New York Securities Lawyers Blog

New York Attorney General Announces the Arrest of Robert Van Zandt

Mon, 14 May 2012 17:17:33 -0500

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 Investigates Unsupervised Sales of Leveraged and Inverse ETFs

Wed, 02 May 2012 17:32:35 -0500

Malecki Law is currently investigating whether investors were improperly sold Leveraged and Inverse Exchange-Traded Funds (ETFs) by any of the following Broker-Dealers: Citigroup Global Markets, Inc., Morgan Stanley & Co, LLC, UBS Financial Services, and Wells Fargo Advisors, LLC.

The Financial Industry Regulatory Authority (FINRA) announced that they had fined the above firms for selling leveraged and inverse ETFs without proper supervision.

Any investors who purchased a leveraged or inverse ETF from any of these firms and believe the products were unsuitable for then should contact an attorney at Malecki Law to explore their legal rights.

Malecki Law Announces Investigation Into the Unsuitable Sale of KBS Property Trust REIT to Investors

Mon, 02 Apr 2012 10:25:07 -0500

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.

Malecki Law Announces Investigation Into Credit Suisse's TVIX Exchange Traded Notes

Fri, 23 Mar 2012 14:44:26 -0500

Malecki Law is currently investigating the potential for recovery of losses from VelocityShares Daily 2x VIX Short-Term ETNb (TVIX), an exchange-traded note issued by Credit Suisse. The product is typically utilized to hedge against market decline, or as a presumptive bet on the decline of stocks. It appear that Credit Suisse ceased creation of new units in February, 2012, until March 22nd, when the company announced a reopened limited issuance of the product. Prior to this reopening, it seems demand for the product greatly outweighed supply. Many market observers predicted that this reopening would cause the value of the notes to plummet, causing TVIX's premium to fade. It looks as though shares of TVIX had lost as much as 50% of their value in less than two days following Suisse's announced reopening.

While Credit Suisse cited internal limits to the size of the product as the reason for its initial closure, many have speculated that the action of short sellers also played a role, as well as something that may have changed within the company as to how Suisse markets and packages the product. "Short sellers may be accelerating bets against TVIX today on speculation Credit Suisse will permit issuance of more shares," said WallachBeth Capital's Chris Hempstead.

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 TVIX exchange traded notes issued by Credit Suisse, contact the securities fraud lawyers at Malecki Law for a free consultation and case evaluation at (212) 943-1233.

Malecki Law Announces an Amendment to the Civil Complaint with FINRA Against MetLife Securities, Inc. in Connection with Alleged Ponzi Schemer Robert H. Van Zandt

Wed, 07 Mar 2012 17:34:39 -0500

Malecki Law announces the filing of an Amended Statement of Claim against MetLife Securities in connection with the real estate investments solicited by Robert H. Van Zandt of The Van Zandt Agency in the Bronx, NY as part of an alleged Ponzi scheme currently under investigation by the New York State Attorney General's Office.

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. 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.

In the following months, many more investors contacted the attorneys at Malecki Law requesting to be part of that action. So, on March 5, 2012, Malecki Law amended their complaint with FINRA to add an additional nineteen investors to the action. In total, Malecki Law's forty-three clients have suffered losses of over $9.2 million as a result of their investments through Mr. Van Zandt and the Van Zandt Agency.

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.

Investor Complains About Behringer Harvard REIT

Thu, 09 Feb 2012 17:42:42 -0500

We recently posted about the Behringer Harvard family of REITs and the devastation that these funds have had on investors' portfolios. Some investors have now begun to seek answers. Investment News reports that a 70 year old woman who has seen her share in Behringer Harvard Short-Term Opportunity Fund drop 96% has recently filed a letter with the Financial Industry Regulatory Authority (FINRA) to complain about her investment.

The shares of BH Short-Term Opportunity Fund have dropped to $.40 from $6.48 just one year ago, and from the $10 per share they were offered at just six years ago. Since the BH Short-Term Opportunity Fund had $130 million in total assets, it is clear that this investor is not alone. Many firms, such as Capital Financial Services, Inc. sold these products to senior citizens.

Since REITs can deliver regular income of up to 7-8% a year, they are attractive to seniors who live off the income generated by their investments. Since these products offer high commission, they are very attractive to the brokers who sell these products. However, all too often, the risks involved with investing in REITs are hidden from investors by their brokers, and these same seniors can see their entire life's savings disappear in the blink of an eye. Downplaying and failing to fully disclose the risks of an investment to a client is illegal, and investors who have suffered losses as a result may have the right to recover their entire loss.

It is the right of any and all investors who believe they may have suffered losses to contact our offices to explore their legal rights and options. If you or a family member suffered losses in Behringer Harvard REITs, contact the securities fraud lawyers at Malecki Law for a free consultation and case evaluation.

Trouble with Behringer Harvard REIT Family

Wed, 18 Jan 2012 17:27:04 -0500

Recently in the news have been stories about the devastation that the Behringer Harvard family of Real Estate Investments Trusts (REITs) has had on investors' portfolios. It was reported by Investment News that the value of the popular Behringer Harvard Opportunity REIT I is down 46% from its value this time a year ago, with prices down to just over $4 per share. The value of the Behringer Harvard REIT I has also seen substantial declines as well.

Unfortunately for many investors, a quick recovery does not appear to be in store. According to Investment News, Mr. Robert Aisner (Behringer Harvard's Chief Executive) "said in an interview ... that since the REIT is shedding assets, its valuation will go down in the long run." That is bad news for investors.

Investors who bought into this fund , believing it to be a safe investment, are now seeing substantial portions of their savings disappear. Too often, investors in REITs do not fully understand the risks of investing in these illiquid and oftentimes speculative products. These products often require investors to "lock in" their money for a set time period and are difficult if not impossible to sell in the interim, even amid sharp declines in value. For more information on the risks of REITs and other investments, click here.

Because of the inherent risks involved, it is not unlikely to see investors suffer substantial losses. However, brokers and other retailers of REITs far too often sell these to clients as safe, income-producing investments and substantially downplay the risks. These tactics are illegal and against the FINRA rules, and investors who are the victims of such practices may be entitled to recovery for all of their losses.

It is the right of any and all investors who believe they may have suffered losses to contact our offices to explore their legal rights and options. If you or a family member suffered losses in Behringer Harvard REITs, contact the securities fraud lawyers at Malecki Law for a free consultation and case evaluation.

FINRA Files Wells Fargo for Unsuitable Sales to Elderly Customers

Fri, 23 Dec 2011 15:19:35 -0500

In a follow up to Malecki Law's recent announcement of our investigation into reverse convertible securities comes news that the Financial Industry Regulatory Authority (FINRA) has fined Wells Fargo Investments, LLC $2 million for the selling of unsuitable reverse convertibles securities, as well as failing to grant sales charge discounts to certain customers on Unit Investment Trust (UIT) transactions. A UIT can be defined as ownership of a fixed portfolio of securities within a finite timespan. FINRA's press release regarding the matter defines reverse convertibles as "interest-bearing notes in which repayment of principal is tied to the performance of an underlying asset, such as a stock or basket of stocks." Customers of such reverse convertibles risk sustaining losses if the value of the underlying asset falls to a certain level at certain points of maturity during the contracted term.

A separate complaint was filed by FINRA against Alfred Chi Chen, the former Wells Fargo registered representative who approved and sold the reverse convertibles. Chen recommended hundreds of unsuitable investments to twenty-one clients, most of whom were elderly investment novices with low capacities for risk. Fifteen of those twenty-one clients were over the age of eighty. Chen also made unauthorized trades in several accounts, including those of deceased customers.

FINRA specified that Wells Fargo failed between January 2006 and July 2008 to give qualified customers breakpoint and rollover/exchange discounts to which they were entitled upon purchasing UITs. This has been attributed to insufficient internal monitoring of sales and discount eligibility.

Wells Fargo has neither admitted nor denied any wrongdoing within these charges, but consented to FINRA's findings and will thus pay the fine in due course.

Investors with questions concerning potentially unsuitable or risky investments made by registered representatives should contact the attorneys at Malecki Law for a confidential consultation.

FINRA's December 15, 2011 News Release can be found here.

In Light of MF Global: Knowing the Risks of European Investment

Tue, 20 Dec 2011 16:34:30 -0500

It has been difficult to not hear about the recent events surrounding MF Global Holdings Ltd and former Senator and New Jersey Governor, John Corzine. However, many investors do not really understand what happened or why. A recent article in Forbes Online titled "MF Global: Were the Risks Clear?" helps to break down just how these events transpired. The article details how overexposure to European sovereign debt (government bonds) leveraged by using borrowed money (called "margin") coupled with declines in the value of those bonds caused the downfall of the fund.

The almost overnight collapse of such a prominent and public investment fund as MF Global has brought many issues to light, and the Forbes article characterizes this "as the latest reminder to investors that it's important - and sometimes very difficult - to understand the entire spectrum of risk they're exposed to." These events also raise many questions that should be asked by investors, such as "Do I really understand how my advisor is managing my savings?" and "Have the risks in my portfolio been adequately explained to me?".

Many investors in MF Global have said that they did not understand what their money was being invested into, but rather trusted that the firm would do the right thing by them. One investor cited by the article said on his blog that "I am supposed to know the difference between an ethical operator and one that is not. The truth is that it often is very difficult to tell them apart." This has unfortunately come to be a fairly common sentiment by many individual investors, in reference to their personal broker and the funds they invested in.

In the present day, individual investors as well as large institutions and investment funds can all be equally at risk of the volatility in the European markets, like MF Global was. Investments directly in European bonds and others with exposure to the European markets may not be appropriate for conservative investors, including senior citizens and retirees, especially if these investments were made on margin. Individuals with these investments may have already lost or may be at risk of losing large portions or possibly all of their investments.

It is the right of any and all investors who believe they may have suffered losses to contact our offices to explore their legal rights and options. If you or a family member suffered losses in unsuitable or risky investments, such as those in European debt, contact the securities fraud lawyers at Malecki Law for a free consultation and case evaluation.

Malecki Law Announces Filing of a Civil Complaint with FINRA Against MetLife Securities, Inc. in Connection with Alleged Ponzi Schemer Robert H. Van Zandt

Tue, 06 Dec 2011 10:27:35 -0500

Malecki Law announces the filing of a civil arbitration complaint in excess of $4 million, plus punitive damages, against MetLife Securities, Inc. The case is being filed with the Financial Industry Regulatory Authority ("FINRA") today for alleged improper supervision and selling away, relating to an alleged Ponzi scheme that devastated a Bronx community. The complaint alleges that the firm failed to properly supervise and maintain the compliance of one of their registered representatives, Mr. Robert H. Van Zandt, in violation of federal and state securities laws, as well as financial industry rules and regulations. Robert H. Van Zandt is apparently already under investigation by the New York State Attorney General's Office. "I believe there are a lot of victims out there who don't know what is going on, nor their rights under the rules and regulations of the securities industry," securities fraud attorney Jenice Malecki indicates.

In November of this year FINRA and the U.S. Securities and Exchange Commission jointly released Regulatory Notice 11-54 stressing the importance of supervision over registered representatives. Shortly before the release of Regulatory Notice 11-54, FINRA filed a regulatory action against Merrill Lynch and fined the firm $1 million for failing to properly supervise a registered representative and catch a Ponzi scheme that he was running out of a San Antonio, Texas branch office that victimized clients and non-clients of Merrill Lynch, all to which Merrill Lynch was responsible for its failure to supervise.

The complaint filed by Malecki Law relates to the alleged conduct of Robert H. Van Zandt of the Van Zandt Agency, who is believed to have sold unregistered securities in the form of promissory notes that were represented to prospective investors as part of a secured real estate investment, which appears improperly set up and not secured at all. It is alleged that these notes were part of yet another "Ponzi" scheme in what Ms. Malecki opines to be "an era filled with ponzi schemes for which the industry should closely monitor to avoid harm to unwitting victims," this alleged ponzi scheme one run through a series of shell companies including Burke and Grace Avenue Corp.

According to his FINRA Broker Check Report, Robert H. Van Zandt was a registered representative with MetLife Securities, Inc. from December of 2004 through February of 2007. During that time, it is alleged that despite its duties to properly supervise Mr. Van Zandt, MetLife Securities allowed him and others to sell unregistered securities in connection with the operation of this Ponzi scheme for the entirety of his tenure with the firm.

It is alleged that Mr. Van Zandt used his status in the close-knit Bronx community to earn the trust of his clients, and ultimately, solicited hundreds of investors, defrauding them of over $20 million. According to the complaint filed with FINRA, Investors were solicited to invest in the scheme while they were having their tax returns done at the Van Zandt Agency and were lured into verbally and through prominently placed brochures promising essentially "guaranteed" returns of 9-12% annually, without appropriate registration, disclaimers, or any earmarks of supervision over this conduct. It is believed that these investors, many of whom invested their IRA's, proceeds from inheritances, and life savings, have lost substantially all, if not all, of their investment.

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.

Watching the Watchers: Charting the SEC's Increased Pursuit of Negligent Execs

Fri, 04 Nov 2011 17:16:12 -0500

The Securities and Exchange Commission (SEC) has in recent weeks seemingly broadened its pursuit of wrongdoers by filing cases against defendants on the charge of negligence alone. Negligence can be defined as a situation in which one should have known that information given to investors was inadequate. In recent years, negligence fines have been what accused bigwigs would accept and pay to avoid more severe charges of fraud, which carry heavy costs and the potential to be banned from the finance industry. Such admissions were usually made out of court and out the public eye. Readers looking to learn more about the role of negligence in securities law proceedings can visit our firm's informational Practice Areas and Investors sections.

As of today, these ramped-up regulations have been sparsely utilized, though the Wall Street Journal speculates that more actions against negligence are forthcoming. It's the SEC's recently united "Structured and New-Products Enforcement" unit that's claiming to be newly insistent about information being more fairly provided to investors.

Criticism of the SEC's post-2008 methods has come in part because they have seemingly failed to catch many financial criminals in the act. Detractors believe that in many cases, outright fraud or recklessness is the issue: branding such failures as negligence would then only diminish or downplay their severity. The penalties for fraud are far more severe, but are in turn more challenging to obtain, as they require proof of intentional malfeasance. The charge of "Recklessness" falls between fraud and negligence in severity, and can be defined as one turning a blind eye to potentially harmful activity.

Today's SEC is in other ways all too familiar with allegations of negligence: the commission itself was sued on the same charge earlier this year by a group of Texas fraud victims for allegedly failing to take proper actions against Fort Worth based Ponzi schemer Allen Stanford.

Concern from SEC's critics stems from the idea that the commission will be too easily satisfied with issuing negligence as a kind of "slap on the wrist", and that it is too often favored over more intensive measures that require greater time, money, and research. In 2010, Citigroup paid $180,000 in fines that kept them from facing SEC civil charges for alleged failure to disclose $40 billion worth of dicey mortgage assets.

The most noteworthy instance of SEC proactivity to date has been a civil lawsuit filed against Edward Steffelin, an executive who managed the assets of Squared, a series of J.P Morgan backed mortgage bonds that went under in 2007. Steffelin is accused of failing to inform investors that J.P. Morgan had placed a hedge fund bet that the deal would fail, despite being on paper the group trying to make it succeed. J.P. Morgan, while refusing to admit or deny culpability, paid the SEC $153.6 million to settle civil fraud charges. Says Steffelin's lawyer Alex Lipman, "We understand the SEC's desire to burnish its reputation in light of recent scandals... But this is not the right case and certainly the wrong defendant to target as a means to redress these failures."

Regardless of whether or not Steffelin is at fault, the SEC is at the center of a pivotal moment: one in which many Americans seek increased regulations on financial institutions, while those same institutions argue that such legislation will limit national growth and profit. The commission taking action against single defendants also bares unique challenges, as individuals are more apt to fight such charges in court than a corporation, which is typically willing to pay fines to avoid litigation.

Credit rating firms like Standard & Poor, Moody's, and Fitch Ratings have also been under higher scrutiny from the SEC after the commission found errors in S&P's analysis of over a thousand mortgage-backed bonds. Like J.P. Morgan and other investment firms, these rating groups have also struggled with public image in the wake of the financial crisis. The SEC's findings were part of an annual review of such rating firms instated by the Dodd-Frank Act. SEC has furthermore notified Standard and Poor that it may be face charges of fraud for inappropriately rating a $1.6 billion mortgage deal that collapsed shortly thereafter.

It seems possible that some of this heightened monitoring of S&P is a result of a the rating group's recent downgrading of U.S. debt, an action that has made them no friends on Capitol Hill. The SEC is additionally looking into potential insider trading from S&P employees that may have occurred just prior to the downgrade, and the potential for S&P ratings to be leaked to the companies in question prior to their publication.

This alleged effort towards tighter regulation comes as a new criminal enforcement office this month opens its doors: the New York State Department of Financial Services, run by newly appointed regulator Benjamin Lawsky, a longtime financial advisor to Governor Andrew Cuomo. The unit is a merging of the state's banking and insurance regulators, entities typically separate in state law coming together to rein in New York's massive and unique financial sector. Lawsky is being painted as no favorite among corporate executives: WSJ notes that it was he who closely examined and criticized bonuses paid to executives of companies receiving federal bailouts.

The formation of such watchdog committees is but the first step towards resonant progress in financial regulation. Ribbon cutting ceremonies make headlines, but on their own garner no convictions. If the goal is increased expectations of transparency toward the consumer, we can only hope that charges of negligence will deter those who seek to defraud us. How the SEC's role in reform evolves in the months and years to come will tell us much about what a bailed out financial sector can offer its post-crisis nation, and whether decreases in fraud have been hard fought and achieved.

Malecki Law Announces Investigation into Leveraged and Inverse ETFs

Wed, 02 Nov 2011 17:39:24 -0500

Malecki Law is currently investigating Financial Industry Regulatory Authority (FINRA) brokerage firms who have advised customers to purchase leveraged and inverse ETFs (Exchange Traded Funds), including those issued by Direxion, ProFunds (ProShares) and Rydex. Some of these ETFs trade under the symbols FAS, FAZ, UPRO, SDOW, SPXU, UDOW, RSU and RSU, among many others.

From 2007 through 2010, the market for inverse and leveraged ETFs such as these has grown from $1 billion to $30 billion, in large part due to these products being solicited in the accounts of normal, unsophisticated investors.

These products are highly complex, using various trading strategies in an attempt to deliver their promised returns, and are oftentimes not suitable for the investment portfolio of a conservative or retired investor.

Unfortunately, many brokers and brokerage firms fail to properly inform their clients about the complex nature of these investments and the associated risks involved. Hence, these investors do not understand the complex structure of the investment or the risks involved. Since these products are highly leveraged and structured to perform only in the very short term, they generally only suitable for speculative day trading, not long-term investment.

Compounding the problem with these investments is the use of margin in an investors account by his or her stock broker. By borrowing on margin to purchase leveraged ETFs, an investor can be exposed to extreme risk and market volatility. Such volatility could result in the investor receiving a margin call, which if not met, can devastate the account.

It is the right of any and all investors who believe they may have suffered losses to contact our offices to explore their legal rights and options. If you or a family member suffered losses in leveraged or inverse ETFs, such as those listed above, contact the securities fraud lawyers at Malecki Law for a free consultation and case evaluation.

Malecki Law Announces Investigation of Citigroup's FALCON and ASTA-MAT Hedge Funds

Wed, 02 Nov 2011 15:48:38 -0500

Malecki Law is currently investigating the potential for recovery of losses from Citigroup's FALCON and ASTA-MAT hedge funds, as sold by its broker-dealer Smith Barney in the years spanning from 2005 to 2008. It is alleged that Citigroup presented the funds as affordable options, with fair-to-little risk and low volatility.

If the group failed to disclose crucial information about dangerous aspects of the funds and potential for severe losses, a claim may be warranted. Both funds were increasingly and excessively invested in real estate, leading to both funds reporting upward of 80% losses in 2008. Investors' legal claims against Citigroup have included but are not limited to Fraud, Failure to Supervise, Unsuitability, Misrepresentations & Omissions, Breach of Contract, and Breach of Fiduciary Duty.

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 Citigroup's FALCON and/or ASTA-MAT hedge funds, contact the securities fraud lawyers at Malecki Law for a free consultation and case evaluation at (212) 943-1233.

Malecki Law Announces Investigation of 1861 Capital Management

Wed, 02 Nov 2011 15:47:04 -0500

Malecki Law is currently investigating the potential for recovery of losses from 1861 Capital municipal bond arbitrage funds sold by brokerage firm UBS. 1861 Capital Management is an investment firm based in New York, NY. It has been alleged that 1861 Capital Discovery Domestic Fund, LP was marketed and sold by UBS and other broker dealers as a sound and secure addition to a portfolio of municipal bonds. It may be more accurate to say, however, that 1861 would be better described as a leveraged municipal arbitrage fund.

In marketing such funds to investors, it has been alleged that UBS and their peers sought investors who were not only wealthy, but also cautious: those avoiding risk, making slow-but-steady investments, who would be drawn to the tax free municipal bonds to which the leveraged fund was coupled.

If these allegations are correct, the approach employed by 1861 was not only questionably deceptive, but dangerous in risking for its investors severe or total losses from a truly volatile fund. Such endeavors would be inconsistent with guarantees made about the safety and security of these investments.

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 1861 Capital Management, contact the securities fraud lawyers at Malecki Law for a free consultation and case evaluation at (212) 943-1233.

Malecki Law Announces Investigation of Reverse Convertible Notes

Wed, 02 Nov 2011 15:46:02 -0500

Malecki Law is currently investigating the potential for recovery of losses from reverse convertible securities. Reverse convertible notes can be defined as complex, short-term bonds. At the end of one year, the owner receives either a 100% return on their investment or a predetermined amount of stock should the value of the note drop by a set figure (typically 70-80%). Their high-interest rates (recently set at as much as 13%) make them an alluring prospect for quick and significant gains.

Such notes are widely discussed in the finance industry today, both because of their popularity ($6.76 billion worth of reverse convertibles were sold in the U.S. in 2010) and because of growing concerns that the industry is selling such notes to unsuitable investors, and failing to supervise investments properly once funds have been transferred. RCNs have thus received increased regulatory attention from FINRA and other regulators.

In July of 2011 the SEC filed a report targeting several areas in which an array of brokerage firms were failing to provide investors with necessary information, to the unwarranted risk and detriment of investment funds. These areas included but are not limited to: a failure to ensure that the sales were suitable, a lack of training procedures, and a failure to properly supervise secondary market activity.

In conjunction with the SEC's findings, FINRA Notice to Members 11-25 concisely states that due diligence is required from brokers when it comes to their own understanding of the securities they are selling, particularly material as potentially precarious an RCN. When a broker has failed to become properly educated in the securities being sold, or is willfully misrepresenting such products, legal recourse can be taken.

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 reverse convertible notes, contact the securities fraud lawyers at Malecki Law for a free consultation and case evaluation at (212) 943-1233.