Alpine, New Jersey investors who have incurred financial losses can turn to the securities fraud attorneys at Lubiner, Schmidt & Palumbo for legal assistance. The securities group at Lubiner, Schmidt & Palumbo has over 30 years experience handling securities litigation and regulatory matters. Among the attorneys at the firm are a former New York City prosecutor, an attorney who worked in the Legal Department at a Wall Street financial firm and a former stockbroker. The firm’s attorneys have appeared in securities matters in courts and arbitrations across the country, including New Jersey and New York. The experienced securities fraud attorneys at the firm have also handled hundreds of securities arbitrations conducted by the Financial Industry Regulatory Authority (“FINRA”). One recent example of securities fraud connected to Alpine involved investment advisor James Trolice. This former Alpine resident pled guilty in April 2017 to a $5 million fraudulent investment scheme. The SEC and the Department of Justice charged the Alpine native with securities fraud in connection with the issuance of warrants, which are certificates granting the holder the right to purchase stock at a specific price in the future. The Alpine broker admitted to misrepresenting and failing to disclose material information in connection with the securities. He was ultimately sentenced to serve 19 months. Alpine investors can rest assured that the firm’s attorneys have developed a deep understanding of brokerage firms and what their best practices are. Lubiner, Schmidt & Palumbo securities litigation attorneys know how brokers are supposed to service their clients and what brokerage firms are obligated to do to protect their customers. Alpine investors who have suffered financial losses in their brokerage and/or retirement accounts can rely upon the experienced securities litigation attorneys at Lubiner, Schmidt & Palumbo to recover those losses.
Securities fraud is a broad term that describes multiple actions of brokers that can result in financial harm to their clients. Unauthorized trading, excessive trading/churning, negligence and misrepresentations/omissions by brokers can lead to investors suffering losses in their accounts which may be recoverable. In order to properly investigate and prosecute such cases, aggrieved clients need the assistance of experienced securities litigation attorneys, such as those at Lubiner, Schmidt & Palumbo.
Alpine investors should be wary of the many complex investment products that are available in the market and sold to unsuspecting customers. Exchange traded funds (“ETFs”) are popular investment vehicles that are packaged similar to mutual funds. They are comprised of an underlying “basket” of securities such as bonds, stocks, etc., and focused on a specific sector of the economy. They are priced daily and trade like a stock.
However, firms will also sell leveraged and inverse ETFs to clients. Leveraged ETFs use the underlying basket of securities as collateral to buy additional securities. While this presents investors with the opportunity for increased profits, it also exposes investors to increased risk if the market moves against their investment.
Inverse ETFs use derivative products to structure the ETF so that it performs opposite to the performance of its underlying basket of securities. This makes leverage ETFs necessarily complex products that are meant to be held for one day only. These are trading vehicles for sophisticated investors and not suitable for many customers.
Other complex investment products now being marketed by brokerage firms are generally referred to as structured products. These are investments that consist of an underlying “basket” of securities such as commodities, indexes, etc. They are tied to a derivative security, typically an option. They are issued by large financial institutions and guarantee the return of principal plus some rate of return. Some of these products are collateralized mortgage obligations (“CMOs”), mortgage backed securities (“MBS”) and credit default swaps (CDS”).
However, they actually are the unsecured debt of the issuer. If the issuer goes bankrupt, the notes will probably fail. The instruments are meant to be held long term and are very illiquid. The initial interest rate paid by these instruments is guaranteed for only a defined period and then is reset, and can be as low as zero.
These notes were originally meant for institutional investors and may not be suitable for retail clients. Alpine investors should exercise caution in considering investments of this nature.
Other dubious products sold to unsuspecting investors include penny stocks. The Securities Exchange Commission (“SEC”) defines penny stocks as those having a price below $5 per share. Penny stocks, often referred to as “microcap” stocks, do not trade on the major exchanges, instead trading on the OTC Bulletin Board or pink sheets. Since they are not exchange traded, the companies who issue penny stocks are not required to issue the financial disclosures made by companies who list their stock on major exchanges. Information on the company’s leadership, industry performance, performance compared to similarly situated companies, etc., may therefore be difficult to obtain.
Penny stocks are susceptible to large price fluctuations. That volatility makes them appealing to speculative traders but not suitable for most investors.
In addition to their volatility, penny stocks are frequently illiquid, meaning that investors may not be able to sell their shares due to the lack of buyers in the market. This is another reason Alpine investors may want to avoid these investments.
Alpine investors who question whether their brokerage account has been mishandled, or have concerns regarding a specific investment in their brokerage or retirement accounts, have the experienced securities fraud attorneys at Lubiner, Schmidt & Palumbo only a phone call away. Contact Lubiner, Schmidt & Palumbo for a consultation.