Cranford investors who have questions or concerns regarding the handling of their securities accounts can turn to the experienced securities litigation and regulatory law firm of Lubiner, Schmidt & Palumbo, located at 123 North Union Avenue, for legal assistance.
In 2008, two executives at a Cranford, New Jersey Based technology company were charged with conspiracy and securities fraud. The securities fraud resulted in investment losses of more than $5 million. The two Cranford executives were found guilty and sentenced to 4 months in connection with the securities fraud and ordered to pay restitution in connection with the investment losses of $4 million to investors.
Lubiner, Schmidt & Palumbo has practiced securities law for over 30 years in courts in New Jersey and New York. The firm has also handled hundreds of securities arbitrations conducted by the Financial Industry Regulatory Authority (“FINRA”). The attorneys at the firm include a former New York prosecutor, a former stockbroker and an attorney who worked in house at a major financial firm. Together, the securities attorneys at the firm have amassed a wealth of knowledge of the policies and procedures under which brokerage firms operate. Cranford investors who may have been the victims of securities fraud can utilize the services of the firm to help recover any losses they may have incurred because of unscrupulous or simply negligent financial advisors.
There are many types of securities fraud and Cranford investors can easily become the victims in nefarious investment schemes. For instance, brokers are obligated to discuss proposed investments with a client and obtain the consent of that client prior to placing an order. The failure to get that prior authority amounts to unauthorized trading. Losses to the client because of unauthorized trading are recoverable.
Cranford investors should be very wary if they receive a phone call, email or snail mail promoting the purchase of penny stocks. The SEC defines penny stocks as those priced below $5 per share. Penny stocks are also known as “microcap” stocks. They do not trade on the major exchanges, instead trading on the OTC Bulletin Board or pink sheets. The companies who issue penny stocks are not required to publish the financial disclosures made by companies who list their stock on the major exchanges. Information on the company’s industry performance, performance compared to competitors and the company’s corporate leadership may be hard to obtain.
Penny stocks are prone to significant price swings. That volatility makes them attractive to speculative traders but not suitable for most investors. Penny stocks are also frequently illiquid because of the lack of buyers in the market. This is another reason Cranford investors may want to avoid these stocks.
Other investments available to the public about which Cranford investors may need the expertise of Lubiner, Schmidt & Palumbo involves structured products. These consist of an underlying “basket” of securities such as commodities, indexes, etc., which are linked to a derivative security, usually an option. Large financial institutions package these investments and guarantee the return of principal and a rate of return. Examples of these investments include collateralized mortgage obligations (“CMOs”), mortgage backed securities (“MBS”) and credit default swaps (“CDS”).
However, these products are the unsecured debt of the institution which has issued them. If the issuer declares bankruptcy, the notes will probably fail. The products are designed to be held long term and are illiquid. The initial interest rate paid by these instruments is guaranteed for only a defined period. The rate is then reset, and can be as low as zero.
These investments were originally meant for institutional investors and may not be suitable for many Cranford clients.
Securities fraud occurs when a financial advisor makes the affirmative decision to deceptively induce a customer to make a securities purchase, resulting in harm to the client. Cranford investors can also be harmed by the negligent actions (or failure to act) on the part of their brokers. Well-intentioned brokers may make simple errors in judgment that, while unintentional, result in harm to their customers. In such instances, clients can recover losses occasioned by the negligent actions of their financial advisor.
In cases of improper conduct such as those mentioned above, an experienced securities fraud attorney must investigate whether there has been failure to supervise. Securities industry rules require broker dealers to have a supervisory chain of command in their branch offices and have supervisory procedures to protect customers. The experienced securities litigation attorneys at Lubiner, Schmidt & Palumbo can determine if a firm has failed to supervise a misbehaving broker. Failure to supervise is a separate violation on the part of the firm and can also lead to a finding of damages.
Cranford investors who are concerned that their brokerage account has been mishandled have the experienced securities lawyers at Lubiner, Schmidt & Palumbo a phone call away (or just done the block). Contact Lubiner, Schmidt & Palumbo for a free consultation.