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Robert W Pearce
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Mr. Pearce has tried, arbitrated and mediated numerous disputes involving complex securities, commodities, administrative, contract, commercial, business tort and employment law issues for over 30 years. He has represented hundreds of clients in Federal and state courts (trial and appellate) as... More
My company:
The Law Offices of Robert Wayne Pearce, P.A.
My blog:
The Investor's Rights Law Blog
  • OPPENHEIMER FINED BY FINRA FOR EXCESSIVE MARKUPS AND FAILURE TO SUPERVISE

    Oppenheimer & Co., Inc. (Oppenheimer) was fined $675,000 by the Financial Industry Regulatory Authority (FINRA) and ordered to pay over $246,000 in restitution to customers for charging unfair prices in municipal securities transactions and for failing to have an adequate supervisory system. FINRA also fined Oppenheimer's head municipal securities trader, David Sirianni, $100,000 for his role in the excessive markups.

    According to Thomas Gira, FINRA Executive Vice President and Head of Market Regulation, "Oppenheimer charged customers unfair prices in numerous municipal securities transactions and failed to properly supervise municipal securities transactions with its customers." In the course of FINRA 's investigation, it found that Oppenheimer, through David Sirianni, unfairly priced 89 municipal securities transactions, 54 of which had markups exceeding 9.4%! Sirianni, himself, was allegedly responsible for determining these prices in the 89 transactions. FINRA alleged that Oppenheimer did not have the necessary supervisory practices and procedures in place to detect the unfair prices charged to its customers.

    Of course, Oppenheimer and Mr. Sirianni did not admit nor deny the charges but nevertheless consented to the entry of FINRA's findings. But this is not the first time that Oppenheimer has been sanctioned by FINRA. There are over 66 regulatory events and 173 customer arbitration complaints reported against Oppenheimer. Make sure you investigate the firm and it's representative thoroughly before you transact any business with any broker-dealer.

    Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement these protective measures, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered losses stemming from excessive markups and/or other fraudulent activity by their broker can bring forth claims to recover damages against broker-dealers like Oppenheimer, which should consistently oversee its employees' activities in order to prevent the above-described prohibited conduct.

    The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. Please see our Instablog profile (left column) for ways to contact us and get answers to any of your questions about this blog post and/or any related matter.

    Dec 31 1:33 PM | Link | Comment!
  • MERRILL LYNCH SETTLES $131.8 MILLION DOLLAR FRAUD CLAIM

    The United States Securities and Exchange Commission (SEC) charged Merrill Lynch with false and misleading disclosures relating to two collateralized debt obligations (CDOs) and false records relating to a third CDO. Merrill Lynch settled the case for $131.8 million simultaneous with the filing of the SEC's charges. According to the SEC, Merrill Lynch hid important facts from investors about a hedge fund known as Magnetar Capital, LLC and its involvement over the selection of collateral for the CDOs Octans I CDO Ltd. and Norma CDO I Ltd. Magnetar had undisclosed conflicts of interest. It bought the equity in the CDOs and hedged that equity position by shorting against the CDOs themselves.

    According to George S. Canellos, one of the SEC's Division of Enforcement Co-directors, "Investors did not have the benefit of knowing that a prominent hedge fund firm with its own interests was heavily involved behind the scenes in selecting the underlying portfolios." The SEC revealed damning emails in its press release. One email explained the secret arrangement: "We pick mutually agreeable (collateral) managers to work with, Magnetar plays a significant role in the structure and composition of the portfolio... And in return (Magnetar) retains the equity class and we distribute the debt." Magnetar's ability to influence the portfolio composition was in conflict with the interest of the debt investors. Merrill Lynch misrepresented the parties to the warehouse agreement; it hid the fact that Magnatar was one of three parties to the agreement. Magnatar excuted trades that were within its contractual rights but not in the best interest of the debt holders.

    Merrill Lynch agreed to pay disgorgement of $56,286,000, prejudgment interest of $19,228,027, and a penalty of $56,286,000 and a censure. It also agreed to cease and desist from future violations of the Securities Act of 1933 and Securities Exchange Act of 1934, for whatever that is worth, since it has signed numerous settlement agreements with the same provision in the past and not stopped violating those securities laws.

    The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. Please see our Instablog profile (left column) for ways to contact us and get answers to any of your questions about this blog post and/or any related matter.

    Dec 30 1:13 PM | Link | Comment!
  • MORE HEADWINDS FOR UBS PUERTO RICO BOND FUND INVESTORS

    Three weeks ago, Fitch Ratings placed Puerto Rico's BBB minus credit rating on negative watch which meant the next step was to downgrade Puerto Rico's general obligation bonds to junk status. Yesterday, the Moody's Investors Service joined in Fitch Ratings' analysis and placed Puerto Rico's general obligation bonds and related credit on review for possible downgrade to junk bond status as well. Both Moody's and Fitch, as well as Standard & Poors rate Puerto Rico debt a single level above junk. All three rating agencies have expressed concerns about the Island's inability to access the market for refinancing at reasonable rates; the extent to which budget targets for the current fiscal year are being met; the instability in the performance of the Puerto Rico economy.

    All three of these rating agencies have impacted Puerto Rico bond prices and consequently the value of the UBS Puerto Rico closed-end bond funds held by so many Puerto Rico investors. Undoubtedly, the net asset values (NAVs) of the various funds which have continued to move downward will decline further when the reports are released next week. The most recent NAV's published on December 4, 2013, put the value of the funds as follows:

    Name of the Fund - NAV

    • Tax-Free Puerto Rico Fund 5.02
    • Tax-Free Puerto Rico Fund II 4.55
    • Tax-Free Puerto Rico Target Maturity Fund 4.46
    • Puerto Rico AAA Portfolio Target Maturity Fund 7.65
    • Puerto Rico AAA Portfolio Bond Fund 7.24
    • Puerto Rico AAA Portfolio Bond Fund II 8.17
    • Puerto Rico GNMA & US Govmt. Target Maturity Fund 8.00
    • P.R. Mortgage-Backed & US Govmt. Securities Fund 6.12
    • Puerto Rico Fixed Income Fund 3.53
    • Puerto Rico Fixed Income Fund II 4.13
    • Puerto Rico Fixed Income Fund III 3.93
    • Puerto Rico Fixed Income Fund IV 5.04
    • Puerto Rico Fixed Income Fund V 4.46
    • Puerto Rico Fixed Income Fund VI 5.38
    • Puerto Rico Investors Tax-Free Fund 4.06
    • Puerto Rico Investors Tax-Free Fund II 3.91
    • Puerto Rico Investors Tax-Free Fund III 4.32
    • Puerto Rico Investors Tax-Free Fund IV 3.80
    • Puerto Rico Investors Tax-Free Fund V 4.17
    • Puerto Rico Investors Tax-Free Fund VI 4.92
    • Puerto Rico Tax-Free Target Maturity Fund 0.96
    • Puerto Rico Tax-Free Target Maturity Fund II 1.60
    • Puerto Rico Investors Bond Fund 4.37

    Notwithstanding, UBS Puerto Rico, Santander Securities, Popular Securities, Merrill Lynch and Oriental Financial Advisors have continued to recommend the funds as good investments. A large number of investors have called our offices with stories about how their brokers claim this is a buying opportunity. Nothing could be further from the truth as evident by all three agencies ratings! These financial advisors simply have no reasonable basis for their recommendations.

    The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. Please see our Instablog profile (left column) for ways to contact us and get answers to any of your questions about this blog post and/or any related matter.

    Dec 27 2:11 PM | Link | Comment!
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