United Development Funding (“UDF”) has come under fire in recent months – being accused of operating like a “Ponzi scheme.”  It has allegedly disclosed that since April 2014, it has been under SEC investigation.

UDF operates several publicly-traded and non-traded Real Estate Investment Trusts (REITs) along with other real estate related companies, according to reports.  UDF reportedly operates in a manner that is different from traditional REITs – in that its assets are not real estate holdings, but rather development loans that it originates.

The UDF fund family is reportedly comprised of four public companies – United Mortgage Trust (non-traded), UDF III (non-traded), UDF IV (publicly traded symbol: UDF), and UDF V (non-traded).

The publicly traded UDF IV has declined in value from upwards of $18 per share to roughly $7 per share in only a few short months.  This means that those who invested in this public fund may have suffered losses of more than 50% seemingly overnight.  Meanwhile, those investors in the non-traded UDF III, UDF V, and United Mortgage Trust may find themselves with highly illiquid investments and potentially heavy losses.

If you or a family member invested in United Development Funding, you should contact our offices to explore your legal rights and options.  You can contact the investment fraud lawyers at Malecki Law for a free consultation and case evaluation at (212) 943-1233.

Malecki Law takes a proactive and informed approach to the financial news of today: actively engaging in fact-finding analysis on prospective cases from around the world. Our thorough knowledge of securities law’s history and fine points makes us ideal consultants for investors who have suffered losses due to misadvice from their broker or other financial counsel.

 

The sad truth is that the Government loves the easy kill.  It is often easier for regulators to extract settlements and punishments against smaller market participants, including brokers, traders and analysts, than the giant wire houses, because large companies can match the resources of the Government.

The Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), among other regulators, regularly engage in investigations to explore, deter and punish market conduct that violates the securities laws and industry rules.  While it can be hard to know what those investigations will be, the regulators like the SEC disclose regulatory priorities on an annual basis.  These examination priorities are areas where the SEC will be dedicating resources throughout 2016.

Of the 2016 Priorities announced by the SEC, the following may lead to broad investigations:

  • Recidivist Representatives and their Employers – the SEC has announced they will use data analytics to identify and track individuals with a track record of misconduct, as well as the firms that employ them.
  • Anti-Money Laundering (“AML”) – AML is usually a topic of great interest by the regulators. Brokers and broker-dealers will be scrutinized for their testing and adaptation to the evolving AML regulatory landscape.
  • Microcap Fraud – Microcap, or small offerings by companies of $50-300 million, will be examined by the SEC for fraudulent conduct, such as aiding and abetting and “pump and dump” schemes.
  • Excessive Trading – the Commission will also use analytics, especially from clearing firms, to try to identify the brokers who engage in inappropriate or “excessive” trading.
  • Product Promotion – the SEC will consider suitability issues for new, complex and/or risky products.

The SEC also noted that they will be keeping a watchful eye on the EB-5 Immigrant Investor Program, transfer agents, as well as considering fee and expense issues with private fund advisors.  We are actively involved in these and other such investigations by the SEC and FINRA.

Often, your first contact with the regulator like the SEC or FINRA will be by the receipt of a Subpoena.  This does not mean you have done something wrong.  As we have explained in prior blog posts, it could mean merely that you might be a witness and have information, but that no charges will be brought against you.  Nonetheless, you may still be required to provide a written response to the Subpoena, and submit to a recorded interview where you may answer questions under oath.  It is imperative that you retain securities counsel with regulatory defense experience to make sure you comply while not waiving rights you may be entitled to.

If the Commission considers you a target that has potentially violated the Securities laws or industry rules, they may file charges after issuing a Wells notice.  This proceeding most often takes place before an Administrative Law Judge, though some cases may be initiated in Federal court.  Either way, it will be imperative that you are represented by counsel to oppose the charges brought against you, conduct discovery, and enter evidence and witnesses at the hearing to defend yourself against the Commission’s charges.  In this regulatory environment, you need to be mindful that criminal charges are not also brought against you.

The Attorneys at Malecki Law are experienced with and regularly represent clients who have become embroiled in regulatory investigations.  We have obtained favorable results for our clients, including settlements and declarations of no action taken by regulators.  Contact us for a free consultation.  Various hourly-billing and flat-fee based options are available to make smart decisions from inception to the completion of your matter.

Thinking about leaving your broker-dealer?  Looking to make the transition to a new firm?

It has been reported recently that brokers from Credit Suisse, Deutsche Bank and potentially Merrill Lynch are being heavily recruited to leave and join new broker-dealers.  For those leaving Credit Suisse, Deutsche Bank, and Merrill (as it is for any FINRA registered representative) the choice to move to a new broker-dealer is not one that is made lightly.  Whether a protocol move or a non-protocol move, many of the same issues remain at the forefront and need to be dealt with judiciously.  One of these issues is the transition bonus/promissory note.

If you are fortunate enough to have a substantial book of business and significant gross production, you may have been offered an upfront transition bonus by a new broker-dealer.  Frequently, these bonuses are awarded to reps in the form of Forgivable Promissory Notes.  The basic structure of these “Notes” is as follows:  The “bonus” is structured on paper as a loan.  Over a set time period – usually five to seven years – the balance of the loan, including interest, is paid off or “forgiven” by the broker dealer.

While this seems relatively straightforward, there are frequently misconceptions (and often misrepresentations) about the finer points of this “bonus.”  For example, many times registered reps are misled into believing that the Note is only structured this way for tax purposes – and that the money is theirs no matter what.  This is usually only half true.

It is generally true that frequently the structured payment over time may result in tax savings. For example, a $100,000 Note paid upfront but forgiven equally over five years, would typically count only $20,000 per year as income.  Whereas, had that been paid upfront and not forgiven over time, the $100,000 would likely have counted as income resulting in higher tax rate.

However, the broker-dealer’s motivation behind this structure is not purely benevolent.  The broker-dealer also gets something out of the deal – retention.  Normally, Forgivable Notes contain clauses that state that if the rep leaves “for any reason – whether voluntary or involuntary,” the entire amount outstanding on the Note, including interest, becomes immediately due and payable.  This means that if our rep from the example above leave their broker-dealer after only three years, they may owe $40,000 back to their broker-dealer the minute they walk out the door.  This gives reps a significant monetary incentive to “stay in their seat” until their Note is fully forgiven.

Of course, there are ways around this for the rep who may still owe money but is determined to get out of their current broker-dealer.

First, if you have a large enough book of business, the broker-dealer you plan to join, may give you a new Note, which will cover at least the amount outstanding on your old Note. For example, our broker above may get a $75,000 Note from their new broker-dealer to pay off the $40,000 they owe to their old firm and keep $35,000 for themself.

The other option is to fight – in a FINRA arbitration.  Broker-dealers regularly sue departed representatives who have balances outstanding on their Notes. While many of these cases wind up in favor of the broker-dealer given the typically broker-dealer friendly language of the agreements, registered reps have and continue to win cases against their broker-dealer.  Typically, these reps have counterclaims against the broker-dealer such as breach of contract, breach of fiduciary duty or discrimination.  Those who win may be awarded forgiveness of some or all of the amounts due on their Note (and in some cases money damages on top).

Other times, cases settle before an arbitration is ever filed.  Frequently, reps in transition can negotiate a settlement with their broker-dealer in which the rep agrees to pay a percentage of the amount owed.

No matter how you slice it, upfront bonuses in the form of forgivable promissory notes are a key thing to consider when deciding whether or not to transition your business to a new firm.

The securities lawyers at Malecki Law have experience representing FINRA registered reps in transition.  Whether you are negotiating a deal with your new firm or trying to settle a dispute with your old one, you should contact the attorneys at Malecki Law for a free consultation at (212) 943-1233.

 

Recently, FINRA issued the 11th Regulatory and Examination Priorities Letter that addresses issues in the financial industry, if left unaddressed could adversely effect market integrity and investors. In 2016 their key points of emphasis have been identified as  (1) culture, conflicts of interest and ethics; (2) supervision, risk management and controls; and (3) liquidity. The Letter also highlights specific policies and procedures the FINRA will use to ensure that member firms are compliant with the priorities identified.

According to Richard G. Ketchum, CEO and Chairman, FINRA, “ Firm culture, ethics and conflicts of interest remain a top priority for FINRA. A firm’s culture contributes to, and is also a product of, a firm’s supervision and its approaches to identifying and managing conflicts of interest and the ethical treatment of customers. Given the significant role culture plays in how a firm conducts its business, this year the letter addresses how we will formalize our assessment of firm culture to better understand how culture affects a firm’s compliance and risk management practices.”

  • Culture, Conflicts of interest and Ethics

Although firm culture can be interpreted subjectively, FINRA expressed its intent this year to craft its own definition of “firm culture” and formalize its assessment based on how executives, supervisors and employees make and implement decisions in the course of conducting a firm’s business. FINRA has express that firm culture is an important indicator of how a firm manages conflicts of interests and ethics. FINRA does not intend to dictate firm culture but rather understand with a view to how it affects compliance and risk management practices internally in a firm.

As per FINRA 2016 the five indicators that will be assessed for a firm’s culture include
(1) whether control functions are valued within the organization
(2) whether policy or control breaches are tolerated
(3) whether the organization proactively seeks to identify risk and compliance events
(4) whether supervisors are effective role models of firm culture
(5) whether sub-cultures (e.g.,  at a branch office, a trading desk or an investment banking department) that may not conform to overall corporate culture are identified and addressed.

Since a firm’s culture is both and input to and product of its supervisory system, it is critical to identify that to assess fair and compliant treatment of customers. They will seek to understand how far these firms tolerate ethical breaches, take visible steps to mitigate conflicts of interest, and have compliance functions in keeping with the changing regulatory landscape.

  • Supervision Risk Management and Controls

Closely related to culture, FINRA’s rules require firms to maintain systems to supervise activities of their associated persons to help the firm adhere to securities laws and FINRA rules. In 2016, FINRA has identified four focus areas which have continued to pose concerns. First being management of conflicts of interest, in particular a firm’s incentive structures. The review they will undertake will encompass conflict mitigations specially arising from compensation plans for representatives and how firms approach conflicts of interests arising from sale of proprietary and affiliated products, or products that result in revenue sharing and other third-party payments. FINRA’s review will draw on suitability and overconcentration issues. FINRA will remind firms that we they have filed the proposed Rule 2273 with the SEC, which relate to recruitment practices and whether transfer of assets to the recruiting firm and financial incentives received by a registered representative may create a conflict of interest.

In keeping with FINRA’s research rules, firms may not use research analysts or the promise of offering favorable research to win investment banking business. FINRA will assess whether firms’ research analysts are inappropriately involved in their investment banking activities and whether investment banking personnel exercise undue influence on analysts.

Some of the other priorities identified include mitigating information leakage within or outside a firm, outsourcing (reminding firms that they remain responsible for supervision of third parties), and anti-money laundering (particularly, where certain customer transactions are automatically excluded from portions of AML surveillance, the reasoning for the decision should be documented for FINRA to check).

  • Liquidity

Since the failure to monitor liquidity led to financial failure and systemic crisis, FINRA will rigorously continue to monitor firm’s liquidity requirements, contingency funding practices and the effectiveness of these contingency practices to weather market wide and internal stresses. FINRA will focus on high-frequency trading (HFT) firms’ liquidity planning and controls and whether sudden changes in a firm’s execution rate, triggered by a market event or other factors, could create liquidity challenges for a firm. FINRA will continue to focus on firms’ liquidity risk management practices, guided by the framework established by the agency in its Regulatory Notice 15-33

 

FINRA’s recently released Regulatory and Examinations Priority Letter made specific mention of multiple critical areas that the regulator will be focused on for the upcoming year.  The one that we will focus on today is the Senior investor and the steps that are and should be taken to prevent elder abuse.

As we have discussed here before, with the growing population of senior aged investors, this demographic is becoming increasingly significant in the retail investor pool nationwide.  Baby boomers are beginning to hit retirement age just as advancements in technology and medicine are leading to longer and longer lifespans.

Per 2012 census data, there are 76.4 million baby boomers which represent close to one-quarter of the then estimated U.S. population of 314 million.  These figures have coupled with longer lifespans across the boards, means that there is the potential for disaster if baby boomers’ retirement savings are not properly managed.  FINRA recognizes that “the consequences of unsuitable investment advice can be particularly severe for this investor group since they rarely can replenish investment portfolios with fresh funds and lack the time to make up losses.”

In response, many firms are reportedly increasing and emphasizing internal guidelines to focus on suitability and to train their financial advisors about issues dealing with senior investors.  FINRA has stated that it will be monitoring these actions taken by member firms.  Specifically, FINRA’s examination focus will be on:

  1. Communications with seniors;
  2. Suitability of investment recommendations made to seniors;
  3. Training of registered representatives with respect to senior specific issues; and
  4. Supervision over registered representatives with the goal of protecting seniors.

While the FINRA examination focus is largely focused on ensuring registered representatives do the right thing for their senior-aged clients, registered representatives should be cognizant of when a senior-aged client is possibly being taken advantage of by family or other trusted individuals.

As individuals age and their capacities naturally diminish, they can (and unfortunately frequently do) become the targets of elder abuse.  Examples of elder abuse can include, but certainly are not limited to, an individual “weaseling” their way into a senior’s will, large transfers of cash or securities out of an investment or bank account to a third-party, and a third-party being designated as the new beneficiary of an investment or life insurance policy.  Each of these examples is a relatively simple way to essentially rob someone who cannot defend themselves.

Fortunately, financial advisors, along with an estate planners and accountants, form a line of defense for these vulnerable individuals.  When a client comes forward with a distant relative or other previously unknown third-party as a beneficiary may be a good time to ask some questions.  Similarly, monetary transfers from a client’s investment account for an unknown purpose or as a substantial gift may also warrant some further investigation or a discussion with a supervisor.

Recognizing these situations and the benefit that a well-intentioned and astute financial advisor can provide, regulators and lawmakers have begun a push to afford brokers and broker-dealers some discretion in holding off on certain suspicious transactions that bear some indicia of elder fraud.  For example, a handful of states have laws on the books that permit broker-dealers to pause transactions deemed to be suspicious.  Likewise, NASAA (the North American Securities Administrators Association) has proposed “An Act to Protect Vulnerable Adults From Financial Exploitation.”  This proposed legislation would provide numerous tools to prevent elder abuse, including a similar provision “to delay disbursements from an account of a vulnerable adult if financial exploitation is suspected.”

Ultimately, there will be a continued focus on elder abuse an exploitation in the financial services industry this year and into the foreseeable future.  Registered representatives should be taking care to understand the issues that are coming up, the expectations that both their firms and the regulators have for them, and ensuring that their practices satisfy these expectations.

The securities and investment fraud attorneys at Malecki Law are interested in hearing from investors in MainStay Investments’ Cushing series Master Limited Partnerships (MLPs) and Energy Equity mutual funds.  MainStay Investments is a subsidiary of New York Life Insurance Company.

Among the MainStay Cushing portfolio of funds, a number of them declined between 33% and 57% in 2015 year to date, per Morningstar.  These funds include:

  • MainStay Cushing® Royalty Energy Inc A (CURAX)
  • MainStay Cushing® Royalty Energy Inc I (CURZX)
  • MainStay Cushing® Royalty Energy Inc Inv (CURNX)
  • MainStay Cushing® Royalty Energy Inc C (CURCX)
  • MainStay Cushing® MLP Premier I (CSHZX)
  • MainStay Cushing® MLP Premier A (CSHAX)
  • MainStay Cushing® MLP Premier Investor (CSHNX)
  • MainStay Cushing® MLP Premier C (CSHCX)

For example, CURCX, a fund that reportedly manages more than $61.2 million in assets, has had its net asset value decline significantly in the past year, from approximately $9.06 NAV in January 2015 to approximately $3.23 in January 2016, according to recent reported pricing data provided by Morningstar.  According to Morningstar data, CSHZX, a master limited partnership, is reported to manage more than 1.15 billion in assets and suffered a price decline of approximately 50% over the past year, down to approximately $10.72 in January 2016 from approximately $21.03 in January 2015.

These MainStay Cushing funds were said to have been marketed to investors and sold by financial advisors at brokerages such as Cetera Advisors LLC, Mid Atlantic Capital Corp., JPMorgan, Ameriprise Brokerage, Raymond James, RBC Wealth Management, Morgan Stanley, and Securities America Inc.

Investments in these or other MainStay Cushing funds have proven to be risky, and only suitable to certain investors.  If you were promised good returns with safety to your principal over a short investment horizon, yet were not informed of the many risks associated with energy sector investments, you may have a claim premised on suitability.

Given that MLPs and other energy sector funds are non-traditional products and typically focus on one sector with significant historical volatility, great care should be taken by an advisor to ensure that the investment is appropriate for the investor in light of their specific risk tolerance, investment objectives and other factors.  When a product is sold to an investor, despite being unsuitable for that investor, the financial advisor’s firm may be liable to the investor for those recommendations.

Investors who lost money in these investments at the recommendation of their financial advisor may be entitled to recover their losses from the brokerage house who sold it to them.  If you or a family member invested in MainStay Cushing funds, you should contact the attorneys at Malecki Law for a free consultation and to explore your legal rights and options.

Malecki Law takes a proactive and informed approach to the financial news of today: actively engaging in fact-finding analysis on prospective cases from around the world. Our thorough knowledge of securities law’s history and fine points makes us ideal consultants for investors who have suffered losses due to misadvice from their broker or other financial counsel.

The securities and investment fraud attorneys at Malecki Law are interested in hearing from investors in Tortoise Capital Advisors and explore their potential options for recovering their losses.

The Kansas-based Tortoise Capital Advisors is a “privately owned investment manager . . . that primarily provides its services to high net worth individuals . . . and caters to corporations, pooled investment vehicles, investment companies, and pension and profit sharing plans . . . typically invest[ing] in [the] energy and infrastructure sector,” per Bloomberg Business.
Among Tortoise’s portfolio of funds, a number of them declined between 17% and 36% in 2015 alone, per Morningstar.

These include Tortoise MLPs – Tortoise MLP & Pipeline C (TORCX), Tortoise MLP & Pipeline Investor (TORTX), Tortoise MLP & Pipeline Instl (TORIX) – and Tortoise Equity Funds – Tortoise North American Energy Indep C (TNPCX), Tortoise North American Energy Indep Inv (TNPTX), Tortoise North American Engy Indep Instl (TNPIX), Tortoise Select Opportunity C (TOPCX), Tortoise Select Opportunity Investor (TOPTX), and Tortoise Select Opportunity Instl (TOPIX).  For example, TORCX, a fund that reportedly manages more than $1.23 billion in assets, has declined significantly in share price from its previous high of $19.52 in August 2014 according to recent quotes. The fund reportedly trades at just over $9 per share – a decline of more than 50% in less than 18 months. TORTX and TORIX have also seemingly mirrored this performance.

Tortoise funds were said to have been marketed to investors and sold by financial advisors at brokerages such as Mid Atlantic Capital Corp, Morgan Stanley, Pershing FundCenter, Shareholders Services Group, JPMorgan, Fidelity Institutional, FundsNetwork, MSSB Retail Fund, Raymond James, CommonWealth Universe, RBC Wealth Management, Mid Atlantic Capital Group, MSWM Brokerage, and Securities America Inc.

Investors who bought this fund or other Tortoise funds upon promises of good returns and safety of principal a short time ago find themselves questioning how so much money could have been lost so quickly, contrary to the assurances received from the advisor who sold them the product. However, all may not be lost. Investors who lost money in these investments at the recommendation of their financial advisor may be entitled to recover their losses from the brokerage house who sold it to them.

One of the main issues facing financial advisors who sell funds and master-limited partnerships is suitability. Given that MLPs are non-traditional products and typically focus on one sector and one sector only (often energy in the case of MLPs), great care should be taken by an advisor to be sure that the investment is appropriate for the investor in light of their risk tolerance, investment objectives and other factors. When a product is sold to an investor, despite being unsuitable (or inappropriate) for that investor, the financial advisor’s firm may be liable to the investor for their losses.

If you or a family member invested in Tortoise Funds, you should contact our offices to explore your legal rights and options. You can contact the investment fraud lawyers at Malecki Law for a free consultation and case evaluation at (212) 943-1233.

Malecki Law takes a proactive and informed approach to the financial news of today: actively engaging in fact-finding analysis on prospective cases from around the world. Our thorough knowledge of securities law’s history and fine points makes us ideal consultants for investors who have suffered losses due to misadvice from their broker or other financial counsel.

The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Christopher T. Fenton.  Mr. Fenton is currently employed and registered with M&T Securities, Inc., a broker-dealer, working out of the Buffalo, New York office, according to his publicly available BrokerCheck, as maintained by the Financial Industry Regulatory Authority.  He was also previously registered with Pruco Securities Corporation.

According to his BrokerCheck report, Mr. Fenton has been the subject of three customer complaints while employed by M&T Securities, Inc.  The latest customer complaint led to a FINRA arbitration proceeding, according to BrokerCheck records.  The BrokerCheck records reveal that the customer alleged that misrepresentations, breach of fiduciary duty and recommendation of unsuitable investments were made.  The dispute resulted in an award to the customer, according to the BrokerCheck report.

A review of the award, publicly available from FINRA’s website, discloses that the claimant also alleged that the causes of action related to an M&T Portfolio Architect Account and Rochester Fund Municipals.  The award also disclosed that Mr. Fenton and his firm were found to be jointly and severally liable to the claimant for the award, as well as a portion of fees the claimant incurred in bringing the claim.

If you or a family member lost money that was invested with Mr. Fenton or with M&T Securities, Inc., you are encouraged to contact the securities fraud lawyers at Malecki Law for a free consultation and case evaluation at (212) 943-1233.

Malecki Law has successfully brought securities actions on behalf of investors who suffered losses as a result of unscrupulous actions taken in their securities accounts, recovering millions of dollars for their clients.

Malecki Law takes a proactive and informed approach to the financial news of today: actively engaging in fact-finding analysis on prospective cases from around the world. Our thorough knowledge of securities law’s history and fine points makes us ideal consultants for investors who have suffered losses due to misadvice from their broker or other financial counsel.

The investment and securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints about Wells Fargo stockbroker Gregg D. Lazarescu.

According to his BrokerCheck report maintained by the Financial Industry Regulatory Authority (“FINRA”), Mr. Lazarescu has been the subject of at least two customer complaints while registered with his prior firm Morgan Stanley.
In addition to Wells Fargo and Morgan Stanley, FINRA reports that Mr. Lazarescu was registered with MetLife, Chemical Investment Services Corp., Citicorp Investment Services, and Chase Investment Services Corp.

Industry records indicate that in 2004, a customer made allegations of unsuitability and misrepresentation against Mr. Lazarescu in connection with a mutual fund purchase. This claim was settled for $100,000, per his FINRA BrokerCheck Report.

In 2009, Mr. Lazarescu was reportedly the subject of another customer complaint. FINRA records indicate that the allegations in this matter involved the unauthorized purchase of an auction rate security in a client account. Per BrokerCheck, this case was settled for $50,000 in connection with FINRA Regulatory Notice 09-12.

Investors who have been given unsuitable investment recommendations by their financial advisor or stockbroker may have the right to sue to recover some or all of their losses.

Financial advisors and stockbrokers are under the obligation to make only suitable recommendations to their customers. They must consider things such as investment objective and risk tolerance, as well as the customers’ age and other important factors before recommending an investment. When a customer makes an unsuitable investment at the recommendation of their financial advisor, that investor may be entitled to have the firm reimburse them for their losses or in some cases even compensate them for the lost profits they should have made had the money been properly invested.

If you or a family member lost money entrusted to Gregg Lazarescu or Wells Fargo and want to explore your rights, you are encouraged to contact the securities and investment fraud lawyers at Malecki Law for a free consultation and case evaluation at (212) 943-1233.

Malecki Law has successfully brought securities actions on behalf of investors who suffered losses as a result of unscrupulous actions taken in their securities accounts, recovering millions of dollars for their clients.

Malecki Law takes a proactive and informed approach to the financial news of today: actively engaging in fact-finding analysis on prospective cases from around the world. Our thorough knowledge of securities law’s history and fine points makes us ideal consultants for investors who have suffered losses due to misadvice from their broker or other financial counsel.

Shares of OncoMed (OMED) plunged more than 40% today, January 25th, in the wake of a report concerning a pancreatic cancer drug the company had reportedly been working on.  According to Marketwatch, “an independent data safety monitoring board advised ‘of several findings regarding futility’ of a Phase 2 treatment of pancreatic cancer.’”

Investors who have lost money in OncoMed may be legally entitled to recover some or all of their losses and are encouraged to contact the attorneys at Malecki Law to explore their rights.

Unfortunately, issues like the one presently facing OncoMed can happen in the market.  Even more unfortunate is that often times financial advisors will improperly advise their clients to take large positions in advance of the release of a report concerning a company’s prized drug, like Tarextumab.

The hope would be that the report would be favorable and the company stock will yield large profits for the investor and big commissions for the broker.  However, this “all or nothing” strategy can be extremely risky for the investor.

Regrettably, brokers will frequently fail to properly advise their client of the extreme risks that may be involved in placing a big bet on one stock.  Instead brokers may encourage their client with only positive analysis and promises of big profits, saying it’s a “sure thing.”

Such large bets are typically not suitable for your average investor.   They are usually best reserved for highly sophisticated investors who have the ability to properly assess the investment risks and absorb the potentially enormous losses.  Frequently, these are wealthy hedge fund managers and the like.  Even for most of the very wealthy, these investments would likely not be suitable absent extremely high levels sophistication and investment experience.

If an investment is not suitable for a customer, the broker is not permitted to recommend that the customer invest – plain and simple.

But, if a broker makes an unsuitable investment recommendation to a customer, the customer may be legally entitled to recover all or some of their losses.

So, if you or a family member lost money in OncoMed at the recommendation of a financial advisor and want to explore your rights, you are encouraged to contact the securities and investment fraud lawyers at Malecki Law for a free consultation and case evaluation at (212) 943-1233.

Malecki Law has successfully brought securities actions on behalf of investors who suffered losses as a result of unscrupulous actions taken in their securities accounts, recovering millions of dollars for their clients.

Malecki Law takes a proactive and informed approach to the financial news of today: actively engaging in fact-finding analysis on prospective cases from around the world. Our thorough knowledge of securities law’s history and fine points makes us ideal consultants for investors who have suffered losses due to misadvice from their broker or other financial counsel.