Robert Rex's  Instablog

Rex Securities Law filed a FINRA arbitration claim on behalf of an elderly widow who was sold a number of unsuitable and risky limited partnerships and non exchange traded real estate investment trusts (REITs).

One of the limited partnerships is Reef Oil & Gas Income and Development Fund III LP.
According to the offering documents, this investment ,which went to the market in late 2007, was to be sold only to "accredited investors". The offering was closed in 2008 with nearly $90 million raised. Units were $100,000 each with a minimum purchase of 1/4 unit ($25,000) .

The SEC defines an accredited investor to include a person with a net worth , not counting the value of the primary residence, of $1 million or more or a person within income exceeding $200,000 in each of the two most recent years or joint income of over $300,000 a year. In addition, there must be a reasonable expectation of the same income in the current year.

In order to make sales, brokers are tempted to stretch the rules and as in this case, exaggerate income, net worth or both in order to get the sale approved. Limited partnerships and other alternative investments tend to have much higher commissions than conventional investments, hence the temptation.

Reef Oil and Gas sold a number of other investments in the oil patch, including these:

• Reef 2007-2009 Drilling Program
• Reef 2010 Drilling Fund
• Reef 2012-2013 Drilling Fund
• Reef 2011 Private Drilling Fund
• Reef 2012-A Private Drilling Fund
• Reef Global Energy I through IX
• Reef Income Funds, various years

Brokers have a duty to make suitable recommendations. If you were sold an investment and were not apprised of its risks or did not fully understand it, you may be able to recover damages. Likewise if the investment was only qualified for sale to accredited investors and you don't meet the financial criteria, you may have a claim for damages.

We have been help investors recover stock market losses for 25 years.

Free consultation. Nationwide representation.

Rex Securities Law

561 391 1900

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

To settle a recent FINRA enforcement action , In the Matter of Arthur Apostol, Respondent, (AWC 2012032570701, February 5, 2013, the subject broker, Mr. Apostol submitted a letter of Acceptance, Waiver and Consent. The action brought by FINRA was for a rules violations for an abuse that we see all too many times in the course of our practice representing clients seeking recovery of stock market losses.

The abuse we are talking about is when a broker decides it is much easier to sign his client's signature than it is to have the client sign the necessary documents.

In the instant case Mr. Apostol, who worked for NewAlliance Investments, was transferring to a new position at LPL Financial during the summer of 2011. As is generally the case, he desired to take as many of his old clients with him to his new job at LPL as possible. In order to transfer an account from one firm to another there are certain transfer documents that must be signed by the customer authorizing and acknowledging the transfer.

FINRA alleges that he submitted new account forms in connection with the transfer of the accounts on which he had affixed customer signatures by cutting and pasting signatures from other documents that contained authentic signatures. In addition, FINRA alleged that in several instances he had clients sign blank forms which he intended to complete in the future.

FINRA suspended Apostol for three months and fined him $5,000.According to the FINRA BrokerCheck site, Apostol is not currently registered with FINRA.

If you purchased an annuity, a limited partnership, a private placement or other alternative investment, in most instances there are documents that should have been presented to you for signature.

We have been helping investors recover investment losses for 25 years. Contact us for a no charge consultation if you have questions about losses in your brokerage account.

Nationwide representation.

Rex Securities Law

561 391 1900

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

John Thomas Financial, a broker/dealer owned and run by Tommy Belesis (Anastasios P Belesis) , who appeared in Oliver Stone's "Wall Street: Money Never Sleeps", is the subject of an investigation involving the FBI, FINRA & the SEC according to a story that appeared in the New York Post on February 7, 2013.

According to the story, the inquiry is focused on whether John Thomas Financial had received information in advance of Bristol-Myers Squibb deal to buy drugmaker Inhibitex.

Mr. Belesis FINRA records, available here, indicate he has a number of issues with customers and a former employer. One customer was awarded about $259,000 on a claim of churning, breach of contract and breach of fiduciary duty. He was discharged from S.W. Bach & Company because of "an inaccurate representation of identity to customer".

The day after this story broke, the Investment News announced that John Thomas Financial has withdrawn from a suit it filed against five ex-brokers alleging they used stolen proprietary information to lure customers away. According to that article, affidavits filed in response to the suit say that John Thomas, through Belesis, promoted a pump and dump stock scheme.

One example cited is Liberty Silver Corp., a company promoted by John Thomas. Liberty Silver traded at $1.55 in October before the SEC suspended trading. It is currently trading for about 39 cents.

In January 2009, John Thomas Financial was lead underwriter on a private placement offering for America West Resources (AWSR) that raised over $5 million. That stock was trading at over $2.75 in early January 2009. It currently trades a one penny.

John Thomas Financial and Belesis have been the focus of criticism in the past over their fund raising efforts in connection with AMBER Ready.

We have been helping investors recover investment losses for 25 years. If you have questions about losses in your stock brokerage account please contact us.

Nationwide representation.

Free consultation.

Rex Securities Law

561 391 1900

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.