November 30, 2007

Supreme Court to Rule on Whether Employee Can Sue for 401K Losses

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The US Supreme Court is considering a case that could allow employees to file lawsuits involving the mishandling of their retirement funds. The issue involves the limits placed on lawsuits under the Employee Retirement Income Security Act (ERISA), which regulates private sector retirement plans and protects pension fund money from misappropriation.

James LaRue, a former employee at DeWolff Boberb & Associates, a management consulting company in Dallas, Texas, says that he lost $150,000 because the company did not follow his instructions on how he wanted them to invest his retirement funds.

LaRue claims that he asked DeWolff Boberb & Associates to change the way his money was allocated in mutual funds available through his 401 (k) plan. They did not make the changes he requested.

LaRue filed his lawsuit in 2004 after failing to reach a settlement with DeWolff Boberb & Associates. A trial judge threw out the lawsuit and The 4th US Circuit Court of Appeals also barred the lawsuit saying that ERISA did not allow it.

Some 42 million American workers contribute to 401(k) retirement plans, of which there are some 250,000. The amount of money that people who invest in 401k plans end up with often depends on the success of their chosen investments.

The Supreme Court’s decision could redefine the rights of participants involved in contribution retirement programs, which includes employee stock ownerships, 401(k)s, and profit sharing plans.

If you are an investor who has lost money because of the misconduct of someone in the securities industry, contact Shepherd Smith and Edwards immediately. We have helped thousands of US investors recover their losses.

Related Web Resources:

Fund Suits May Be Allowed by Supreme Court, Bloomberg.com, November 26, 2007

James LaRue v. DeWolff, Boberg & Associates, Inc., Oyez.org, June 18, 2007

Dewolff, Boberb & Associates


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Posted In: Retirement Funds

November 29, 2007

Prosecutors Say Smart Online Inc. CEO Scammed Investors to Drive Up Shares

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Prosecutors charged former Smart Online Inc. CEO Dennis Nouri, his brother Reza, and brokers Ruben Serrano and Alain Lustig on charges of conspiracy to commit fraud and securities fraud. The four men allegedly took part in a scam, in which they sold stocks to investors to drive up Smart Online shares.

US Attorney Michael Garcia is also accusing Dennis and Reza, also Smart Online employee, of bribing the brokers to sell the stock aggressively so that the stock’s price would go up. The brothers were also charged with commercial bribery and wire fraud.

The SEC complaint said that Dennis Nouri paid over $170,000 to the brokers, who sold over 267,000 shares to investors. The investors did not know about these payments. The complaint says that Dennis Nouri covered up the bribes by calling them “consulting fees.”

Prosecutors claim the defendants started their scheme in 2005 in an attempt to boost the company’s share price before it was listed on NASDAQ. Prosecutors say that in a recorded conversation, Nouri is overheard explaining how to lie to investigators so they won’t find out about the scam.

Smart Online announced CEO Nouri’s resignation in September. Lustig is a broker at Jesup & Lamont Securities Corp. Serrano worked for Maxim Group LLC.

The four men face from 5 to 20 years in prison for each count and fines.

If you are an investor who has scammed by a broker or any other member of the securities industry, you should speak with an experienced securities fraud attorney right away. Shepherd Smith and Edwards has helped thousands of investors recover their losses.

Related Web Resources:

Smart Online CEO, brokers indicted in fraud case, Reuters, November 8, 2007

SEC Charges Smart Online, Its President and CEO Dennis Michael Nouri, and Five Others in Connection With a Broker-Bribery Scheme, SEC.gov, September 12, 2007


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Posted In: Broker Fraud

November 25, 2007

Bear Stearns is Charged with Violating Securities Laws in Hedge Fund Case

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The Massachusetts Securities Division says that Bear Stearns Asset Management Inc. (BSAM) violated securities laws in principal transactions it took part in with two hedge funds that it also advised.

State securities officials filed an administrative complaint against the company earlier this month. In the complaint, Bear Stars is charged with taking part in improper trading activities in the Enhanced Leverage Fund and the Bear Stearns High Grade Structured Credit Strategies Fund. Both funds fell into bankruptcy over the summer.

The complaint claims that BSAM traded securities from its account into the two founds without permission from the client funds’ independent directors. Consent is necessary under state and federal securities laws and BSAM’s own prospectus and representations.

The 1940 Investment Advisers Act bans investment advisers from taking part in major transactions with a client without letting the client know about a transaction and obtaining its consent.

At BSAM, the disclosure and consent procedure is called a Principal Trade Letter and is used to minimize conflicts of interest between the investment vehicles that BSAM oversees, including Bear Stearns, the High Grade Fund, and BSAM.

In the complaint, security regulators say BSAM did not fulfill its obligations pertaining to principal transactions from 2004-2007. Regulators are also accusing BSAM staffers of not knowing when to use PTLs and not properly training the employees who were in charge of obtaining approvals from directors.

The complaint says that BSAM violated the Massachusetts Uniform Securities Act. Regulators want BSAM to cease and desist its violations of securities law and to pay a censure fine and other necessary relief.

If you are an investor who has lost money because of the misconduct of an investment adviser, contact Shepherd Smith and Edwards today. We have helped thousands of US investors recover such losses. One of our securities fraud attorneys would be happy to speak with you.


Related Web Resources:

Massachusetts Regulators Accuse Bear Stearns of Fraud, The Wall Street Journal, November 14, 2007

BSAM

Massachusetts Securities Division

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Posted In: Bear Stearns

November 20, 2007

SEC Enforcement Director Highlights Agency's Efforts To Eliminate Fraud Targeting Senior Investors

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The Securities and Exchange Commission says that it has brought about over 45 enforcement actions involving scams targeting senior investors in the past two years. At the ALI-ABA Life Insurance Company Products Conference earlier this month, SEC Enforcement Director Linda Thomsen talked about the agency’s efforts to fight fraud against the elderly. She expressed concern over the fact that there are so many investment schemes out there focused on defrauding the elderly.

Thomsen said that the SEC has targeted a number of cases involving supervisory deficiencies. In one case, a Georgia broker convinced the Fulton County Sheriff’s Office that it was investing with a MetLife affiliate, when, in fact, the affiliate was actually affiliated to the broker.

Thomsen says MetLife knew their broker had compliance issues yet failed to supervise him properly and let him work in a “detached location.” The broker also convinced the sheriff’s office that an investment was permissible when it was not.

Variable insurance products sometimes sold by representatives primarily in the insurance sales business also raised red flags for the SEC. Thomsen raised concerns that these representatives may not be committed to obeying federal securities laws.

Sales practices and suitability issues were among other concerns that Thomsen cited for making variable insurance products an area with opportunities for defrauding investors. She cited the high level of exchange activity involving complex variable insurance products and the high commission payouts that representatives received for the sales.

Many “free lunches” for seniors are actually “hard sell” sessions that, once again, create opportunities for the sale of variable insurance products. Thomsen also mentioned conflicts of interest involving fiduciaries as a common problem.

Trying to recover your lost investment without the help of an experienced stockbroker fraud lawyer on your site can be difficult. At Shepherd Smith and Edwards we have helped thousands of investors recover their losses caused by broker misconduct. We have represented our clients in arbitration and in state and federal courts. Contact Shepherd Smith and Edwards today.

Related Web Resources:

Remarks Before the 2007 ALI-ABA Life Insurance Company Products Conference, SEC.gov, November 8, 2007

Senior Investment Fraud News and Alerts, NASAA.org

For Seniors, SEC.gov

Posted by Shepherd Smith Edwards & Kantas LTD LLP | | Email This Post

Posted In: SEC Enforcement , Senior Investors

November 19, 2007

Cromwell Financial Services and Several Employees Will Pay Over $20 Million to Settle Fraudulent Solicitations Allegations

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Cromwell Financial Services Inc. and several of its employees says they will pay over $20 million to settle allegations by the state of New Hampshire and the Commodity Futures Trading Commission that they engaged in fraudulent solicitations.

The New Hampshire Bureau of Securities Regulation and the CFTC claim that Cromwell Financial Services and a number of its employees, from 2002 to 2003, engaged in sales presentations that were fraudulent and misleading in an attempt to convince some 900 people to trade options on commodity futures contracts. The options were from commodity futures contracts in accounts at two futures commission merchants.

According to the Consent Order of Permanent Injunction and Other Equitable Relief, Cromwell employees allegedly exaggerated the degree and possibility of profit, while minimizing the investment risks, and neglected to inform the public that over 75% of Cromwell investors have lost money.

Cromwell compliance director Michael Staryk, and branch managers Dennis Gee, Richard Astern, and Richard Peluchette were all accused of failing to properly supervise other Cromwell employees. Cromwell controlling person and founder Philip Tuccelli also was held liable for failure to supervise and alleged fraud.

Gee has agreed to pay $523,000 in restitution to investors. Peluchette agreed to pay $241,000. Astern agreed to pay $285,000. Staryk will pay $130,000. Tuccelli and Cromwell will pay $9.2 million, with Tuccelli’s fine held to a $2 million cap. They all have also agreed to pay civil monetary penalties for their alleged misconduct.

The defendants are no longer allowed to participate in any commodity trading activity. By agreeing to the settlement terms, none of the defendants are admitting to or denying the charges.

In order to ensure that you actually recoup your lost investment caused by the misconduct of a member of the securities industry, you should speak with a securities litigation attorney right away. Shepherd Smith and Edwards has helped thousands of investors recover their losses. Contact Shepherd Smith and Edwards today for your free consultation.

Related Web Resources:

Florida CTA Fined $20 Million For Fraud, Fin Alternatives, November 7, 2007

CFTC Press Release 5083-05, CFTC.gov, June 16, 2005

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Posted In: Cromwell Financial Services

November 15, 2007

Ex-Freddie Mac CEO Leland Brendsel Will Pay $16.4 Million Fine to Settle OFHEO Action

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Former Freddie Mac CEO and Chairman Leland C. Brendsel says he will pay the $13 million in penalties imposed by the Office of Federal Housing Enterprise Oversight. As part of the deal, he will also waive his claim to $3.4 million from Freddie Mac. Payment of the fine would settle the OFHEO’s administrative enforcement action against the former Freddie Mac CEO.

The OFHEO charges, initially filed in December 2003, alleged that Brendsel created a company environment that permitted improper earnings management, allowed accounting to function without the proper resources, and neglected to set up proper controls within the company. As a result of the unsound and unsafe practices, as well as the misconduct, the OFHEO claimed that Freddie Mac sustained financial losses.

The consent order is connected to an accounting scandal that forced the company to restate up to $4.5 billion in earnings.

The OFHEO issued Freddie Mac a number of consent orders that mandated that the company restructure its internal controls, corporate governance, and accounting penalties. Over $100 million in civil penalties were also involved.

As part of paying the penalties, Brendsel has to disgorge $3.4 million in income, including the $10.5 million bonus that had been previously been paid to him by Freddie Mac. He can never work for Freddie Mac again unless the OFHEO grants him permission. Brendsel must pay the remaining $2.5 million to the US government. Disgorged funds will go toward helping distressed homeowners keep their homes.

Other related claims were settled against former Freddie Mac President David Glen, Ex-CFO Vaughn Clark, and two other former company vice-presidents.

Freddie Mac guarantees or owns about 1/5th of the $11.5 trillion residential-mortgage debt in the United States. Freddie Mac has paid OFHEO $125 million related to bogus accounting charges. Last month, the company agreed to pay $50 million to settle claims that it defrauded investors.

If you are an investor who has lost money because of the inappropriate actions of a member of the securities industry contact Shepherd Smith and Edwards right away. We can protect your rights. Our securities fraud lawyers have helped thousands of people recover their losses.

Related Web Resources:

Former Freddie Mac Chief to Pay $16.4 Million Penalty

Freddie Mac

Office of Federal Housing Enterprise Oversight

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Posted In: Mortgage Backed Securities

November 13, 2007

Oppenheimer to Pay $1 Million to Settle FINRA Bogus Data Charges

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Oppenheimer & Co. says it will pay a $1 million fine to settle charges by the Financial Industry Regulatory Authority that it turned in false information regarding mutual fund breakpoints. The company also has agreed to submit to having an independent consultant conduct an audit regarding how Oppenheimer handles regulatory inquiries. By agreeing to the settlement terms, Oppenheimer is not agreeing to or denying FINRA’s allegations.

Background
FINRA says it initially asked Oppenheimer for the information in March 2003 when the self-regulatory organization (then the NASD) looked at over 2000 broker-dealers who had sold front-end loan funds over a two-year period.

FINRA’s request was based on the discovery that nearly one in three mutual fund transactions in front-end loans seemed to qualify for a discount but did not get one.

FINRA says that in June and November 2003, Oppenheimer turned in data that was not complete or accurate after FINRA’s request that brokers assess their breakpoint practices. The term breakpoint refers to discounts or other benefits clients can obtain if they buy a certain number of funds at the same time.

The first time FINRA received the data, FINRA says it knew the information was “flawed” and notified Oppenheimer immediately.

The second assessment also contained “obvious deficiencies,” says FINRA. Linked accounts were not identified, ineligible transactions were included, overcharged trades were not properly identified, and correct discount information was left out.

When a broker-dealer engages in inappropriate actions, investors, unfortunately, can incur financial losses. The best chance an investor has of recouping their lost investment(s) is to retain the services of an experienced stockbroker fraud lawyer who can help you.

Contact Shepherd Smith and Edwards today and ask for your free consultation with one of our experienced stockbroker fraud attorneys.

Related Web Resources:

FINRA Fines Oppenheimer $1 Million, Associated Press/Forbes, October 30, 2007

Oppenheimer & Co Inc.

Mutual Fund Breakpoints: A Break Worth Taking, FINRA, January 14, 2003


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Posted In: FINRA , Oppenheimer

November 12, 2007

Corporation Owner and His Two Companies Can Sue Accountants For Fraud Involving Third Entity

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A company owner and his two corporations have the right to sue their accountants for alleged defalcations at a third company because, at the time, the three companies were affiliated and only severed ties because of the misconduct at issue. The decision regarding whether or not the owner had standing was decided by the Wisconsin Court of Appeals last month when Judge Patricia S. Curley reversed the trial court’s grant of summary judgment.

Judge Curley found that plaintiffs do not have to be shareholders at the corporation where the alleged fraudulent accounting took place. She also said that the plaintiffs are trying to recover damages they had allegedly suffered, not damages sustained by another party.

Michael Vilione and Henry J. Krier were co-owners of three separate companies that were affiliated with each other. The companies, EOG Disposal Inc, EOG Environmental Inc, and Vil-Kri Investments LLC are involved in the hazardous waste storage business. Vilione and Krier became involved in a dispute over Vilione’s alleged personal use of corporate assets. In mediation, the two men decided to split the enterprise. Vilione got full ownership of EOG Environmental, while Krier took full possession of the other two companies.

The terms of the settlement purposely excluded from release claims that Krier and his two companies, EOG Disposal and Vil-Kri, might have against enterprise accountant Donald Vilione, who is the brother of Michael Vilione, and the accounting firm Virchow, Krause & Co. LLP. After the separation, Krier and his two companies sued Donald and Virchow Krause for a number of claims, such as negligent misrepresentation, accounting malpractice, injury to business, breach of fiduciary duty, and violation of the Wisconsin Organized Crime Control Act.

Krier, Vil-Kri, and EOG Disposal claim that Donald Vilione, while a Virchow Krause Partner, purposely falsified accounting records for the three companies so that the misappropriation of funds by Michael Vilione would not be noticed. Krier and the two entities claim the Virchow Krause was aware of the misappropriation, fraud, and misrepresentation but did not inform Krier of these illegal activities.

Krier and the two entities are seeking as damages for the diminished value of their business. They claim they lost out on certain opportunities and contracts because of the fraud and theft. Damages to Krier, Vil-Kri, and EOG Disposal are estimated at more than $11 million.

Virchow Krause said Krier did not have standing to recover because the allegations center around assets that were stolen from EOG Environmental, of which Krier no longer owns an interest. A trial court rejected Virchow Krause’s claim.

The Wisconsin Court of Appeals reversal of the ruling lets the claims move forward.

The securities litigation law firm of Shepherd Smith and Edwards represents clients who have lost money because of the misappropriation, fraud, misrepresentation, and other illegal acts performed by members of the securities industry. Contact Shepherd Smith and Edwards today and ask for you free consultation.

Related Web Resources:

Read the Wisconsin Court of Appeals Decision (PDF)

Vilkri.com

EOG Environmental, Inc.


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Posted In: Miscellaneous

November 9, 2007

Mortgage-Backed Securities, Collateralized Debt Obligations, Subprime Loans: Officials Scramble to Rescue Banks, Borrowers and Stock Market, but Forget Defrauded Investors

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In August, Wall Street pundent Jim Kramer went ballistic when he felt the Federal Reserve did not act fast enough to rescue the stock market. Washington officials from George Bush to Nancy Pelosi are vying over how and how much to make avalible to troubled mortgage holders to keep afloat. The Chairman of the Federal Reserve acknowledges the need to preserve the banking system.

But no one seems worried about millions of individual investors who have chunked billions of dollars into mortgage related securities while being told these were completely safe. Many securities which were rated AAA only months ago, have lost a fourth of their value or more and likely face further markdowns in the near future.

Other investments which carried lower ratings, but were hyped as perfectly safe, are worth less than half their purchase value and may be all but wiped out before the dust settles. Many of these securities were sold as CD substitutes to small investors and retirees and to pension funds. The fallout of the failure of such investments will be tragic.

When naïve investors were sold high flyers in 1999 their advisors should have have warned them this was gambling. Others were lied to through bogus research. Yet, almost none of these victims were reimbursed. This appears to be the ultimate outcome for those who were defrauded through mortgage debts.

Welfare is currently being designed for those who borrowed more than they can pay back. More welfare is forthcoming for banks which lent to those without the ability to pay. Rating agencies and other financial institutions continue to be exempt from liability for their roles. Yet there is no mercy on the horizon for those individuals and small institutions who are the only innocent victims of this fraud.

Shepherd Smith and Edwards represents institutional and individual investors nationwide in claims against securities firms. We have represented investors in more than 1,000 securities cases, including many involving mortgage securities. To learn whether we may be able to assist you with a claim contact us to arrange a free consultation with one of our attorneys.

Posted by Shepherd Smith Edwards & Kantas LTD LLP | | Email This Post

Posted In: Mortgage Backed Securities

November 8, 2007

Broker-Dealers Get New Rule Governing Deferred Variable Annuities Sales

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Broker-dealers are getting ready to cope with a new rule governing deferred variable annuities (VAs) sales.

Rule 2821 by the Financial Industry Regulatory Authority Inc. was finally approved by the Securities and Exchange Commission on September 7. The rule has been in the works since 2004. The official regulatory notice, to be issued this week, gives brokerage firms six months to comply. The rule is expected to go into effect in May or June 2008.

Rule 2821 has four provisions regarding the sale of deferred variable annuities and the exchange of variable annuities. The rule places a suitability requirement on products for sales. It also makes it mandatory for principals to look at transactions within seven business days and before a customer’s application is forwarded to an insurance carrier.

Brokerage firms also must develop and document training programs for sales teams to ensure that they understand the way deferred VAs work. Supervisory procedures for staying in compliance with the new rule must be put in place.

Some industry members have expressed concern that the seven-day deadline could be difficult to honor—especially if customers delay the submission of their application. Notifying customers of any errors or gaps on their application could also delay the process.

Because many independent broker dealers work with a decentralized compliance structure, their customer applications may have to go through different processing centers—again potentially making it difficult to meet the new 7-day timeframe.

Some larger firms are planning to implement an automated compliance system to make the process run more efficiently.

Shepherd Smith and Edwards represents individual investors who have incurred financial losses because of the inappropriate actions of brokerage firms and investment advisers.

To schedule your free consultation with one of our experienced stockbroker fraud attorneys, contact Shepherd Smith and Edwards today.

Related Web Resources:

B-Ds brace for new rule on sales of deferred VAs, Investment News, November 5, 2007

Variable Annuities, SEC.gov

Variable Annuities Knowledge Center

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Posted In: Annuities and Insurance , Broker-Dealers

November 7, 2007

SEC and FINRA Announce Plan to Help Broker-Dealer CCO’s with Compliance Controls

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The Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) have introduced an initiative that will assist broker-dealer chief compliance officers in maintaining compliance controls that work, creating effective communications about compliance risks, and implementing solid compliance programs at brokerage firms.

Regional and national seminars will be designed to focus on increased compliance practices at brokerage firms to increase investor protection. FINRA and SEC said that this new initiative is similar to the SEC’s current CCOutreach Program for investment company chief compliance officers and investment advisers.

A national compliance seminar is tentatively scheduled for March 2008 at the SEC headquarters in Washington D.C. Regional seminars will be held in cities across the United States.

Potential topics include sales practices, debt securities issues, new products, CCOs and compliance programs within the organization, The CCO’s Role in Businesses that are constantly changing, business continuity / pandemic planning, trading issues, conflicts of interest, protecting customer data and non-public information, annual compliance report, regulatory compliance examinations, and Reg NMS.

The plan is sponsored by FINRA, the Division of Market Regulation, and the SEC’s Office of Compliance Inspections and Examinations.

SEC Chairman Christopher called the initiative an opportunity for regulators and broker-dealers to learn from each other the best ways to ensure that security laws are abided by.

Even when there are investor protections in place, there are still incidents that occur where an investor loses money because of broker misconduct. If you are a victim of investor fraud, you should speak with an experienced stockbroker fraud attorney who can help you.

Contact Shepherd Smith and Edwards today to schedule your free case evaluation.

Related Web Resources:

Regulators roll out CCOutreach Program, Investment News, November 7, 2007

Broker-Dealer CCOutreach Program, SEC.gov

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Posted In: Broker-Dealers , FINRA , SEC

November 5, 2007

FINRA Says New Rule Book Consolidating NYSE and NASD Rules Might Not Be Completed Until 2009

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FINRA enforcement chief Susan Merrill announced at a Practising Law Institute Gathering on “Coping with Dealer/Broker Regulation and Enforcement” that the Financial Industry Regulatory Authority rulebook, which consolidates NASD and NYSE Rules might not be completed until the end of 2008 or even into 2009.
Merrill said that the consolidation is causing FINRA to ponder whether different kinds of firms should be regulated differently and whether it makes sense to use principle-based standards more frequently.

Merrill says that different groups, including employees previously with NYSE and NASE, are looking at the different rules and trying to figure out how to best merge the two systems.

Established in July, FINRA consolidates the risk assessment, regulatory, arbitration, and enforcement functions of NYSE and NASD.

Prior to the merger, the close to 300 NYSE member organizations had also belonged to NASD’s 5100 membership. FINRA now regulates both memberships. Organizations that belonged to both legacy organizations must comply with NYSE rules and members that belonged to NASD only must follow NASD’s rulebook until the new consolidated rulebook is complete.

Merrill says that FINRA’s current targeted sweeps into certain practice areas confirms that organization’s enforcement priorities continue to focus on stopping brokers that use “professional designations” to defraud or mislead investors, the use of “educational” seminars to target senior investors, as well as the sale of life settlements and the collateralized mortgage obligations targeting seniors.

If you are the victim of investor fraud, do not hesitate to contact the securities litigation firm of Shepherd Smith and Edwards today. We have helped thousands of investors recover their losses. Your first consultation with us is free.


Related Web Resources:

FINRA Announces Rule Book Delay, CCH Wall Street, October 29, 2007

FINRA

Practising Law Institute

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Posted In: FINRA

November 2, 2007

Bill Allowing American Stock Exchange to Increase Competitiveness With Second Tier Markets Passes House of Representatives

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On October 23, The House of Representatives passed Bill H.R. 2868, which allows the American Stock Exchange (Amex) to move forward with plans to create a second tier market for smaller companies that have less restrictive listing standards. The plan will hopefully improve the global competitiveness of U.S. financial markets.

H.R. 2868 was introduced by New York Representatives Vito Fossella and Gregory Meeks. Both men claim that the bill is intended to slow down the flow of U.S. initial public offerings from U.S. exchanges to foreign exchanges.

The proposed Small Cap Competitive Listing Act would take away the “inadvertent” legal impediment brought about by the 1996 National Securities Markets Improvement Act (NSMIA) and allow for developmental listing tiers on the three major U.S. stock exchanges.

Amex first submitted a proposed rulemaking to the SEC three years ago. At the time, state securities regulators disapproved of the plan because of the SEC’s strict interpretation of the 1933 Securities Act exemption under NSMIA. The exemption was an informal agreement that preempted state regulators from regulating any company regulated by the SEC and was listed on the New York Stock Exchange, Amex, or NASDAQ Stock Market.

H.R. 2868 modifies the exception so that both the SEC and state regulators could regulate securities in a second tier. Amex Senior Vice President for Government Affairs Mark Seetin says the legislation would improve investor protection by increasing regulation over these companies. It would also create an even playing field for domestic exchanges and increase their competitiveness in a global marketplace.

The securities litigation law firm of Shepherd Smith and Edwards represents investors throughout the U.S. who have lost money because of the inappropriate actions of investment advisers and investment firms. We also represent investors from outside the U.S. that wish to file claims against investment firms based in this country.

Contact Shepherd Smith and Edwards today to schedule your free case evaluation.


Related Web Resources:

H.R. 2868, Congressional Budget Office (PDF)

H.R. 2868, To eliminate the exemption from State regulation for certain securities designated by national securities exchanges, Washingtonwatch.com

American Stock Exchange

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Posted In: Miscellaneous

November 1, 2007

FINRA Cautions Investors to Watch Out For “Pump-and-Dump Scams” Using Energy Stocks

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FINRA (Financial Industry Regulatory Authority) is warning investors to look out for “pump-and-dump” scams focusing on energy stocks. FINRA says that these scams involve energy stocks that are thinly traded issues from companies that are not well known.

In the alert that it issued on October 23, FINRA says that the purpose of the scams is to increase a stock’s price using misleading or false statements that create a demand for a company’s shares. The people who “pumped” the stock then sell their shares when the stock price is high enough. Investors are then left with stock that are worthless.

In one scam, investors were encouraged to invest in a Texas energy company involved in a business deal with a $23 million Chinese oil monopoly. The backers of the scheme told investors that they would receive huge returns if they invested immediately.

Another scheme promised investors that a $5,000 could be converted into $26,500 within four months.

Pump-and-dump scammers are sending their pitches to investors via e-mail, text message, and cell phone. One fax promised an unrealistic and fast investment return. FINRA is urging investors to ignore e-mails and faxes that are unsolicited.

FINRA is also urging investors to be wary of offers that seem too good to be true. It also suggests that investors research any firm that they are considering investing in and get more information about the source that is soliciting investments.

The SEC is also cautioning investors to be wary of scams promoting gas and oil investments.

If you are the victim of a pump-and-dump scheme or any other kind of investment fraud scam, you should contact Shepherd Smith and Edwards right away. We are one of the country’s premier securities fraud law firms. We are committed to helping investors recover their lost investments. Contact us online to request your free consultation.

Related Web Resources:

FINRA Identifies Energy Stocks as Latest “Pump and Dump” Scheme, FINRA, October 23, 2007

Investors warned over pump-and-dump energy scams, Reuters, October 23, 2007

Posted by Shepherd Smith Edwards & Kantas LTD LLP | | Email This Post

Posted In: FINRA

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