represented hundreds of investors who suffered losses caused by these types of high risk, low reward products.

In December 2019 a customer complained that Fairchild violated the securities laws by alleging that Fairchild engaged in sales practice violations related to breach of fiduciary duty, misrepresentations and omissions, negligence and unsuitable investments in high risk, illiquid investments purchased between 2013 and 2014 and in violation of Nevada Securities Laws. The claim alleges $214,335 and is currently pending.

In January 2019 a customer complained that Fairchild violated the securities laws by alleging that Fairchild engaged in sales practice violations related to breach of fiduciary duty, negligence, breach of contract, and unsuitable investment recommendations related to Real Estate Investment Trusts purchased between on or around 2013 and 2014. The claim alleges $500,000 and settled for $175,000.

DDPs include products such as non-traded REITs, oil and gas offerings, equipment leasing products, and other alternative investments. These alternative investments virtually never profit investors and are almost always unsuitable for investors because of their high fee and cost structure. Brokers selling these products are paid additional commission in order to hype these inferior quality investments providing a perverse incentives to create an artificial market for the investments.

Several studies have confirmed that Non-traded REITs underperform publicly traded REITs with some showing that Non-Traded REITs cannot even beat safe benchmarks, like U.S. treasury bonds. Brokers selling these products must disclose to the investor that non-traded REITs provide lower investment returns than treasuries while being high risk and illiquid – but almost never do. Because investors are not compensated with additional return in exchange for higher risk and illiquidity, these kinds of alternative investment products are rarely, if ever, appropriate for investors. Continue Reading

Advisor John Jaramillo Terminated for Selling a Non-Approved Product

May 15, 2020 | by Staff Attorney

The law offices of Gana Weinstein LLP are currently investigating claims that advisor John Jaramillo (Jaramillo) has been accused by his former employer of selling a non-approved product among other allegations. According to records kept by The Financial Industry Regulatory Authority (FINRA) Jaramillo has been terminated by his prior employer, Western International Securities, Inc. (Western International) concerning his outside business activities. If you have been a victim of Jaramillo’s alleged misconduct our firm may be able to assist you in recovering funds.

In March 2020 Western International terminated Jaramillo after alleging that he sold a non-approved product.

Jaramillo’s outside business activities disclosed on his publicly available BrokerCheck report include accident & health insurance and Integrity Real Estate Solutions which is listed as a real estate agent.

Our law firm has significant experience bringing cases on behalf of defrauded victims when their advisors engage in receiving loans from clients or selling securities sales through OBAs. The sale of unapproved investment products – is a practice known in the industry as “selling away” – a serious violation of the securities laws. In the industry the term selling away refers to when a financial advisor solicits investments in companies, promissory notes, or other securities that are not pre-approved by the broker’s affiliated firm. Sometimes those investments have some legitimacy but often times these types of investments can end up being Ponzi schemes or the advisor can be engaging in the conversion of funds.

Advisor Marc Linsky Accused of Recommending GPB Capital

May 15, 2020 | by Staff Attorney

Advisor Marc Linsky (Linsky), currently employed by ProEquities, Inc. (ProEquities) has been subject to at least one customer complaint during the course of his career. According to a BrokerCheck report one of the customer complaints appears to concern fraudulent GPB Capital Holdings (GPB Capital) related investments.

GPB Capital is facing multiple accusations of being a Ponzi scheme, an ongoing U.S. Securities and Exchange Commission (SEC) and FBI investigations, and even GPB’s chief compliance officier being indicted for illegally obtaining information on the SEC’s investigation. Now even Volkswagen and Toyota are threatening to pull the plug on GPB Capital auto dealerships. While advisors have been telling investors to do absolutely nothing and just hang in there – this is nothing more than just additional poor advice. In November 2019 GPB Capital’s admitted that no financial audit would occur anytime in the near future. The firm has admitted that it has never been profitable and has merely returned investor capital in the past in order to fake a successful business model. In sum, investors now know there is nothing to hang onto. By the day, advisor recommendations to do nothing appear to be completely self-serving, out of the loop, and not in the interest of the investor.

In January 2020 a customer complained that Linsky violated the securities laws by alleging that Linsky engaged in sales practice violations related to negligence, breach of fiduciary duty, violation of Pennsylvania Securities Act, violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, and breach of contract in relation to investment recommendation in GPB Auto made by representative in October of 2016. The claim alleges $80,000 in damages and is currently pending.

Our firm has analyzed the GPB Capital offerings and believe that brokerage firms did not review GPB Capital offerings in any significant detail. Any serious due diligence would have revealed that GPB Capital was a dubious offering destined to fail. In complaints filed with The Financial Industry Regulatory Authority (FINRA) our clients have alleged that GPB Capital’s scam was highly predictable and easy to spot. Nearly every aspect of the offering raised unanswerable questions from GPB Capital’s senior management, fantastical business claims, and intra-fund lending practices.

Advisor Ferrell Rollins Terminated for Borrowing Customer Funds

May 14, 2020 | by Staff Attorney

The law offices of Gana Weinstein LLP are currently investigating claims that advisor Ferrell Rollins (Rollins) has been accused by his former employer of borrowing client funds among other allegations. According to records kept by The Financial Industry Regulatory Authority (FINRA) Rollins has been terminated by his prior employer, Capital Investment Group, Inc. (Capital Investment Group) concerning his outside business activities. If you have been a victim of Rollins’ alleged misconduct our firm may be able to assist you in recovering funds.

In September 2019 Capital Investment Group terminated Rollins after alleging violation of firm policy and FINRA Rules 2010 and 3240 related to borrowing money from a customer and making false statements to the firm on forms related to said loan.

Rollins’ outside business activities disclosed on his publicly available BrokerCheck report include Telco Credit Union.

Our law firm has significant experience bringing cases on behalf of defrauded victims when their advisors engage in receiving loans from clients or selling securities sales through OBAs. The sale of unapproved investment products – is a practice known in the industry as “selling away” – a serious violation of the securities laws. In the industry the term selling away refers to when a financial advisor solicits investments in companies, promissory notes, or other securities that are not pre-approved by the broker’s affiliated firm. Sometimes those investments have some legitimacy but often times these types of investments can end up being Ponzi schemes or the advisor can be engaging in the conversion of funds.

Advisor Jason LaBelle Sanctioned Over Outside Business Activities – Investor Recovery

May 14, 2020 | by Staff Attorney

The law offices of Gana Weinstein LLP are currently investigating claims that advisor Jason LaBelle (LaBelle) has been accused by a securities regulator of potentially engaging in the sales of private securities among other allegations. LaBelle was sanctioned by The Financial Industry Regulatory Authority (FINRA) concerning his private securities and undisclosed outside business activity conduct. According to BrokerCheck records, LaBelle was formerly registered with FINRA member firm LPL Financial LLC (LPL Financial). If you have been a victim of LaBelle’s alleged misconduct our firm may be able to assist you in recovering funds.

In January 2020 FINRA found that that LaBelle consented to the sanctions and findings that he participated in an outside business activity involving a real estate development project that was financed with money lent by one of his customers without providing prior written notice to his firm. FINRA found that LaBelle falsely confirmed that he had fully disclosed his outside business activities on two annual compliance questionnaires submitted to his firm.

In June 2017 a customer filed a complaint concerning LaBelle where the customer alleged that LaBelle violated the securities laws by alleging the advisor made misrepresentations on the terms of a promissory note he recommended Plaintiffs purchased in February 2016, and without authorization withdrew money to purchase the note from Plaintiffs’ taxed deferred accounts. The complaint is currently pending.

According to LaBelle’s publicly disclosed records the he has several disclosed outside business activities including Berkshire Retirement Strategies (his d/b/a for LPL Financial), Brickhouse Mountain LLC (owner of office building), and Private Advisory Group (an RIA d/b/a).