Mutual Fund Fraud and Mismanagement

FAQ – Liquidation of Investment Funds – South Florida FINRA Arbitration and Commercial Litigation Attorney

Published on: February 27, 2022 | By Russell L. Forkey, P.A.

The following post provides a general summary of what every investor needs to know about the liquidation of an investment fund. Please keep in mind that this information is being provided for educational purposes only and is not designed to be complete in all material respects. If you have any questions concerning this subject matter, you should contact a qualified professional.

What is a fund liquidation?

A fund liquidation occurs when a fund closes down its operations completely, sells off its assets and generally distributes substantially all of its assets in cash to its shareholders. Fund liquidations may occur for a variety of reasons, including poor performance, a decline in assets under management, lack of investor interest, and more. A liquidation is different than a merger where one fund acquires the assets of another fund. In a merger, shareholders in the “acquired” fund receive shares of the new, “acquiring” fund rather than the proceeds from selling off fund assets. During a liquidation, all fund assets are distributed to shareholders.

Legend Equities Corporation – Mutual Fund Abuse FINRA Arbitration Attorney

Published on: June 20, 2017 | By Russell L. Forkey, P.A.

Legend Equities Corporation (CRD #30999, Palm Beach Gardens, Florida) recently submitted an Acceptance, Waiver and Consent in which the firm was censured and required to provide FINRA with a plan to remediate eligible customers who qualified for, but did not receive, the applicable mutual fund sales-charge waiver. As part of this settlement, the firm agrees to pay restitution to eligible customers, which is estimated to total $2,300,188 (the amount eligible customers were overcharged, inclusive of interest). The firm will also ensure that retirement andcharitable waivers are appropriately applied to all future transactions. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it disadvantaged certain retirement plan and charitable organization customers thatwere eligible to purchase Class A shares in certain mutual funds without a front-end sales charge.

To review a complete copy of the Acceptance, Waiver and Consent.

Contact Us:

Leveraged – Inverse Mutual Funds – Risk vs. Rewards – Boca Raton, Florida FINRA Arbitration Attorney

Published on: August 23, 2015 | By Russell L. Forkey, P.A.

Leveraged – Inverse Mutual Funds – Risk vs. Rewards – Boca Raton, Florida FINRA Arbitration Attorney:

The Financial Industry Regulatory Authority, Inc. (FINRA) is a self-regulatory authority assigned the responsibility, by the Securities and Exchange Commission, to license, regulate and discipline securities broker/dealers and their employees, including account executives. In the event that FINRA elects to institute an enforcement action, firms and licensed individuals have the responsibility to reflect such action on their U-4 and/or U-5 filings, which can be viewed on the FINRA website under the broker-check section of the site or by viewing the monthly disciplinary information also provided on the FINRA site.

The monthly disciplinary information is referenced on the FINRA site generally in alphabetical order. This post relates to the following company or individuals. If the reader would like to review the entire FINRA release or the broker-check information concerning this matter, you can follow these highlighted links:

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

Published on: March 30, 2015 | By Russell L. Forkey, P.A.

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

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

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

Investment Advisory Conflict of Interest – West Palm Beach, Florida Investment Advisor Conflict of Interest Attorney

Published on: September 2, 2014 | By Russell L. Forkey, P.A.

South Florida, including West Palm Beach and Boca Raton Investment Advisor Conflict of Interest FINRA Arbitration and Litigation Attorney:

Houston-Based Investment Advisory Firm and Co-Owners Charged With Failing to Disclose Conflict of Interest to Clients

The Securities and Exchange Commission recently announced fraud charges against a Houston-based investment advisory firm accused of recommending that clients invest in particular mutual funds without disclosing a key conflict of interest: the firm was in turn receiving compensation from the broker offering the funds.

OX Trading, LLC, optionsXpress, Inc. and Thomas E. Stern – South Florida Option Fraud and Breach of Fiduciary Duty FINRA Arbitration and Litigation Attorney

Published on: October 23, 2013 | By Russell L. Forkey, P.A.

In the Matter of OX Trading, LLC, optionsXpress, Inc., and Thomas E. Stern

The Commission issued an Order Making Findings and Imposing Remedial Sanctions and a Cease-and-Desist Order Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 as to OX Trading, LLC and optionsXpress, Inc. (OX Order). The OX Order finds that OX Trading, LLC (OX Trading) willfully violated Sections 15(a) and 15(b)(8) of the Securities Exchange Act of 1934 by operating as an unregistered dealer from October 2009 to November 2010 and transacting in securities while not a member of a national securities association or a national exchange from March 2009 to November 2010, respectively. The OX Order also finds that optionsXpress, Inc. caused OX Trading’s violations. The OX Order ordered OX Trading and optionsXpress to cease and desist and ordered OX Trading to pay $2,750,000 in disgorgement, prejudgment interest of $253,094.39, and a civil money penalty of $750,000. (Rel. 34-70739).

The Commission also issued an Order Making Findings and Imposing Remedial Sanctions and a Cease-and-Desist Order Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 and Section 9(b) of the Investment Company Act of 1940 as to Thomas E. Stern (Stern Order). The Stern Order finds that Thomas E. Stern (Stern), OX Trading’s Chief Financial Officer and Chief Compliance Officer during the relevant time period, willfully aided and abetted and caused OX Trading’s violations of Sections 15(a) and 15(b)(8) of the Exchange Act. The Stern Order ordered Stern to cease and desist and to pay a civil money penalty of $50,000. (Rel. 34-70740) Respondents consented to the issuance of the Orders. These proceedings were instituted on April 19, 2012. (Rel. 34-66831).

No-Load Fund – Florida Mutual Fund Misrepresentation and Breach of Fiduciary Duty FINRA Arbitration and Litigation Attorney

Published on: September 22, 2013 | By Russell L. Forkey, P.A.

No-Load Mutual Fund – South Florida Mutual Fund Breach of Fiduciary Duty, Negligence and Breach of Contract FINRA Arbitration and Litigation Attorney:

A “No-Load” fund is a mutual fund offered by an open-end investment company that imposes on sales charge (load) on its shareholders. Investors buy shares in no-load funds directly from the fund companies, rather than through a broker, as is done in load funds. Many no-load fund families allow switching of assets between stock, bond, and money market funds. The net asset value, market price, and offer prices of this type of mutual fund are exactly the same, since there is no sales charge.

Please keep in mind that the above information is being provided for educational purposes only. It is not designed to be complete in all material respects. Thus, it should not be relied upon as legal or investment advice. If the reader has any questions concerning the contents of this post, you should contact a qualified professional.

Income Mutual Fund – South Florida Mutual Fund Abuse and Loss FINRA Arbitration and Litigation Attorney

Published on: August 30, 2013 | By Russell L. Forkey, P.A.

Income and Growth Mutual Fund Abuse, Fraud and Mismanagement Principal and Income Loss FINRA Arbitration and Litigation Attorney:

Income Mutual Funds are designed to produce current income for shareholders. Some examples of income mutual funds are municipal, international and junk bond (high-yield) funds. Several kinds of equity-oriented funds also can have income as their primary investment objectives, such as utilities income funds and equity income funds.

It is important to remember that mutual funds are offered by prospectus. The prospectus will provide all necessary information for an informed investor to make an intelligent investment decision. For example, a prospectus may contain information about such things as:

Secured vs. Unsecured Corporate and Municipal Bonds – South Florida FINRA Arbitration and Litigation Attorney – You May Be Able To Recover Your Investment Losses

Published on: June 30, 2013 | By Russell L. Forkey, P.A.

Secured vs. Unsecured Corporate and Municipal Bonds – What happens if a company goes into bankruptcy? South Florida FINRA Arbitration and Litigation Attorney – You may be able to recover your investment losses.

If a company defaults on its bonds and goes bankrupt, bondholders will have a claim on the company’s assets and cash flows. The bond’s terms determine the bond-holder’s place in line, or the priority of the claim. Priority will be based on whether the bond is, for example, a secured bond, a senior unsecured bond or a junior unsecured (or subordinated) bond. In the case of a secured bond, the company pledges specific collateral-such as property, equipment, or other assets that the company owns-as security for the bond. If the company defaults, holders of secured bonds will have a legal right to foreclose on the collateral to satisfy their claims. Bonds that have no collateral pledged to them are unsecured and may be called debentures. Debentures have a general claim on the company’s assets and cash flows. They may be classified as either senior or junior (subordinated) debentures. If the company defaults, holders of senior debentures will have a higher priority claim on the company’s assets and cash flows than holders of junior debentures. Bondholders, however, are usually not the company’s only creditors. The company may also owe money to banks, suppliers, customers, pensioners, and others, some of whom may have equal or higher claims than certain bond holders. Sorting through the competing claims of creditors is a complex process that unfolds in bankruptcy court.

However, investors usually purchase and sell corporate and municipal bonds through securities broker/dealers. Under certain circumstances, investments losses suffered by investors, in these types of bonds, may be recoverable from the brokerage firm. Therefore, it is important for the reader to consult with a qualified professional.

Basic Characteristics of Corporate and Municipal Bonds – Florida FINRA Arbitration and Litigation Attorney – Investment Losses

Published on: June 30, 2013 | By Russell L. Forkey, P.A.

Basic characteristics of corporate and municipal bonds – South Florida FINRA Arbitration and Litigation Attorney – As an investor, you may be able to recover losses associated with your investment in corporate bonds.

Corporate bonds make up one of the largest components of the U.S. bond market, which is considered the largest securities market in the world. Other components include U.S. treasury bonds, other U.S. government bonds, and municipal bonds. Companies use the proceeds from bond sales for a wide variety of purposes, including buying new equipment, investing in research and development, buying back their own stock, paying shareholder dividends, refinancing debt, and financing mergers and acquisitions.

Bonds can be classified according to their maturity, which is the date when the company has to pay back the principal to investors. Maturities can be short term (less than three years), medium term (four to 10 years), or long term (more than 10 years). Longer-term bonds usually offer higher interest rates, but may entail additional risks.