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San Diego Securities Law Blog

Knowledge of the opposition is how we help investment victims

Intelligence about the opposition is a powerful tool. World governments rely on spies to gather the information needed to assess potential threats to national security. Pro teams make a point of reviewing game films to see what they did wrong and how other teams handle certain situations. The same applies to the practice of business law and perhaps particularly in the area of securities law.

The fact of the matter is that most individuals are more dependent on the success of their investments than ever before. Most of us are not Warren Buffet, however, so we have to put our trust in stockbrokers, investment companies and financial advisors. 

How can I avoid falling victim to an investment scam?

Ben Franklin is credited with saying, "An ounce of prevention is worth a pound of cure." Whether he came up with the phrase himself or retooled one that he picked up from another source is something we may never know. That doesn't diminish the value of the adage, however.

That may be especially true when it comes to issues related to investment loss and recovery. Victims of fraud may have avenues of recourse after the fact. It depends on the circumstances of a given case and a proper assessment of all the factors is something to pursue with an experienced attorney. But before falling victim to the schemes of nefarious brokers, there are things individuals should know to exercise a measure of prevention.

Federal regulators renew warnings about pension advance deals

The attraction of apparent ready money in the face of mounting financial pressure can lead people to make decisions they otherwise probably would not. Perhaps one of the best examples of this phenomenon in practice can be seen in the existence of so-called pension advance companies.

These operations have been around for a lot of years. Typically, the pitch they offer is that they will "convert tomorrow's pension checks into hard cash today." On the other side of the coin, according to regulators, the firms seek to attract operating cash by offering investors big returns.

The problem with these deals, according to the Federal Trade Commission and other agencies, is that the takers often wind up being taken and fall victim to financial fraud that may cost them a pretty penny. This has prompted officials to issue warnings about pension advance operations before and the alert was recently renewed.

Supreme Court ruling's effect on investor class action suits TBD

The U.S. Supreme Court wrapped up its session for the year on Monday. As is typically the case, there was a flurry of decisions issued in the final weeks. Included on the list was one that came down June 22 and which practitioners in securities law are surely still mulling over. As is also fairly typical in such instances, there doesn't seem to be any clear consensus about exactly what effect the decision will have on cases going forward.

The matter before the justices was an appeal by Halliburton Co. seeking to scuttle a suit by one investor group that seeks to win approval as a class action claiming investor losses. The allegation is that Halliburton committed fraud by misrepresenting its revenue projections and liabilities, driving up its stock price and that the losses were suffered by the potential class when corrective statements were made and the stock price fell.  

To avoid shock waves from retiree rollover boom, use caution

A Bloomberg article that just hit the wires this week sheds light on phenomenon that San Diego readers may be only somewhat familiar with. It's called America's retirement rollover boom -- the growing practice of people shifting their 401(k) funds into other plans such as individual retirement accounts as they leave the workforce and enter retirement.

According to one research firm cited by the article, retirees moved $321 billion from 401(k)-style accounts into IRAs in 2012. That reflects a 60 percent increase in rollover volumes from a decade ago. Based on that, it's estimated that IRAs now enjoy $6.5 trillion in assets while 401(k)-type accounts carry slightly less than that. The implication is that the gap is only going to widen as the number of retirees grows.

Regulators renew cautions about possible marijuana stock fraud

Marijuana is clearly gaining a reputation as a growth industry in the United States. Laws allowing the use of medical marijuana are on the books in California and are popping up across the country. In two states, laws allow a certain level of recreational use of the drug.

Whether you agree with the trend or not, the fact remains that movement seems to be toward relaxation of anti-marijuana laws. What that means from a business and investment standpoint is opportunity. And while there are certainly legitimate opportunities to advantage of, the field is bound to be rife with bad players.

Regulators warn that investors who don't take proper care could become victims of stock fraud and see their marijuana industry investments go up in smoke.

Escondido developer to be sentenced in $50M fraud scheme

Generating passive income is typically a key objective of any investment plan. Active investors look for ways to put their money to work so that it earns interest and produces revenues. Even through the rough times of the recent recession, real estate was the option many exercised to achieve their passive income objectives.

Putting money into real estate securities can be a lucrative endeavor, but it can lead to a great deal of frustration and financial ruin without proper care. Too often, brokers and dealers engage in misrepresentation or conceal the transactional works of their real estate programs. Huge losses can result. Victims may be able to pursue restitution with the help of an experienced attorney.

Ameriprise ordered to repay couple $1.17M for bad investments

An elderly California couple is slated to receive $1.17 million from Ameriprise Financial Services Inc. The money has been ordered paid by an arbitration panel of the Financial Industry Regulatory Authority -- Wall Street's self-funded regulatory body.

The finding of the panel, announced May 1 in San Francisco, is that Ameriprise inappropriately advised the retirees to put more than $1 million into three tenant-in-common arrangements involving commercial real estate ventures around the country.

The investments were considered high risk. One of them failed utterly. The other two lost substantial value and the investment loss cost the couple nearly all of their life savings, according to their attorney. 

Class action suit seeks to shine light on 'dark pool' practices

Did you buy stocks in the United States anytime between April 2009 and the present? If you did, there's new securities law litigation being launched on your behalf.

The claim being made in the class action is that dozens of high-frequency trading firms, brokerages and the major U.S. stock exchanges have been manipulating American securities markets through the use of so-called "dark pools."

Some astute California investors may be familiar with that term. We suspect many more are not. What dark pools are, as described by one expert for CNBC, are private trading markets that are generally owned and operated by brokerages. They used to be called "upstairs trading."

FINRA steps back from expanding oversight to investment advisers

The investment realm is a complicated place. There are a lot of players involved in a lot of activities. As we have learned from recent experience involving mortgage-backed derivatives, sometimes the players don't even know what they're up to. Is it any wonder that regulators find it hard to exercise some measure of control to protect investors against financial fraud?

Another factor that may contribute to the confusion is that not all the same rules apply to the various players. For example, the broker contingent on the field is ostensibly under the thumb of the self-funded Financial Industry Regulatory Authority (FINRA). As we've noted before, that organization faces some interesting challenges. 

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