Category Archives: FINRA Sales Practice Violations

SEC

NOTICE TO MORGAN STANLEY CLIENTS: Klayman & Toskes, P.A. Announces Investigation of Morgan Stanley Following $8 Million in SEC Fines for Exchange Traded Fund Violations

By | Exhanged Traded Funds, Featured Investigations, FINRA Sales Practice Violations, SEC Disciplinary Actions, Securities Arbitration | No Comments

New York, NY — February 21, 2017 – The Securities Arbitration Law Firm of Klayman & Toskes, P.A.,(K&T) www.nasd-law.com, announces an investigation into sales practice violations by Morgan Stanley (NYSE:MS) following $8 million in fines levied by the Securities Exchange Commission (SEC) related to Exchange Traded Funds (ETFs).

On February 14, 2017, the SEC imposed a Cease and Desist Order and Remedial Actions against Morgan Stanley for sales practice violations related to recommended investments in single-inverse ETFs for advisory clients in non-discretionary accounts.  According to Morgan Stanley compliance procedures, recommended investments in single-inverse ETFS had two requirements:

  • Advisory clients were required to sign Client Disclosure Notices which detailed the risks associated with the investment; and
  • Morgan Stanley supervisors were required to review the risky transactions for suitability based on client profile.

The SEC examination determined deficiencies were found in the supervisory procedures related to record keeping and the determination of “suitability” in advisory clients’ non-discretionary accounts.  No Client Disclosure Notices were signed for these risky transactions for nearly 44% of the non-discretionary advisory accounts at Morgan Stanley.  The supervisory review was considered “deficient or non-existent” for advisory clients who did not have a signed Client Disclosure Notice.

The sole purpose of this release is to investigate Morgan Stanley’s sales practices related to single-inverse exchange traded funds, which were supposed to be monitored on a daily basis and only considered suitable as a part of a hedging strategy. Morgan Stanley’s sales practice violations may include misrepresentations and omissions of material facts, conflicts of interest, unsuitable investment advice, and the failure to supervise financial advisor recommendations concerning these risky transactions. Current and former Morgan Stanley customers who have information about the firm’s sales practices are encouraged to contact Lawrence L. Klayman, Esq. or Raymond Gentile, Esq. of Klayman & Toskes, P.A.  at (888) 997-9956, or visit our website at www.nasd-law.com.

About Klayman & Toskes, P.A.

K&T is a leading national securities law firm which practices exclusively in the field of securities arbitration and litigation, on behalf of retail and institutional investors throughout the world in large and complex securities matters. The firm represents high net-worth, ultra-high-net-worth, and institutional investors, such as non-profit organizations, unions, public and multi-employer pension funds. K&T has office locations in California, Florida, New York and Puerto Rico.

Destination:  http://nasd-law.com/notice-to-morgan-stanley-clients-klayman-toskes-p-a-announces-investigation-of-morgan-stanley-following-8-million-in-sec-fines-for-exchange-traded-fund-violations/

Contact:

Klayman & Toskes, P.A.

Lawrence L. Klayman, Esq.

Raymond Gentile, Esq.

Toll Free: (888)-997-9956

Email: info@nasd-law.com

 

dollars-in-chains

Another Investor Lawsuit Filed Over Puerto Rico Bonds

By | FINRA Sales Practice Violations, News, Puerto Rico Bond Funds, Regulator Disciplinary Actions, Securities Arbitration | No Comments
Caribbean News

January 16, 2017
SAN JUAN, Puerto Rico — A securities arbitration law firm on Friday filed a claim against UBS Financial Services Inc. of Puerto Rico and UBS Financial Services, Inc. (collectively “UBS”) for $8.5 million.

According to the claim, the claimant entrusted assets to UBS with the investment objective of capital preservation. However, UBS ultimately concentrated the account in Puerto Rico government bonds (PRGBs) and its proprietary Puerto Rico closed-end bond funds (UBS PR CEBFs), which are leveraged and concentrated in PRGBs.

UBS purchased and held for the claimant PRGBs and UBS PR CEBFs, both of which are closely tied to the performance of Puerto Rico’s economy. The claimant believed the purchases were consistent with their low risk tolerance. However, the over concentration in these PRGBs and UBS PR CEBFs was fraught with excessive risk given the claimant’s investment objective and risk tolerance.

UBS failed to disclose to the claimant the risks associated with over concentrating the account in these securities. Had this information and the true nature of the risk of the recommended allocation been known to the claimant or properly disclosed, he would not have invested his assets in these products.

The law firm representing the claimant, Klayman & Toskes, in conjunction with Carlo Law Offices, is currently investigating, on behalf of their clients, the sales practices of UBS in connection with investment recommendations provided to their customers.

 

Compliance_Rules

NOTICE TO MERRILL LYNCH CUSTOMERS – Klayman & Tokses, P.A. Announces Investigation into Merrill Lynch Loan Management Accounts in Light of FINRA Sanctions for $7 Million in Fines and Restitution Regarding US and Puerto Rico Clients

By | Blog, Featured Investigations, FINRA Disciplinary Actions, FINRA Sales Practice Violations | No Comments

New York, NY – December 1, 2016 — The Securities Arbitration Law Firm of Klayman & Toskes, P.A. (“K&T”), www.nasd-law.com, announces an investigation into Merrill Lynch, a wholly owned brokerage firm of Bank of America (NYSE:BAC), for Financial Industry Regulatory Authority (FINRA) sales practice violations from its Loan Management Accounts (LMAs) following FINRA regulatory fines.  Yesterday, FINRA accepted from Merrill Lynch an Acceptance Waiver and Consent for $6.25 million in fines and approximately $780,000 in restitution to Puerto Rico customers, for inadequately supervising the use of Merrill Lynch loans for customer accounts.  According to FINRA, Merrill Lynch brokerage accounts received proceeds transferred from LMAs and purchased millions of dollars in securities, the majority being purchased on margin, within 14 days of the transfer.  FINRA concluded that these supervisory failures occurred from January 2010 to November 2014.

According to K&T founder, Lawrence L. Klayman, Esq. “The use of brokerage account assets as collateral for these loans greatly increased the risks assumed by Merrill Lynch customers.”    Mr. Klayman explains, “Our firm is investigating sales practice violations by Merrill Lynch for failure to supervise its financial advisors’ recommendations to customers concerning the use of LMA proceeds to purchase stock on margin.  Merrill Lynch’s advice to use margin loans signals a potential conflict of interest, which increased commissions for their financial advisors at the expense of customers who did not fully understand the risks associated with these loans.”

The sole purpose of this release is in furtherance of our investigation into Merrill Lynch’s sales practices related to Loan Management Accounts (LMAs) which may include violations for unsuitable recommendationsmargin abuse, breach of fiduciary dutymisrepresentations and omissions of material facts and a failure to supervise.   Current and former Merrill Lynch customers who have information about the sales practices of Bank of America and its brokerage firm, Merrill Lynch are encouraged to contact Lawrence L. Klayman, Esq. or Raymond Gentile, Esq. of Klayman & Toskes, P.A.  at (888) 997-9956, or visit our website at www.nasd-law.com.

Klayman & Toskes, P.A. Wins $2.25 Million FINRA Arbitration Award in Favor of Retired UPS Executive With Concentrated Stock Position Against Citigroup Global Markets

By | Blog, Featured Cases, FINRA Sales Practice Violations, Securities Arbitration, Securities Concentration | No Comments

Boca Raton, Florida (GLOBE NEWSWIRE) February 10, 2016 – The Securities Arbitration Law Firm of Klayman & Toskes, P.A. (“K&T”), www.nasd-law.com announced a major victory today in winning a significant $2.25 million award against Citigroup Global Markets (NYSE: C) for FINRA securities arbitration Case No. 14-00199. The securities arbitration panel heard testimony for six days in Atlanta, Georgia before an award in the amount of $2.25 million was made in favor of a retired UPS executive, represented by attorneys, Steven D. Toskes, Esq. and Raymond Gentile, Esq. Citigroup has since paid the award. The Claimant alleged causes of action related to Claimant’s concentrated position in UPS stock (NYSE: UPS) including: breach of fiduciary duty; unsuitable investment strategy; failure to recommend risk management strategies  for a concentrated; leveraged position; negligence and gross negligence; and failure to supervise. Investors who suffered losses in concentrated stock positions should consider what recourse is available to recover their investment losses in stock held in full-service brokerage accounts. The Financial Industry Regulatory Authority, (FINRA) is a self-regulating organization with sales practice rules and regulations that governs the securities industry’s conduct to protect the investing public.

According to founding partner, Steven D. Toskes, “Our client worked over 37 years with UPS and accumulated shares through UPS’ Employee Stock Purchase Plan and Managers Incentive Program. Citigroup loaned funds using UPS stock and other securities as collateral but failed to implement a risk management strategy to protect the concentrated stock.” Mr. Toskes continues, “Any time a client has a concentrated, leveraged stock position, the prudent practice is to protect the downside to prevent a margin call through a risk management strategy such as a prepaid forward contract, collar or protective put option. This case was about the failure of Citigroup to protect our client’s UPS stock which represented the vast majority of his life savings”.

Concentrated stock positions represent a long term holding acquired through investment, inheritance or as an employee of the company. “Employees who participate in Employee Stock Purchase Plans (“ESPP”) can be particularly susceptible to concentrated stock positions and their respective financial advisors should ensure that these positions are protected from unforeseen market events by diversifying or hedging these positions accordingly” said Raymond Gentile, Esq. Full-service brokerage firms are obligated to give, and investors are entitled to rely upon, brokerage firms for competent, suitable investment advice concerning risk management strategies for concentrated stock positions. Brokerage firms are required to supervise the activities in brokerage accounts, and losses may be attributed to the failure to adequately supervise the financial advisor. Recommendations of unsuitable investments and/or maintaining unprotected concentrated stock positions are both causes of action that may be available to investors against their full-service brokerage firm in an individual securities arbitration claim filed with FINRA.

 

About Klayman & Toskes, P.A.

K&T is a leading securities law firm which practices exclusively in the field of securities arbitration and litigation, on behalf of retail and institutional investors such as non-profit organizations, public and multi-employer pension funds in large and complex securities matters. The Firm has offices in California, Florida, New York and Puerto Rico. Investors who have suffered investment losses from concentrated stock positions and the failure to implement risk management strategies should contact Steven D. Toskes, Esq. at 888-997-9956.

The Securities Arbitration Law Firm of Klayman & Toskes, P.A. Continues to Investigate Sales Practices Violations Related to Credit Suisse X-Links and Velocity Shares ETNs

By | Alternative Investments, Blog, Featured Cases, Featured Investigations, FINRA Sales Practice Violations, MArket-Linked Notes, Oil & Gas Investments, Securities Arbitration, Structured Securities Products | No Comments

Boca Raton, Florida (BUSINESSWIRE) – January 21, 2016 – The Securities Arbitration Law Firm of Klayman & Toskes, P.A., www.nasd-law.com, continues to investigate Financial Industry Regulatory (FINRA) sales practice violations related to Credit Suisse Securities USA (“Credit Suisse”) X-Links and Velocity Shares Exchanged Traded Notes (ETNs). Credit Suisse X-Links and Velocity Shares ETNs are issued by affiliated banks, Credit Suisse A.G and Credit Suisse Group A.G., ADR (NYSE:CS). In some instances, Credit Suisse X-Links and Velocity Shares performance is linked to oil prices, energy-related master limited partnerships and commodity indexes. Credit Suisse manages its proprietary X-Links and Velocity Shares ETNs, commonly known as structured securities products, to generate greater returns through the use of embedded derivatives designed to track the performance of a volatile security, index, commodity or currency, many times without any principal protections.

FINRA sales practice rules require a fair and balanced representation to investors that Credit Suisse X-Links and Velocity Shares ETNs are more complex and risky than a simple “interest rate” credit when based on a volatile index or commodity. Credit Suisse underwrites, manages and markets billions of dollars in Credit Suisse X-Links and Velocity Shares ETNs including the following:

  • Credit Suisse S&P MLP ETN (NYSE Arca: MLPO)
  • Credit Suisse X-Links Commodity Benchmark ETN (NYSE Arca: CSCB)
  • Credit Suisse X-Links Commodity Rotation ETN (NYSE Arca: CSCR)
  • Credit Suisse X-Links Cushing MLP Infrastructure ETN (NYSE Arca: MLPN)
  • Credit Suisse Velocity Shares 3X Long Crude ETN (NYSE Arca: UWTI)
  • Credit Suisse Velocity Shares 3X Natural Gas ETN (NYSE Arca: VGAZ)

In 2015, a Securities Exchange Commission (SEC) audit of major Wall Street brokerage firms led to a National Exam Program – Risk Alert Report after the review of sales practices violations related to Structured Securities Products, similar to Credit Suisse X-Links and Velocity Shares ETNs. According to the SEC examination, deficiencies were found in some brokerage firms’ supervisory and sales practices related to the determination of “suitability” and “levels of concentration” in customer accounts.

Our investigation of major Wall Street brokerage firms, including Credit Suisse relates to sales practices related to Credit Suisse X-Links and Velocity Shares ETNs. Brokerage firm violations of FINRA sales practice rules may include misrepresentations and omissions of material facts, conflicts of interest, unsuitable investment advice, securities concentration or the failure to supervise its financial advisors. Our investigation relates to investments in Credit Suisse X-Links and Velocity Shares ETNs designed to track the Price of Oil, MLP Pipeline Indexes, Commodities Baskets, and in some instances are leveraged up to 300%.

About Klayman & Toskes, P.A.

Klayman & Toskes, P.A., an experienced, qualified and nationally recognized securities litigation law firm, is currently investigating FINRA sales practice violations of major Wall Street brokerage firms related to the sale of Credit Suisse X-Links and Velocity Shares ETNs. Investors who have knowledge or experience related to the sales practices of brokerage firms and its financial advisors’ recommendations related to Credit Suisse X-Links and Velocity Shares ETNs, contact Steven D. Toskes, Esq. at 888-997-9956.

The Securities Arbitration Law Firm of Klayman & Toskes, P.A. Continues to Investigate Sales Practices Related to UBS ETRACS ETNs

By | Alternative Investments, Blog, Broker Misconduct, Featured Investigations, FINRA Sales Practice Violations, MArket-Linked Notes, Oil & Gas Investments, Structured Securities Products | No Comments

Boca Raton, Florida (BUSINESSWIRE) – January 20, 2016 – The Securities Arbitration Law Firms of Klayman & Toskes, P.A., www.nasd-law.com, continues to investigate Financial Industry Regulatory Authority (FINRA) sales practice violations related to UBS Exchange Traded Access Securities (ETRACS) whose performance is linked to declining energy, currency and commodity markets. UBS Financial Services, Inc. (UBS), a wholly owned subsidiary of UBS Group A.G. (NYSE:UBS) sells and distributes UBS ETRACS Exchange-Traded Notes (ETNs). UBS ETRACS ETNs, commonly known as structured securities products, are designed to generate greater returns through the use of embedded derivatives designed to track the performance of a volatile security, index, commodity or currency, many times without any principal protections.

FINRA sales practice rules require a fair and balanced representation to investors that UBS ETRACS ETNs are more complex and risky than a simple “interest rate” credit when based on a volatile index or commodity. UBS underwrites, manages and markets billions of dollars in UBS ETRACS ETNs to its customers, including the following:

  • UBS ETRACS Alerian MLP Index ETN (NYSE Arca: AMU)
  • UBS ETRACS 2X Monthly Leveraged S&P MLP Index ETN (NYSE Arca: MLPV)
  • UBS ETRACS Alerian MLP Infrastructure Index ETN (NYSE Arca: MLPI)
  • UBS ETRACS 2X Monthly Leveraged Long Alerian MLP Infrastructure Index ETN (NYSE Arca: MLPL)
  • UBS ETRACS CMCI Energy Total Return ETN (NYSE Arca: UBN)
  • UBS ETRACS CMCI Total Return ETN (NYSE Arca: UCI)
  • UBS ETRACS Bloomberg Commodity Index Total Return (NYSE Arca: DJCI)

In 2015, a Securities Exchange Commission (SEC) audit of major Wall Street brokerage firms led to a National Exam Program – Risk Alert Report after the review of sales practices violations related to Structured Securities Products, similar to UBS’ proprietary ETRACS ETNs. According to the SEC examination, deficiencies were found in some brokerage firms’ supervisory and sales practices related to the determination of “suitability” and “levels of concentration” in customer accounts.

Our investigation relates to UBS’ sales practices related to its proprietary ETRACS ETNs. UBS’ violations of FINRA sales practice violations may include misrepresentations and omissions of material facts, conflicts of interest, unsuitable investment advice, securities concentration or the failure to supervise its financial advisors. Our investigation relates to investments in UBS ETRACS ETNs designed to track the Price of Oil, MLP Pipelines, Indexes, Currency and Commodities Baskets, and in some instances leveraged up to 200%.

About Klayman & Toskes, P.A.

Klayman & Toskes, P.A., an experienced, qualified and nationally recognized securities litigation law firm, is continues to investigate FINRA sales practice violations related to the sale of UBS ETRACS ETNs. Investors who have knowledge or experience related to the sales practices of brokerage firms and its financial advisors’ recommendations related to UBS ETRACS ETNs, contact Steven D. Toskes, Esq. at 888-997-9956.

The Securities Arbitration Law Firms of Klayman & Toskes, P.A. and Carlo Law Offices Announce Investigation of Santander Securities, LLC on Behalf of Puerto Rico Investors for FINRA Sales Practice Violations

By | Featured Investigations, FINRA Disciplinary Actions, FINRA Sales Practice Violations, Puerto Rico Bond Funds, Securities Concentration | No Comments

The Securities Arbitration Law Firms of Klayman & Toskes, P.A. and Carlo Law Offices Continue to  Investigate Santander Securities, LLC on Behalf of Puerto Rico Investors for FINRA Sales Practice Violations

San Juan, Puerto Rico (BUSINESSWIRE) – October 13, 2015 – The Securities Arbitration Law Firms of Klayman & Toskes, P.A., www.perdidasenbonospr/.com/en/, and Carlo Law Offices continue to investigate Santander Securities, LLC, a subsidiary of Santander BanCorp, both wholly owned by Banco Santander, S.A. (NYSE:SAN) for securities sales practice violations. Financial Industry Regulatory Authority (FINRA), announced a $6.4 million settlement with Santander Securities, LLC for sales practice violations related to UBS Puerto Rico Bond Funds and UBS affiliated bank loans.

According to the FINRA Acceptance Waiver and Consent Order (AWC), Santander Securities, LLC agreed to settle with FINRA for $6.4 million which included, “A fine of $2.0 million” and “Restitution of approximately $4.3 million” for certain solicited transactions in Puerto Rico Bonds and close-end funds. FINRA cited that, Santander Securities, LLC had “deficient supervisory system and procedure regarding concentrated securities purchases and margin use” related to solicited investments in individual Puerto Rico bonds and Puerto Rico close-end funds.

According to Steven D, Toskes, Esq., of Klayman & Toskes, P.A., “the findings in the FINRA action against Santander Securities released today is significant for investor claims of broker misconduct related to solicited investments in individual Puerto Rico Bonds, Puerto Rico closed-end funds and the use of margin loans which led to catastrophic losses.” Mr. Toskes continued, “Our investigations resulted in similar findings to those detailed in the FINRA AWC against Santander Securities that resulted in $6.4 million in fines and restitution for misrepresentations about risk, concentration in Puerto Rico Bonds and the use of margin and bank loans.”

The securities arbitration law firms of Klayman & Toskes, P.A. and Carlo Law Offices are dedicated to the rights of Puerto Rico investors. We are experienced, qualified and nationally recognized securities litigation attorneys. We are currently investigating Santander Securities, LLC for FINRA sales practice violations related to concentrated investments in individual Puerto Rico Bonds, Puerto Rico closed-end funds and the use of margin loans. Puerto Rico investors who have experience with or knowledge of Santander Securities sales practices, contact Steven D. Toskes, Esq. at 888-997-9956.

The Securities Arbitration Law Firm of Klayman & Toskes, P.A. Announces Investigation into FINRA Sales Practices Violations Related to Credit Suisse X-Links and Velocity Shares ETNs

By | Alternative Investments, Broker Misconduct, Featured Investigations, FINRA Sales Practice Violations, MArket-Linked Notes, Oil & Gas Investments, Securities Arbitration, Securities Concentration, Structured Securities Products | No Comments

Boca Raton, Florida (BUSINESSWIRE) – October 13, 2015 – The Securities Arbitration Law Firm of Klayman & Toskes, P.A., www.nasd-law.com, announces an investigation into Financial Industry Regulatory Authority (FINRA) sales practice violations by major Wall Street brokerage firms, including Credit Suisse Securities USA (“Credit Suisse”), related to Credit Suisse X-Links and Velocity Shares Exchanged Traded Notes (ETNs). Credit Suisse X-Links and Velocity Shares ETNs are issued by affiliated banks, Credit Suisse A.G and Credit Suisse Group A.G., ADR (NYSE:CS). In some instance, Credit Suisse X-Links and Velocity Shares performance is linked to oil prices, energy-related master limited partnerships and commodity indexes. Credit Suisse manages its proprietary X-Links and Velocity Shares ETNs, commonly known as structured securities products, to generate greater returns through the use of embedded derivatives designed to track the performance of a volatile security, index, commodity or currency, many times without any principal protections.

FINRA sales practice rules require a fair and balanced representation to investors that Credit Suisse X-Links and Velocity Shares ETNs are more complex and risky than a simple “interest rate” credit when based on a volatile index or commodity. Credit Suisse underwrites, manages and markets billions of dollars in Credit Suisse X-Links and Velocity Shares ETNs including the following:

  • Credit Suisse S&P MLP ETN (NYSE Arca: MLPO)
  • Credit Suisse X-Links Commodity Benchmark ETN (NYSE Arca: CSCB)
  • Credit Suisse X-Links Commodity Rotation ETN (NYSE Arca: CSCR)
  • Credit Suisse X-Links Cushing MLP Infrastructure ETN (NYSE Arca: MLPN)
  • Credit Suisse Velocity Shares 3X Long Crude ETN (NYSE Arca: UWTI)
  • Credit Suisse Velocity Shares 3X Natural Gas ETN (NYSE Arca: VGAZ)

On August 24, 2015, the Securities Exchange Commission (SEC) issued a SEC National Exam Program – Risk Alert Report which reviewed sales practices violations of major Wall Street brokerage firms related to supervision and sales of Structured Securities Products, similar to Credit Suisse X-Links and Velocity Shares ETNs. According to the SEC examination, deficiencies were found in some brokerage firms’ supervisory and sales practices related to the determination of “suitability” and “levels of concentration” in customer accounts.

Our investigation of major Wall Street brokerage firms, including Credit Suisse relates to sales practices related to Credit Suisse X-Links and Velocity Shares ETNs. Brokerage firm violations of FINRA sales practice violations may include misrepresentations and omissions of material facts, conflicts of interest, unsuitable investment advice, securities concentration or the failure to supervise its financial advisors. Our investigation relates to investments in Credit Suisse X-Links and Velocity Shares ETNs designed to track the Price of Oil, MLP Pipeline Indexes, Commodities Baskets, and in some instances are leveraged up to 300%.

About Klayman & Toskes, P.A.

Klayman & Toskes, P.A., an experienced, qualified and nationally recognized securities litigation law firm, is currently investigating FINRA sales practice violations of major Wall Street brokerage firms related to the sale of Credit Suisse X-Links and Velocity Shares ETNs. Investors who have knowledge or experience related to the sales practices of brokerage firms and its financial advisors’ recommended investment in Credit Suisse X-Links and Velocity Shares ETNs, contact Steven D. Toskes, Esq. at 888-997-9956.

The Securities Arbitration Law Firm of Klayman & Toskes, P.A. Investigates Claims of Customer Losses from Concentrated UPS Stock Positions Managed in Merrill Lynch’s Rampart Options Management Service (ROMS) Program

By | Blog, FINRA Sales Practice Violations, Securities Concentration | No Comments

Boca Raton, Florida (GLOBE NEWSWIRE) September 18, 2015 — The securities arbitration law firm of Klayman & Toskes, P.A. (“K&T”), www.nasd-law.com, announced today that it is investigating Financial Industry Regulatory Authority (FINRA) violations for Merrill Lynch customers with concentrated positions in United Parcel Service (“UPS”) (NYSE: UPS) stock managed in Merrill Lynch’s Rampart Options Management Service (“ROMS”) program. Merrill Lynch offers the ROMS program on a discretionary basis exclusively to high-net-worth clients holding stock positions exceeding $1 million through Rampart Investment Management Company (RIMCO), an independent money manager located in Boston, Massachusetts. According to Merrill Lynch, “The ROMS service can enhance the income potential of a concentrated stock position by leveraging a combination of modeling programs, experience and professional options management. Investors can likely increase cash flow on their stock by 2% to 6% annualized, with the potential for more depending on the stock’s individual characteristics and the client’s risk/return profile.”

According to K&T, the investigation encompasses Merrill Lynch sales practices for customers who acquired UPS stock through through UPS’ Managers Incentive Program or as an UPS employee, and were advised by Merrill Lynch to manage their concentrated UPS stock position through Merrill Lynch’s ROMS program. According to securities attorney, Steven D. Toskes, “Merrill Lynch must supervise financial advisor investment recommendations made to customers with concentrated stock positions, especially brokerage accounts managed on a discretionary basis” Mr. Toskes explains, “The ROMS program was unsuitable investment advice for UPS investors with low cost basis stock who did not want to have UPS stock ‘called away’ and trigger large capital gains tax. During the second half of 2013, UPS stock price gains resulted in substantial losses when share prices rose above call option strike prices selected by the ROMS program. A failure to recommend suitable option strategies for concentrated stock positions may be a cause of action available to Merrill Lynch customers in an individual securities arbitration claim filed with FINRA.” Securities concentration in UPS stock may result from investors’ desire to avoid taxes from the sale of low cost basis stock. No matter what the reason for maintaining a concentrated stock position, Merrill Lynch and its financial advisors must recommend suitable options strategies based on customer personal financial needs.

About Klayman & Toskes, P.A.

K&T an experienced, qualified and nationally recognized securities litigation law firm is currently investigating FINRA sales practice violations of Merrill Lynch related to customers with concentrated positions in UPS stock managed by Rampart Options Management Services. If you have knowledge or experience related to the sales practices of Merrill Lynch and its financial advisors recommendation of covered call option strategies for managed by Rampart Options Management Services, contact Steven D. Toskes, Esq. at 888-997-9956 or visit us on the web at www.nasd-law.com.

The Securities Law Firms Klayman & Toskes, P.A. and Carlo Law Offices Comment on Recent Standard & Poor’s Credit Downgrade Decision To Cut Puerto Rico Public Finance Corp. Bond Credit Ratings

By | Blog, Featured Cases, FINRA Sales Practice Violations, Puerto Rico Bond Funds, Securities Arbitration | No Comments

SAN JUAN, Puerto Rico (Globe Newswire) – July 21, 2015 – The Securities Arbitration Law Firm of Klayman & Toskes, P.A. (“K&T”), www.sueubspuertorico.com, and Carlo Law Offices comment on Standard & Poor’s (“S&P”) decision to downgrade the credit rating on debt issued by Puerto Rico Public Finance Corp’s (“PRPFC”) in 2011 and 2012 from “CCC-” to “CC”. The S&P rating agency downgrade came after the PRPFC failed to transfer money to the bond trustee for the $58 million bond payment due Aug 1st. As a matter of practice, funds are transferred 15 days in advance of payment date. With this development, S&P warned that a default on the payment due by the PRPFC on August 1st has now become “a virtual certainty.” S&P stated, “We believe a default on the PFC bonds would be further demonstration of increasing unwillingness to pay debt in full and also raises the potential for future unequal treatment between various types of bondholders.”

In a recent report Bond Buyer asserted that, “Holders of that debt may have no recourse.” In support of this opinion PRPFC Series 2004B Bond Offering documents declare that, “The 2004 Series B bonds will not constitute an obligation of the Commonwealth of Puerto Rico or any of its political subdivisions or public instrumentalities (other than the corporation), and neither the Commonwealth of Puerto Rico nor any of its political subdivisions or public instrumentalities (other than the corporation) will be liable thereon. The Corporation has no taxing authority.”

Securities arbitration attorney, Steven D. Toskes comments on the recent events, “The 2016 Puerto Rico budgetary process has begun to buckle under the strain of excessive debt levels. Investors in PRPFC issued 2004 Series B bonds are most likely the first to be faced with an actual default in interest payments.” Mr. Toskes continues, “This pending default should lead investors to consider loss recovery options, including a Financial Industry Regulatory Authority (FINRA) arbitration claim for the failure to disclose the risks associated with concentrated investments in Puerto Rico Bonds that is the result of a brokerage firm’s failure to supervise its financial advisors.”

 

Klayman & Toskes, P.A. and Carlo Law Offices are dedicated to the rights of Puerto Rico investors. Puerto Rico investors who suffered losses as a result of FINRA sales practice violations may be able recover their losses in a FINRA arbitration claim. Klayman & Toskes, P.A., a leading securities and litigation law firm, practices exclusively in the field of securities arbitration and litigation, on behalf of retail and institutional investors against major Wall Street brokerage firms.

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