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Fort Lauderdale Securities Law Blog

Russell L. Forkey

Veros Partners, Inc., Jeffrey B. Risinger and Tobin J. Senefeld - Boca Raton, Florida Investment Adviser and Private Offering Fraud and Misrepresentation Attorney

Veros Partners, Inc., Jeffrey B. Risinger and Tobin J. Senefeld - Boca Raton, Florida Investment Adviser and Private Offering Fraud and Misrepresentation Attorney

Securities and Exchange Commission v. Veros Partners, Inc., et al., Civil Action No. 15-cv-000659-JMS-MJD (S.D.Ind., filed April 22, 2015)

SEC Halts Fraudulent Farm Loan Scheme by Indianapolis Investment Adviser

The Securities and Exchange Commission recently announced charges against an Indianapolis investment adviser, its president, two associates and several affiliated companies for engaging in two fraudulent farm loan offerings, in which they made ponzi scheme payments to investors in other offerings and paid themselves hundreds of thousands of dollars in undisclosed fees. The SEC obtained a temporary restraining order and emergency asset freeze to halt the scheme.

According to the SEC's complaint, filed in the U.S. District Court for the Southern District of Indiana, in 2013 and 2014, Veros Partners, Inc., its president, Matthew D. Haab, and two associates, attorney Jeffrey B. Risinger and Tobin J. Senefeld, fraudulently raised at least $15 million from at least 80 investors, most of whom were Veros advisory clients. The investors were informed that their funds would be used to make short-term operating loans to farmers, but instead, significant portions of the loans were to cover the farmers' unpaid debt on loans from prior offerings. According to the SEC's complaint, Haab, Risinger and Senefeld used money from the two offerings to pay millions of dollars to investors in prior farm loan offerings and to pay themselves over $800,000 in undisclosed "success" and "interest rate spread" fees.

In addition to Veros, Haab, Risinger, and Senefeld, the SEC charged Veros Farm Loan Holding LLC and FarmGrowCap LLC, the issuers of the offerings, and PinCap LLC. The SEC also charged registered broker-dealer Pin Financial LLC as a relief defendant.

The Honorable Jane Magnus-Stinson of the U.S. District Court for the Southern District of Indiana issued an asset freeze order against the defendants as well as a temporary restraining order prohibiting them from soliciting, accepting or depositing any monies from any actual or prospective investors, and in the case of Veros, any investors in private securities offerings. Judge Magnus-Stinson also ordered that a receiver be appointed. A preliminary injunction hearing has been scheduled for May 1, 2015.

The SEC's complaint charges the defendants with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and also charges Veros and Haab with violating Sections 206(1), 206(2) of the Investment Advisers Act, and Veros with violating Section 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-2. The SEC's complaint seeks permanent injunctions and disgorgement against all defendants and a financial penalty. The SEC's complaint names Pin Financial for the purposes of recovering proceeds it received from the fraud.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

False Investment Scheme Targeting Military Personnel - South Florida Retirement and Elder Financial Abuse Litigation and Arbitration Attorney

False and Fraudulent Investment Scheme Targeting Military Personnel - South Florida Retirement and Elder Financial Abuse Litigation and Arbitration Attorney

SEC Halts Investment Scheme Targeting Military Personnel

The Securities and Exchange Commission recently announced fraud charges and an asset freeze against a man living in central Texas accused of telling false tales about his stockbroking experience to lure current and former U.S. military personnel into investing with him.

The SEC alleges that Leroy Brown Jr. touted his own military connection as an Army veteran while soliciting members of the military and other investors through his firm LB Stocks and Trades Advice LLC.  Brown falsely assured investors, including some stationed at nearby Fort Hood, that he had many years of experience in the securities markets.  He specifically claimed to have all the necessary licenses and registrations to conduct securities business.  In reality, Brown is not a licensed securities professional and his firm is not registered with the SEC, Financial Industry Regulatory Authority, or any state regulator.  Brown and his firm have no evident experience with investments.

The SEC further alleges that Brown falsely guaranteed investors that he would double or triple their money within 120 days.

The SEC's complaint, filed in U.S. District Court for the Western District of Texas, charges Brown and LB Stocks and Trades Advice with securities fraud and conducting an unregistered securities offering.  The SEC is seeking financial penalties and disgorgement of ill-gotten gains as well as permanent injunctive relief.  The court has issued an order temporarily freezing all assets of Brown and LB Stocks and Trades Advice.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

South Florida Oil and Gas Fraud and Misrepresentation Litigation and Arbitration Attorney

South Florida Oil and Gas Fraud and Misrepresentation Litigation and Arbitration Attorney

Securities and Exchange Commission v. GC Resources, LLC and Brian J. Polito, Civil Action No. 3:15-CV-0104-B, (NDTX, filed April 6, 2015)

 

SEC Charges Oil and Gas Company and Founder with Fraud

The Securities and Exchange Commission ("Commission") filed suit against GC Resources, LLC and Brian J. Polito in the United States District Court for the Northern District of Texas, Dallas Division, for defrauding investors through the sale of interests in oil and gas wells the company never owned.

The Commission alleges that GC Resources, through its owner and sole operator, Brian J. Polito, raised approximately $11.8 million by creating a fake agreement with a well-known oil company that purported to give GC Resources the right to sell interests in certain oil wells. Polito forged signatures on the false contract and used it to lure investors to purchase interests in the wells GC Resources claimed to own. Polito then used investor money for Ponzi-type payments back to investors and to purchase luxury cars, designer watches, and exotic vacations for himself.

The Commission's complaint charges both defendants with securities fraud under Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933. The complaint also alleges that Polito violated Section 15(a) of the Exchange Act by acting as an unregistered broker-dealer. The Commission's complaint seeks permanent injunctions, civil penalties, disgorgement plus prejudgment interest, and other relief against both of the defendants.

In a parallel action, the U.S. Attorney's Office for the Northern District of Texas, Dallas Division also filed criminal charges against Polito.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

Professional Athletes - South Florida Investment Fraud Litigation and Arbitration Attorney

Professional Athletes - South Florida Investment Fraud Litigation and Arbitration Attorney

Securities and Exchange Commission v. Capital Financial Partners, LLC et al., Civil Action No. 15-cv-11447-IT

SEC Obtains Asset Freezes in Ponzi Scheme Involving Loans to Professional Athletes

The Securities and Exchange Commission recently announced fraud charges against a former professional football player and others, alleging they operated a Ponzi scheme that raised more than $31 million from investors who were promised profits from loans to professional athletes.

The SEC's complaint was unsealed late yesterday after being filed in federal court in Boston on April 1. The court entered asset freezes and other preliminary relief that same day against the defendants.

According to the SEC's complaint, former professional football player William D. Allen and his business partner Susan C. Daub claimed to make loans to professional athletes who were short of cash. Allen and Daub told investors that they could profit by funding the loans and receiving interest of up to 18 percent paid by the athletes. The complaint alleges that from July 2012 through February 2015, the defendants paid approximately $20 million to investors while receiving a little more than $13 million in loan repayments from athletes. To fill the nearly $7 million gap, Allen and Daub used money from some investors to pay other investors, the hallmark of a Ponzi scheme.

The SEC's complaint alleges that Allen of Davie, Fla., and Daub, a financial professional formerly of Acton, Mass. who now lives in Coral Springs, Fla, advanced approximately $18 million to athletes while raising more than $31 million from investors. Allen and Daub allegedly misled investors about the terms, circumstances, and even the existence of some of the loans and used some investor funds to pay personal expenses such as charges at casinos and nightclubs, or to fund other business ventures.

The SEC's complaint alleges that Allen, Daub, Florida-based Capital Financial Partners Enterprises LLC, and Boston-based Capital Financial Partners LLC and Capital Financial Holdings LLC violated federal anti-fraud laws and related SEC anti-fraud rules. In addition to the relief obtained last week, the SEC is seeking a court order to restrain the defendants from violating the same laws and to require them to return their allegedly ill-gotten gains with interest and pay civil monetary penalties.

Four other entities owned or controlled by Allen, Daub, or both are named in the complaint as relief defendants based on their receipt of investor funds. The SEC is seeking to have the entities - WJBA Investments LLC, Insurance Depot of America LLC, Simplified Health Solutions LLC, and Simplified Health Solutions 2 LLC - return their allegedly ill-gotten gains with interest.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

South Florida Life Settlement Fraud and Misrepresentation Litigation and Arbitration Attorney

South Florida Life Settlement Fraud and Insurance, Mismanagement and Misrepresentation Litigation and Arbitration Attorney

Securities and Exchange Commission v. Pacific West Capital Group Inc., et al., Civil Action No. 2:15-CV-02563 (C.D. Cal., filed April 7, 2015)

SEC Charges Los Angeles-Based Pacific West Capital Group with Fraud in Sale of Life Settlement Investments

The Securities and Exchange Commission recently charged Los Angeles-based Pacific West Capital Group, Inc. and its owner Andrew B Calhoun IV with fraud in the sale of "life settlement" investments.

Life settlements are securities structured around when life insurance policies "mature" & after the insured individual dies and benefits are paid. Life settlement investors purchase an interest in a life insurance policy and in exchange receive a share of the death benefit.

The SEC's complaint alleges that since 2004, Pacific West and Calhoun, a Beverly Hills, California, life insurance agent, have raised nearly $100 million from life settlement investors. Since at least 2012, Pacific West and Calhoun are alleged to have defrauded investors by using proceeds from the sale of new life settlements to continue funding life settlement investments sold years earlier. The complaint alleges that Pacific West and Calhoun did not disclose this practice to investors and undertook it to make life settlement investments appear successful when in fact, Pacific West had used up the primary reserves to pay premiums on those policies.

According to the complaint, Pacific West and Calhoun also made false and misleading statements about the risks of investing in life settlements, including the risk of investors having to make increased premium payments as insured individuals lived longer than Pacific West and Calhoun anticipated. Pacific West and Calhoun also are alleged to have misled investors about annual returns and to have falsely represented to investors that their investments had nothing to do with Pacific West's efforts and fortunes.

The complaint charges Pacific West and Calhoun with violating Section 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. Pacific West and Calhoun are also charged with the unregistered offer and sale of the life settlements in violation Sections 5(a) and 5(c) of the Securities Act and acting as unregistered brokers in violation of Section 15(a) of the Exchange Act. The SEC's complaint further alleges that in the alternative, under Section 20(a) of the Exchange Act, Calhoun is liable as Pacific West's control person for its alleged violations of Exchange Act Sections 10(b) and 15(a) and Rule 10b-5 thereunder. Also named as defendants are Ohio-based PWCG Trust, which held and serviced the insurance policies, and five sales agents of Pacific West, Brenda C. Barry of Issaquah, Washington, and her company BAK West, Inc., Andrew B Calhoun Jr. of Anderson, South Carolina, Eric C. Cannon of Lakewood, California, and his company Century Point, LLC, and Michael W. Dotta and Caleb A. Moody, both of Los Angeles. PWCG Trust and the sales agents are all charged with the unregistered offer and sale of the life settlements in violation of Sections 5(a) and 5(c) of the Securities Act; the sales agents were also charged with acting as unregistered brokers in violation of Section 15(a) of the Exchange Act. The complaint seeks permanent injunctions against all defendants and return of allegedly ill-gotten gains with interest and penalties against Pacific West, Calhoun, and the sales agents.

South Florida Broker-Dealer and Investment Advisory Fraud and Misrepresentation Litigation and Arbitration Attorney

South Florida Broker-Dealer and Investment Advisory Firm Fraud and Misrepresentation Litigation and Arbitration Attorney

Securities and Exchange Commission v. Warren D. Nadel et al., Civil Action No. 11-cv-0215

SEC Obtains Summary Judgment Against Warren D. Nadel, His Broker-Dealer and His Investment Advisory Firm

The U.S. Securities and Exchange Commission recently announced that on April 2, 2015, the United States District Court for the Eastern District of New York granted the SEC's motion for partial summary judgment against Defendants Warren D. Nadel, his broker-dealer, Warren D. Nadel & Co. (WDNC), and his investment advisory firm Registered Investment Advisors, LLC , while also denying the Defendants' motion for summary judgment in its entirety. The Securities and Exchange Commission filed its civil action on January 13, 2011, alleging that the Defendants fraudulently induced clients to invest tens of millions of dollars in a purported investment program in order to receive over $8 million in commissions and fees from 2007 through 2009. The Complaint alleged, among other things, that the Defendants inflated the amount of assets they held under management, and repeatedly misrepresented to clients and prospective clients that they were executing open-market transactions on their behalf with other broker-dealer, when in fact, in the vast majority of transactions (numbering in the thousands), the trades consisted of cross trades between advisory client accounts, controlled by Defendants, or in principal transactions with his own firm, at prices determined by Nadel himself.

In its Order granting the Commission's motion, and denying Defendants' motion in its entirety, the Court held that the Commission was entitled to judgment as a matter of law on its claims that Defendants violated (1) Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, Section 17(a) of the Securities Act of 1933, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, by deliberately inflating the amount of assets they had under management by a factor of 300% to 600%; (2) Section 206(3) of the Advisers Act, by conducting thousands of cross-trades among their clients, and principal transactions with client accounts, without notifying and obtaining consent from their clients in advance of each of those transactions that they were cross-trades or principal transactions; and (3) Rule 10b-10 of the Exchange Act, because Nadel and WDNC falsely disclosed to their clients the capacity under which WDNC was acting in their cross trades and principal transactions.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

Dean Esposito, Joseph DeVito, Frederick Birks and Joseph Azzata - Boca Raton, Florida Microcap Investment Fraud Litigation and Arbitration Attorney

Dean Esposito, Joseph DeVito, Frederick Birks and Joseph Azzata - Boca Raton, Florida Microcap Investment Fraud Litigation and Arbitration Attorney

SEC Halts Microcap Scheme in South Florida

The Securities and Exchange Commission recently announced fraud charges and an asset freeze against the operators of a South Florida-based microcap scheme, including three boiler room brokers caught trying to conceal from investors that they have been barred from the industry.

The SEC alleges that investors were defrauded in cold calls placed to investors through a boiler room spearheaded by Dean A. Esposito of Boca Raton, Fla., Joseph DeVito of Brooklyn, N.Y., and Frederick Birks of Orlando, Fla. These brokers and their sales agents were hired by Joseph J. Azzata of Boca Raton, Fla., CEO of eCareer Holdings, Inc., to sell unregistered stock shares in the company. Investors were told their money would be used as working capital to develop eCareer's online job staffing business, however about 30 percent of investor proceeds has been diverted to pay exorbitant fees to the brokers and sales agents. These payments were mischaracterized in eCareer's corporate filings as dispensed to third parties for consulting and advisory services rather than to the sales agents. Company filings and offering materials also misrepresented that eCareer shares would be sold only to accredited investors when in reality stock has been pitched and sold to people not necessarily meeting that definition, including some non-accredited investors aged 85 to 98 years old.

According to the SEC's complaint unsealed today in U.S. District Court for the Southern District of Florida, Esposito, DeVito, and Birks were subjects of a prior SEC enforcement action that resulted in them being barred from acting as a broker or dealer or participating in any offering of a penny stock. Therefore, they were prohibited from earning transaction-based compensation from the sale of eCareer's stock. In an attempt to circumvent these prohibitions and disguise the true nature of their compensation, Esposito, DeVito, and Birks and their companies entered into agreements typically signed by Azzata that miscategorized their compensation as advisory fees and finder's fees.

The SEC alleges that eCareer, Azzata, Esposito, DeVito, and Birks fraudulently raised more than $11 million in funds from more than 400 investors since August 2010. In addition to approximately $3.5 million paid out of investor funds in the form of undisclosed exorbitant fees, Azzata diverted $650,000 to pay expenses related to his motorsports hobby as well as other family expenditures such as private school tuition for his children and shopping bills for his wife. Corporate filings by eCareer falsely claimed that private offering funds were used for working capital purposes and concealed Azzata's misappropriation of investor proceeds.

The SEC's complaint charges eCareer, Azzata, Esposito, DeVito and Birks with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 as well as Section 10(b) of the Securities Exchange Act of 1934 along with Rule 10b-5. The SEC's complaint also charges eCareer Holdings, Inc. for its violations of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13, and the complaint charges Azzata for aiding and abetting and control person liability for eCareer's violations among other violations. The SEC seeks disgorgement of ill-gotten gains, prejudgment interest, and financial penalties among other relief for investors. The court has granted the SEC's request for a temporary restraining order and temporary asset freeze, and temporarily barred Azzata from serving as an officer or director of eCareer Holdings and voting the company's shares.

Azzata's wife is named as a relief defendant in the SEC's complaint for the purposes of recovering investor proceeds diverted to her personal accounts or expenditures.

The SEC also suspended trading in shares of eCareer Holdings due to questions that have arisen about the accuracy and adequacy of publicly disseminated information in its filings.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

Security and Investment Analyst - South Florida Security and Investment Fraud and Mismanagement Litigation Attorney

Security and Investment Analyst - South Florida Security and Investment Fraud, Breach of Fiduciary Duty and Mismanagement Litigation Attorney:

Factors to Consider in Analyzing Analyst Security and Investment Recommendations:

Research analysts study publicly traded companies and make recommendations on the securities of those companies. Most specialize in a particular industry or sector of the economy. They exert considerable influence in today's marketplace. Analysts' recommendations or reports can influence the price of a company's stock-especially when the recommendations are widely disseminated through television appearances or through other electronic and print media. The mere mention of a company by a popular analyst can temporarily cause its stock to rise or fall-even when nothing about the company's prospects or fundamentals has recently changed.

Analysts often use a variety of terms-buy, strong buy, near-term or long-term accumulate, near-term or long-term over-perform or under-perform, neutral, hold-to describe their recommendations. But the meanings of these terms can differ from firm to firm. Rather than make assumptions, investors should carefully read the definitions of all ratings used in each research report. They should also consider the firm's disclosures regarding what percentage of all ratings fall into either "buy," "hold/neutral," and "sell" categories.

While analysts provide an important source of information in today's markets, investors should understand the potential conflicts of interest analysts might face. For example, some analysts work for firms that underwrite or own the securities of the companies the analysts cover. Analysts themselves sometimes own stocks in the companies they cover-either directly or indirectly, such as through employee stock-purchase pools in which they and their colleagues participate.

As a general matter, investors should not rely solely on an analyst's recommendation when deciding whether to buy, hold, or sell a stock. Instead, they should also do their own research-such as reading the prospectus for new companies or for public companies, the quarterly and annual reports filed with the SEC-to confirm whether a particular investment is appropriate for them in light of their individual financial circumstances.

Who Analysts Are and Who They Work For

Analysts historically have served an important role, promoting the efficiency of the markets by ferreting out facts and offering valuable insights on companies and industry trends. Analysts generally fall into one of three categories:

Sell-side analysts typically work for full-service broker-dealers and make recommendations on the securities they cover. Many of the more popular sell-side analysts work for prominent brokerage firms that also provide investment banking services for corporate clients-including companies whose securities the analysts cover.

Buy-side analysts typically work for institutional money managers-such as mutual funds, hedge funds, or investment advisers-that purchase securities for their own accounts. They counsel their employers on which securities to buy, hold, or sell and stand to make money when they make good calls.

Independent analysts typically aren't associated with firms that underwrite the securities they cover. They often sell their research reports on a subscription or other basis. Some firms that have discontinued their investment banking operations now market themselves as more independent than multi-service firms, emphasizing their lack of conflicts of interest.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

Concealing Poor Performance of Fund Assets - South Florida Securities and Investment Mismanagement Attorney

Concealing Poor Performance of Fund Assets - South Florida Securities and Investment Mismanagement Attorney

SEC Announces Fraud Charges Against Investment Adviser Accused of Concealing Poor Performance of Fund Assets From Investors

The Securities and Exchange Commission recently announced fraud charges against an investment adviser and her New York-based firms accused of hiding the poor performance of loan assets in three collateralized loan obligation (CLO) funds they manage.

The SEC's Enforcement Division alleges that Lynn Tilton and her Patriarch Partners firms have breached their fiduciary duties and defrauded clients by failing to value assets using the methodology described to investors in offering documents for the CLO funds, which have portfolios comprised of loans to distressed companies. Instead, nearly all valuations of loan assets have been reported to investors as unchanged from the time they were acquired despite many of the companies making partial or no interest payments to the funds for several years. Investors have not only been misled to believe that objective valuation analyses were being performed, but Tilton and her firms allegedly have avoided significantly reduced management fees because the valuation methodology described in fund documents would have given investors greater fund management control and earlier principal repayments if collateral loans weren't performing to a particular standard. Tilton and her firms also consequently have misled investors about asset valuations in fund financial statements.

According to the SEC's order instituting an administrative proceeding, CLO funds raise capital by issuing secured notes and using proceeds to purchase a portfolio of collateral typically comprised of commercial loans. Investors are paid based on cash flows and other proceeds from the collateral. The three CLO funds managed by Tilton and the Patriarch Partners firms are collectively known as the Zohar funds, and more than $2.5 billion has been raised from investors. Tilton's investment strategy for the Zohar funds has been to improve the operations of the distressed portfolio companies so they can pay off their debt, increase in value, and eventually be sold for a profit.

The SEC's Enforcement Division alleges that under the contractual terms of the deals, Tilton and her firms are required to categorize the value of each loan asset in monthly reports by using a specific method set forth in deal documents. To be assigned the highest category, a loan has to be current in its interest payments to the Zohar funds. The category of each asset impacts the calculation of a fund's "overcollateralization" ratio, which reflects the likelihood that investors will receive a return on their principal. If the overcollateralization ratio falls below a specific threshold, Tilton and her firms are not entitled to receive certain management fees and may be required to cede more control of fund management to investors.

The SEC's Enforcement Division alleges that rather than following the required methodology for valuing these loan assets, Tilton and her firms have maintained their control over the funds and preserved their management fees by not lowering an asset's category until she decides to cease financial support of the distressed company. Thus the valuation of an asset simply reflects Tilton's subjective assessment of the company's future. Absent an actual overcollateralization ratio test, investors aren't getting a true assessment of the actual values of their investments, which in reality have declined substantially.

The SEC's Enforcement Division further alleges that Tilton and her firms were responsible for misstatements in the quarterly financial statements of the Zohar funds. When preparing these financial statements, they failed to conduct a required impairment analysis on the assets of the Zohar funds despite disclosures stating that such analysis had occurred. They also falsely stated that assets of the Zohar funds were reported at fair value. Tilton repeatedly and falsely certified that the financial statements were prepared in accordance with Generally Accepted Accounting Principles (GAAP).

The SEC's Enforcement Division alleges that Tilton, Patriarch Partners LLC, Patriarch Partners VIII LLC, Patriarch Partners XIV LLC, and Patriarch Partners XV LLC violated Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206-4(8). Patriarch Partners LLC also is charged with aiding and abetting violations by the others. The matter will be scheduled for a public hearing before an administrative law judge for proceedings to adjudicate the Enforcement Division's allegations and determine what, if any, remedial actions are appropriate.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

Underwriter Due Diligence - Fact or Fiction - Boca Raton, Florida Fraudulent Underwriting Attorney

Underwriter Due Diligence - Fact or Fiction - Boca Raton, Florida Fraudulent Underwriting Attorney

Securities and Exchange Commission v. Macquarie Capital (USA) Inc. et al., Civil Action No. 15-CV-02304

SEC Charges New York-Based Brokerage Firm with Faulty Underwriting of Public Offering by China-Based Company

The Securities and Exchange Commission recently announced charges against a New York-based brokerage firm responsible for underwriting a public offering despite obtaining a due diligence report indicating that the China-based company's offering materials contained false information.

Macquarie Capital (USA) Inc., a wholly owned subsidiary of global financial services firm Macquarie Group Limited, has agreed to settle the SEC's charges by paying $15 million and separately covering the costs of setting up a Fair Fund to compensate investors who suffered losses after purchasing shares in the public offering by Puda Coal. The SEC previously charged the Puda Coal executives behind the offering fraud at the company, which is no longer in business.

The SEC also charged former Macquarie Capital managing director Aaron Black and former investment banker William Fang for failing to exercise appropriate care in their due diligence review. Black agreed to pay $212,711 and Fang agreed to pay $35,000 to settle the charges.

According to the SEC's complaint filed in federal court in Manhattan, Macquarie Capital was the lead underwriter on a secondary public stock offering in 2010 by Puda Coal, which traded on the New York Stock Exchange at the time and purported to own a coal company in the Peopleâ€TMs Republic of China (PRC). In the offering documents, Puda Coal falsely told investors that it held a 90-percent ownership stake in the Chinese coal company. Macquarie Capital repeated those statements in its marketing materials for the offering despite obtaining a report from Kroll Associates showing that Puda Coal did not own any part of the coal company. According to corporate registry filings in the PRC that Kroll accessed in its due diligence review, Puda Coal's chairman had transferred ownership of the coal company to himself and then sold nearly half of his interest to the largest state-owned investment firm in the PRC. As a result, Puda Coal no longer had any ownership stake or source of revenue.

According to the SEC's complaint, Kroll provided its report to Fang, who read it but failed to act on the information revealing that Puda Coal no longer owned the coal company. Instead, Fang circulated the report to other members of the Puda Coal deal team and stated in the e-mail that "no red flags were identified." Black, who served as one of the transaction directors on the Puda Coal deal, received the report from Fang and read portions stating that Puda Coal's chairman owned 50 percent of the coal company of which Puda Coal was claiming to own 90 percent. Black likewise failed to act on the information.

The SEC alleges that Macquarie Capital made a net profit of $4.17 million as lead underwriter on the Puda Coal offering, which sold stock to investors at a price of $12 per share. When reports about Puda Coal's false claim appeared on the Internet based on the same PRC filings that Kroll Associates accessed for its report, Puda Coal's stock price plunged as low as pennies per share.

The SEC's complaint charges Macquarie Capital, Black, and Fang with violating Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933. They agreed to settle the charges and accept permanent injunctions without admitting or denying the allegations. The settlement is subject to court approval. In addition to the monetary penalties, Black has agreed to be barred from supervisory positions in the securities industry and Fang has agreed to be barred from the securities industry, both for at least five years.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

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Russell L. Forkey, P.A.

1075 Broken Sound Parkway NW, Suite 103

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