Articles Posted in Featured Investigations

Malecki Law is investigating possible unsuitability claims against stock brokers and financial advisors who sold shares of Amarin to investors for whom the stock was not appropriate.

Amarin is a biopharmaceutical company based out of New Jersey.  The company’s primary business involves the development and marketing of medicines used to treat cardiovascular disease.  Amarin is best known as the company that developed the pharmaceutical drug Vascepa.

Over the past few years, Amarin has been reportedly seeking various FDA approvals for Vascepa.  During the past four to five years, the shares of Amarin have shown great volatility.  The shares have gone from roughly $1 per share in February of 2010 up to $19 per share in May of 2011 and back down to just more than $1 per share today.  In October 2013, share prices went from more than $7 per share to just over $2 per share in less than two weeks.  Again this past October, share prices dropped roughly 50% in only one month’s time.

As a result, investors who were sold Amarin by their financial advisor may have experienced crushing losses.  It is believed that some financial advisors may have been advising clients to buy Amarin in the run up to major announcements by the company.  When negative news came out, the stock price fell dramatically, causing significant losses to investors.

Financial Industry Regulatory Authority (“FINRA”) rules expressly prohibit registered financial advisors from selling unsuitable investments to the public. Therefore, investors who bought Amarin at the recommendation of a financial advisor may be able to recover some or all of their losses.

It is the right of any and all investors who believe they may have suffered losses as a result of recommendations of their financial advisor to contact our offices to explore their legal rights and options. If you or a family member invested in Amarin, contact the securities 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.

Malecki Law is investigating possible claims against Craig Scott Capital, based in Long Island, NY.

According to FINRA BrokerCheck, some customers of the firm have recently filed arbitrations related to the conduct of the firm’s brokers alleging “unsuitability, excessive trading and misrepresentation” against the firm. According to his CRD, the firm’s President and CEO, Craig Scott Taddonio, intends to vigorously defend himself in at least two arbitrations. Craig Scott Capital has also recently been the subject of a FINRA regulatory investigation resulting in the firm paying a fine.

Sources have reported that some brokers from Craig Scott Capital are alleged to be “cold-calling” investors with no prior relationship with the firm and soliciting sales of investments that may be unsuitable for the investor. These investments may include non-traded real estate investment trusts (“REITs”).

Non-traded REITs are well-known in the financial industry for paying high commissions to the selling broker, but have run into problems in the past, causing investors to suffer significant losses. These products should only be sold to investors for whom they are suitable. Unfortunately, they are frequently sold to investors for whom they are not appropriate.

It is the right of any and all investors who believe they may have suffered losses as a result of recommendations of their financial advisor to contact our offices to explore their legal rights and options. If you or a family member has suffered losses, contact the securities 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. Information on a selection of funds and companies currently under investigation by Malecki Law can be found below.

Just this past week, two brokerages units of Stifel Financial were ordered by the Financial Industry Regulatory Authority (“FINRA”) to pay more than $1 million related to the sale of leveraged and inverse exchange-traded funds (“ETFs”). Of the more than $1 million to be paid, $550,000 comes in the form of a fine to be split by Stifel, Nicolaus & Co., Inc. and Century Securities Associates Inc. The firms were also ordered to pay more than $475,000 in restitution to 65 customers to compensate them for losses incurred on ETF purchases.

According to the Wall Street Journal, FINRA said that some of the brokers who were selling the ETFs did not have a full understanding of the products they were selling, including the risks associated with them.

Brokerage firms can be fined and/or sued when they allow their brokers to sell unsuitable, or inappropriate, investments to customers, especially when the brokers have not been properly trained. Industry regulations require that a broker understand both the product they are selling and the customer to whom they are selling the product. Most importantly a broker must understand the risks of the products being sold and appreciate the customer’s ability (or inability) to tolerate risk. Brokerage firms are also required to train their brokers properly, including what qualifies as a suitable, or appropriate, recommendation to a customer.

Regulators have been looking at the sale of ETFs, especially inverse and leveraged ETFs, in recent years. In the past few years, FINRA has reportedly fined multiple brokerage firms millions of dollars, including Citigroup, Morgan Stanley, UBS and Wells Fargo over the sales of ETFs.

These investments are complex and often not completely understood by the average investor. They use futures and/or derivatives to 1) multiply the return (and loss) of a given index on a given day and/or 2) cause the value of the ETF to rise when the index falls, or vice versa. However, they are largely designed as a product for day-traders and are not typically supposed to be recommended as “buy and hold” investments.

For example, below are twenty five ETFs that lost the most in the past 12 months per Yahoo Finance, many of which are inverse, leveraged, or both. Malecki Law is investigating and/or has recently pursued claims for customers who incurred losses in these ETFs.

1. Direxion Daily Gold Miners Bull 3X Shrs (NUGT)
2. VelocityShares Daily 2x VIX ST ETN (TVIX)
3. C-Tracks Citi Volatility Index TR ETN (CVOL)
4. Barclays Short B Lvgd Inv S&P 500 TR ETN (BXDB)
5. Direxion Daily Semicondct Bear 3X Shares (SOXS)
6. VelocityShares Daily 2x VIX MT ETN (TVIZ)
7. Direxion Daily Small Cap Bear 3X Shares (TZA)
8. ProShares UltraPro Short Russell2000 (SRTY)
9. VelocityShares Long VIX ST ETN (VIIX)
10. ProShares VIX Short-Term Futures ETF (VIXY)
11. ProShares UltraPro Short QQQ (SQQQ)
12. ProShares Ultra Silver (AGQ)
13. Direxion Daily Nat Gas Rltd Bear 3X Shrs (GASX)
14. Direxion Daily Mid Cap Bear 3X Shares (MIDZ)
15. ProShares UltraPro Short MidCap400 (SMDD)
16. Global X Gold Explorers ETF (GLDX)
17. Market Vectors Junior Gold Miners ETF (GDXJ)
18. Direxion Daily S&P500 Bear 3X Shares (SPXS)
19. Direxion Daily China Bear 3X Shares (YANG)
20. ProShares UltraPro Short Dow30 (SDOW)
21. ProShares UltraShort Russell2000 Growth (SKK)
22. Direxion Daily Technology Bear 3X Shares (TECS)
23. Market Vectors Gold Miners ETF (GDX)
24. ProShares UltraShort SmallCap600 (SDD)
25. ProShares UltraShort Health Care (RXD)

If you believe you have lost money as a result of an investment in these or any ETFs, or because of some other investment, contact an attorney at Malecki Law for a free consultation to determine if you may be able to recover your losses.

Maxwell B. Smith was sentenced to serve the next seven years in federal prison for operating a $9 million Ponzi scheme. Maxwell sold investments as a fund that made loans to nursing homes. Smith had previously plead guilty to several counts of mail fraud as well as money laundering.

It is believed that Smith was employed as a financial professional at several financial firms in New Jersey, where he provided financial advice to his clients, many of whom may have lost money to his Ponzi scheme, Health Care Financial Partners (“HCFP”), purportedly a fund with hundreds of millions of dollars in assets. Investors even received a prospectus guaranteeing 7.5% to 9% per year, tax free. Investors could buy bonds in amounts ranging from $25,000 to $300,000.

Investors may not know that broker-dealers, like the ones that it is believed registered Mr. Smith, have a duty to supervise their employees. As a result, in situations like these, investors may be entitled to recover against the financial firms that employed the financial advisor for failing to supervise their employee.

Mr. Smith was apparently employed by Rickel & Associates, Inc., Atlantic Group Securities, Inc., JJB Hilliard, WL Lyons, Inc., PNC Investments, and Cantone Research, Inc. during the Ponzi schemes operation. It is believed that had these firms properly supervised Mr. Smith, they should have caught and stopped this Ponzi scheme.

If you or a family member fell victim to Mr. Smith, it is your right to consult with an attorney and explore your options. For a free consultation, contact the investment fraud attorneys at Malecki Law at (212)943-1233. Malecki Law has recovered millions of dollars for victims of Ponzi Schemes.

Those who invested in many of the commonly called “Apple reverse convertibles,” now find themselves facing huge potential losses. But all hope is not lost, as investors may be able to recoup their losses. apple falling.jpg

The plight of these investors has been well documented recently.

What would you do if your broker tells you that you just bought Apple stock at a price of over $700 a share, even though after this past week’s collapse left the price hovering below $440? Now what would you do if you found out that you wound up with this “bum deal” by buying a product that was issued by your broker’s firm?

Jason Zweig of the Wall Street Journal addressed this situation in his recent report on how individual investors lost potentially hundreds of millions of dollars in structured products linked to Apple stock, while the firms and brokers who sold them made a profit.

These products were typically marketed to investors as being like bond investments, but promised substantially higher interest rates between 6-12%. However, this came with a catch – if the stock fell more than 20% or so by the date of maturity, the bonds morph into shares of the underlying stock on the maturity date. This means an enormous, sudden loss to the investor.

Over $722 million of these investments have been sold. Many investors who bought these investments, such as UBS’s “trigger yield optimization notes” in the past year have seen the value of the underlying Apple stock drop from over $700 to south of $440 per share, which means that these investors are staring down the barrel of an enormous loss – estimated to be around 30%. At the same time, the banks that sold these products reaped a large profit, sometimes nearly 2% of the total investment.

Many products such as these have been sold to conservative investors who were not willing to lose money – based largely on the historically positive performance of Apple stock. Investors often do not understand the complexities of these products, or others like them. In many cases, investors seeking safe income may not have been aware of this risk or had it downplayed to them, which could constitute a sales practice violation committed by their broker.

Unfortunately, as Mr. Zweig notes at the end of his article “Complexity always favors the seller, not the buyer. And the house always wins.”

However, this does not have to be true. Investors have the ability to fight back against “the house.”

It is the right of any and all investors who believe they may have suffered losses as a result of recommendations of their financial advisor to contact our offices to explore their legal rights and options. Malecki Law is currently investing claims resulting from the sale or purchase of Apple reverse convertibles sold by UBS and other banks. If you or a family member invested in Apple reverse convertibles, contact the securities fraud lawyers at Malecki Law for a free consultation and case evaluation at (212) 943-1233.

As recently reported by InvestmentNews, the estimated value of common stock in real estate investment trust (or REIT) of Wells Timberland REIT, Inc. fell to $6.56 per share. Given the illiquidity of the trust, finding that price in the market may prove difficult. That figure marks a 35% plunge in value since the REIT premiered in 2006 at $10 per share. Unfortunately, such incidents are all too common in a post-bubble real estate industry continuing to face adversity. Many of these incidents have caused substantial losses to investors who invested some or all of their savings in these ventures at the recommendation of their financial advisor.

The trust in question is controlled by Wells Real Estate Funds, an industry giant which has over $11 billion invested in real estate worldwide. Wells management has committed $37 million in preferred equity to this REIT alone, yet the trust currently appears to accrue annual dividends of a mere 1%. In October of 2011, redemption of trust shares was suspended until a new share value could be determined. Beginning next month, shareholders are apparently supposed to have the option of redemption, which will garner 95% of each share’s estimated value, or $6.23.

REITs in many instances can be considered to be high-risk endeavors: appealing for their potential for high gains due to their interest rates, but with equal if not unwarranted potential for resolute failure, and a possible lack of accountability toward investors. Too often, financials advisors describe high-risk investment products like REITs as safe, secured or guaranteed, typically to get the higher commission that these riskier investments pay. Misrepresenting the risk of an investment to a customer like that is against the law and rules under which these professionals work.

It is the right of any and all investors who believe they may have suffered losses as a result of recommendations of their financial advisor to contact our offices to explore their legal rights and options. If you or a family member invested in real estate investment trusts, contact the securities 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. Information on a selection of funds and companies currently under investigation by Malecki Law can be found below. Our pursuit of excellence is constant, but our opportunities to make lasting positive change to the securities industry begin and end with determined clients who seek justice.

Tonight, June 5, 2012, on the 6 O’Clock Evening News on CBS 2 New York, the lawsuit filed by Malecki Law on behalf of forty-three investors in the alleged Ponzi scheme run by Robert Van Zandt will be featured.

This past December, Malecki Law announced the filing of a civil arbitration complaint with the Financial Industry Regulatory Authority against MetLife Securities for more than $4 million on behalf of twenty-four investors. In March, Malecki Law announced that the complaint had been amended to include additional nineteen investors totaling roughly $9.2 million in claims.

The attorneys at Malecki Law continue to take calls and anticipate either adding future victims to the existing claim or commencing a second action, if necessary. We urge anyone with knowledge about the Van Zandt Agency or MetLife Securities supervision (or lack thereof) over the office to contact us. Investors or employees with knowledge of the events at the Van Zandt Agency who seek further information or want to explore their rights should contact Malecki Law by e-mail or phone. Malecki Law has a uniquely diverse background with significant experience representing clients in securities and investment fraud issues and is “AV Rated” by Martindale-Hubbell. Malecki Law hosts a website providing information and resources dedicated to the securities industry: www.AboutSecuritiesLaw.com. Please contact Jenice L. Malecki, Esq., MALECKI LAW, 11 Broadway, Suite 715, New York, NY 10004, Telephone: (212) 943-1233, Facsimile: (212) 943-1238, E-Mail: Jenice@MaleckiLaw.com.

On Thursday May 17, 2012, the New York Attorney General Eric Schneiderman issued a press release announcing the filing of a summons and complaint to recover funds for investors. The filing coincided with an earlier press release disclosing that Mr. Robert (Bob) H. Van Zandt had been indicted and arrested for criminal charges stemming from some of the same activity that formed the factual basis for the civil filing.

The New York Attorney General’s civil filing noted that Mr. Van Zandt issued promissory notes totaling over $35 million to over 250 investors, most of whom were unsophisticated and invested the bulk of their life savings in the scheme. The filing alleged that these promissory notes were securities sales that were not properly registered with the requisite governmental offices in New York State and, while stated to be suitable for self-directed IRAs, were at best “highly speculative.”

The civil filing also alleged that while the Van Zandt Agency, by Mr. Van Zandt, sold the promissory notes with the understanding that the money collected would be used to fund real estate purchases and real estate development, in reality bank loans were used to fund certain purchases and construction, while other projects were never even commenced. The civil filing further alleged that no investors received security in the form of mortgages or otherwise, and that the money was converted for personal use or used to pay interest claims of other investors, essentially a Ponzi scheme.

Malecki Law already represents a very large group of investors against MetLife Securities, Inc. in a $9.5 million arbitration proceeding before the Financial Industry Regulatory Authority (FINRA) and is investigating bringing other actions against other broker-dealers for their possible role in dealing with Mr. Van Zandt and the Van Zandt Agency. Any investor who has questions concerning any investment made with Mr. Van Zandt or the Van Zandt Agency should contact an attorney at Malecki Law to discuss whether they may qualify for such a claim.

The New York Attorney General Eric T. Schneiderman announced today the unsealing of a 35-count indictment of and the arrest of Robert H. Van Zandt, a Bronx tax preparer who for years sold promissory notes in alleged real estate investments “guaranteeing” high rates of interest return. He sold these promissory notes out of his tax preparation business, the Van Zandt Agency, while he was licensed by various broker-dealers to sell securities.

Malecki Law currently represents a large group of investors who purchased promissory notes totaling almost $10 million in aggregate from Mr. Van Zandt in an arbitration before the Financial Industry Regulatory Authority (“FINRA“), the independent regulator of securities companies. The arbitration is pending against MetLife Securities, Inc., a broker-dealer who employed Mr. Van Zandt during a period in his career. While investors purchased the promissory notes directly from Robert Van Zandt and through the Van Zandt Agency, he was then licensed by MetLife Securities, Inc. to sell securities, and MetLife was required to perform certain supervisory and audit duties as a result of that employment relationship.

Malecki Law is also investigating the potential for other actions against other broker-dealers arising from Mr. Van Zandt’s alleged real estate investments.

Broker-dealers owe heightened audit and supervisory duties of these off-site and often unregistered offices because promissory note fraud and other Ponzi-like frauds and schemes have become common. Under FINRA Rules, SEC guidance and prevailing industry standards, broker-dealers have affirmative duties to oversee and supervise the conduct of their associated persons, both inside and outside of their offices.

Specifically, firms have been repeatedly advised, both through FINRA Rules, NASD Rules and FINRA/NASD Notices to Members, to beware of certain improper or fraudulent activities which are regularly conducted and can have devastating effects on customers. Notice to Members 98-38 specifically outlined that geographically diverse offices present supervisory risks and potential problems in detecting faulty sales practices.

FINRA has, itself, has recently fined firms for lax supervisory performance, or inadequate systems for detecting potential fraud. Mr. Van Zandt, through the Van Zandt Agency, operated a tax preparation business, creating the sort of environment that would require heightened supervision.

The New York Attorney General noted in their press release that the fraud continued through at least 2011 and involved at least $4.6 million. We believe it was a larger scheme. Investors who believe they purchased similar investments through Mr. Van Zandt or any other employee at the Van Zandt Agency should immediately contact an attorney at Malecki Law to see if they qualify for an action against a broker-dealer who licensed and employed these individuals during the relevant time period.

Malecki Law is investigating possible unsuitability claims against stock brokers and financial advisors who sold shares of KBS REIT I to investors. REITs are illiquid real estate investments, which may be unsuitable for both unsophisticated and elderly customers.

Just recently, KBS informed investors that it would be dropping its share price a whopping 29% from $7.32 to $5.16. This represents a nearly 50% drop from its original sale price of $10. For investors who bought shares of KBS REIT I as part of their retirement savings, this drop may be too much to handle.

In addition to the drop in share price, KBS has also informed investors that it will cease payment of its dividend. Since, many financial advisors sell REITs like KBS REIT I to retired customers as a way to obtain steady income, this announcement has to potential to be devastating to a retiree depending on that income.

However, all is not lost for investors who were sold KBS REIT I. Financial Industry Regulatory Authority rules prohibit stock brokers and financial advisors from selling unsuitable investments to the public. Therefore, investors in KBS REIT I may be able to recover their losses. It is the right of any and all investors who believe they may have suffered losses as a result of recommendations of their financial advisor to contact our offices to explore their legal rights and options. If you or a family member invested in KBS REIT I, contact the securities 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. Information on a selection of funds and companies currently under investigation by Malecki Law can be found below. Our pursuit of excellence is constant, but our opportunities to make lasting positive change to the securities industry begin and end with determined clients who seek justice.