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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
  • BROKERS NATIONWIDE RESTART PUSH FOR INVESTORS TO BUY REVERSE CONVERTIBLES

    Investors are once again being pushed into structured products such as reverse convertibles by brokers who tout sturdy profits and very little downside risk. However, representatives are unable to account for why products like reverse convertibles have been unable to deliver stellar returns without posing a significant risk to investors' capital. Reason being is that more than most brokers do not understand how reverse convertibles work and are only selling them because of the hefty commission.

    Reverse convertibles are alternative investments that are not suitable for all investors. Their complexity is hardly ever understood, and they are oftentimes misrepresented as fixed income products. Reverse convertibles are made of a note and a derivative. The note is a loan by the investor to the issuer that pays an income stream to the investor, while the derivative establishes the payment at maturity. The derivative can either be a put option, which would allow the issuer to sell the underlying derivative or security back to the investor, or it can be a call option, which would allow the issuer the right to buy the underlying security at a predetermined price.

    One example of an investor who lost money after buying Wells Fargo reverse convertibles is Dominic Annino. The 78-year-old invested $300,000.00 and lost money after the underlying stocks fell. Mr. Aninno filed an arbitration complaint with FINRA and alleged that the broker never fully explained the reverse convertibles to him.

    Most investors are not capable of evaluating whether reverse convertibles are suitable investments. What investors should recognize though is that reverse convertibles put principal at risk if the price of the underlying security rises above or falls below a predetermined amount. The issuer will either sell or buy the security, which may cause investors to lose a significant amount of principal. However, investors are attracted to reverse convertibles because of their yields; reverse convertibles have averaged 13% in certain years. This comes as no surprise since yields on CDs and other conservative investments are near all-time lows, and fixed income investors need to generate income to pay bills and keep up with increasing costs. Still, investors must realize that reverse convertibles are not the solution. Rather than chase yields and risk losing hard earned savings, investors need to stick to what is suitable for them in order to avoid financial calamity.

    Have you suffered a loss in a reverse convertible? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.

    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. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

    Jan 09 11:42 AM | Link | Comment!
  • WHISTLEBLOWER PAYDAY COMING SOON!

    The SEC is expected to pay hundreds of millions of dollars to whistleblowers very soon. In fact, according to a New York Post article, "SEC set to hand out up to $452M to whistleblowers." Whistleblowers can collect from 10 percent to 30 percent of what the government recovers when a tip has helped the government obtain the recovery. So far, tips have exposed all manner of corporate wrongdoing, ranging from insider trading and rigged bonds deals to cover-ups of cooked books and bribes. SEC officials are eager to pay out and publicize the first whistleblower award, as they anticipate the news will result in a flurry of new tips.

    A case against Wachovia Bank is illustrative of how the program works. Last December the bank paid a penalty of $25 million to settle a probe into rigging municipal bond sales. If a whistleblower's tip helped the SEC bring the case, it could be worth up to 30 percent of the SEC's take to the whistleblower - or $7.5 million.

    Other large whistleblower awards could flow from the following SEC recoveries, among others:

    • $92.8 million in penalties from convicted hedge fund boss Raj Rajaratnam,

    • $59.6 million from Hungarian telecom Magyar Telekon to settle charges of bribing officials,

    • $22 million from RBC Capital Markets to settle a probe into rigging muni bond deals, and

    • $32.5 million from JP Morgan Securities to end a probe into irregularities in bond sales.

    SEC investigators received nine tips per day on average during the first two months the program was launched.

    The whistleblower program, a product of Dodd Frank legislation, may be the best strategy the SEC has deployed since it has been formed. People now have an incentive to report fraud. The tipsters can remain confidential and justice can be served at the same time through attorney representation. Robert Pearce, a former SEC Enforcement Division attorney, has close ties with the Division and his firm is well equipped to represent confidential informants and secure their reward for helping to protect the integrity of the financial markets!

    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. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

    Jan 09 11:27 AM | Link | Comment!
  • CAN I RECOVER MY BEHRINGER HARVARD REAL ESTATE INVESTMENT TRUST LOSSES?

    Many investors in the non-traded Behringer Harvard REIT have inquired about their ability to recover their losses after learning that their fund is no longer valued as much as they were previously led to believe. As a result, many claims are being filed by Behringer Harvard REIT and other REIT investors for misrepresentation, unsuitable recommendations and/or overconcentrations of their investment funds in Behringer Harvard REIT and other REIT investments to recover their REIT losses.

    At first blush, one may think that the best claim is against the Behringer Harvard REIT itself and its management but one needs to remember why they first invested. Undoubtedly, the Behringer Harvard REIT and other REIT investments were recommended by your brokerage firm and financial advisor who have a fiduciary duty to not misrepresent or omit to state important facts, perform due diligence on any REIT and first make sure that the investment is suitable at all for any investor and then specifically ensure that the investment is appropriate in light of the investor's actual age, investment experience, investment objectives, tax and financial condition. If the brokerage firm and its advisor fail in fulfilling any one of these duties under common law and under the FINRA Code of Conduct, investors will have the right to recover their investment losses against them through a FINRA arbitration proceeding and/or court if no arbitration agreement has been executed.

    The most common misrepresentation and misleading statement claims that the Behringer Harvard REIT and other REIT investors have been making relate to the risk associated with the non-traded REITs. Many investors have complained that the Behringer Harvard REIT and other REITs were not adequately represented before purchase and that they did not know the real truth about the valuations, performance, prospects, liquidity, or distribution and redemption practices of management relating to their investment. Many elderly investors seeking income were overconcentrated in Behringer Harvard REITs and other REITs because they needed income. Sadly they learned too late that there were no guarantees that distributions would be made. Some REIT investors have just learned that they would no longer be receiving distributions or that the distributions they actually received were derived from loans and not the true cash flow of the REIT. Brokerage firms and their financial advisors were eager to push REIT investments on their clients for the high commissions compared to other products. Unfortunately, many investors are locked in and unable to sell their REIT investments without suffering without selling into deeply discounted secondary market for some other REIT investments. If you are a Behringer Harvard REIT investor with the same complaints, we believe we can help you recover your REIT losses!

    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. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

    Jan 09 11:21 AM | Link | Comment!
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