Westfield, New Jersey investors who are the victims of securities fraud or simply negligent financial advisors can retain the services the experienced securities fraud attorneys at Lubiner, Schmidt & Palumbo. The securities group at Lubiner, Schmidt & Palumbo includes a former in house attorney from a major financial firm, a former stockbroker and a former New York prosecutor. Only a few years ago, the head of a Westfield financial firm, Carlo Chiaese, pled guilty to securities fraud in New Jersey federal court. Chiaese ran CGC Advisors, LLC, in Westfield from 1999 to 2010. The government charged Chiaese with securities fraud, alleging that he ran a Ponzi scheme from November 2008 through September 2010. Chiaese told investors he was investing their funds in conservative investments such as stocks and mutual funds. Instead, Chiaese stole approximately $2.9 million from investors, including $1.7 million from the pension fund of a New York longshoremen’s union. He diverted investor funds to his wife and her family and used the stolen funds for personal expenses, membership fees at two country clubs and private school tuition for a child. Using classic Ponzi scheme methods, he used some investor funds to make payments to earlier investors and fabricated trading confirmations and monthly account statements to hide his fraudulent scheme. Chiaese was sentenced to 58 months in jail.
For over 30 years the securities lawyers at the firm have appeared in courts in New York and New Jersey in various securities matters similar to those seen in the Westfied securities fraud case pertaining to Chaise discussed above. They have also handled hundreds of FINRA securities arbitrations nationwide. This experience has enabled the securities lawyers at the firm to develop a deep understanding of the rules and regulations that govern the conduct of brokerage firms and their registered representatives.
There are many other types of securities fraud about which Westfield investors need to be wary. Securities regulations require brokers to discuss proposed investments with the client before entering an order to buy or sell the investment. If the financial advisor does not obtain the agreement from the client to enter an order, that order to buy or sell is an unauthorized trade. Any financial losses to a Westfield investor that result from an unauthorized trade are recoverable.
Margin trading can be another form of securities fraud. Brokerage firms allow clients to borrow from the firm. In such instances, the securities held in the client’s account serve as collateral for the loan. The firm charges the client margin interest each month in which there is a margin balance in the account. By extending credit in the account, the firm enables the customer to increase her “buying power” and the possibility of greater profits. However, the converse is true: increasing the buying power of an account also increases risk in the account if the market moves against the client’s position. Therefore, margin trading is a strategy only experienced, sophisticated investors should use. If a broker engages in margin trading to increase the level of trading in the account (and, therefore, the amount of commissions charged to the client), such trading may be viewed as securities fraud. Margin trading may not be appropriate for many Westfield investors.
There are many different investment products available to Westfield investors today. But not every product is suitable for all investors. Real Estate Investment Trusts (“REITs”) are created by bundling income producing properties such as hotels, hospitals, etc. They are like mutual funds and trade on major exchanges. However, Westfield investors should be cautious if a broker recommends the purchase of a non-traded REIT. Unlike REITs, non-traded REITs are not traded on national exchanges and are meant to be held long term (more than eight years). Therefore, they are very illiquid and difficult to sell before maturity. If they can be sold, the proceeds to the seller will probably be well below the purchase price. Non-traded REITs are not suitable for many Westfield investors.
Elder abuse is a current and significant problem in the securities industry. State and industry regulators have instituted new regulations aimed at eliminating the financial abuse of senior citizen investors. Unfortunately, such conduct still occurs. See here, here, here and here. Unsuspecting senior investors may not comprehend the risks entailed in investments presented to them by an unethical broker. They may not understand their account statements. If you are an elderly Westfield investor and have questions concerning your account, the experienced securities lawyers at Lubiner, Schmidt & Palumbo are available to assist you.
Westfield investors who believe their securities account has been mishandled can rely on the experienced securities fraud attorneys at Lubiner, Schmidt & Palumbo to assist them. Contact Lubiner, Schmidt & Palumbo to discuss your concerns.