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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
  • FINRA BARS RAYMOND JAMES BROKER PAUL ARNOLD FOR MISAPPROPRIATION

    According to FINRA, Raymond James and Associates, Inc. (Raymond James) stockbroker Paul David Arnold (Arnold) misappropriated and misused funds of an 88-year-old customer. The regulator alleged that during the period May 2010 through April 2011 that Arnold, a stockbroker in Raymond James' Largo, Florida office, had customers sign blank checks that Arnold later made payable to his own wife and son without the customer's authorization. FINRA found that Arnold misappropriated and misused $173,600 in customers' funds. Arnold did not contest the charges and failed to appear for testimony on two separate occasions. The customer received an arbitration award against Arnold and appears to have settled his claim against the broker-dealer. Arnold has been permanently barred from serving in any capacity in the securities industry.

    This is just another case of elder abuse, a crime that is becoming more and more prevalent as our population ages. The customer was an 88-year-old widower who placed blind trust in a Raymond James stockbroker to help him with his financial affairs. Family members and friends must be vigilant for abuse of their elders by financial advisors. There is too much opportunity for financial advisors to take charge of their clients' finances. Stockbrokers are generally not permitted to take discretion over customers' accounts, even with written authority which is absolutely required if they do so. Stockbrokers are also prohibited by firm's policies and procedures from serving as trustees of clients' trusts without their employers express authorization. This is because discretionary accounts and trustee relationships are avenues for abuse.

    Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages due to broker misappropriations such as those misappropriations allegedly committed by Mr. Arnold can bring forth claims to recover losses against Raymond James & Associates, which could have prevented brokers from committing illegal activity.

    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 24 10:27 AM | Link | Comment!
  • "2013 MOST EFFECTIVE LAWYER" FINALISTS FOR $2.75 MILLION AWARD AGAINST WELLS FARGO

    This week the "Daily Business Review" recognized more than 80 attorneys in 12 practice area categories as the "Most Effective Lawyers" in South Florida. Robert W. Pearce and Adam Kara-Lopez of the Law Offices of Robert Wayne Pearce, P. A. were recognized in the Mediation and Arbitration category.

    According to the editors of the Daily Business Review, the selection was made after reviewing a long list of nominees and the course of a 3 month investigation. DBR law reporters and several outside contributors researched and further reported on the cases handled by the finalists. In some cases, DBR spoke with the nominee's adversaries in clients and consulted case files. The "Most Effective Lawyer" award is a recognition of not only the success but the tireless efforts of lawyers on behalf of their clients -- the ultimate measure for any lawyer.

    We were fortunate to be recognized as finalists for our work in an arbitration proceeding against Wells Fargo Advisors f/k/a Wachovia Securities which resulted in a $2.75 million award for one of our clients this year.

    Mediation and arbitration is supposed to be faster and more cost-effective than going to court. However, it was neither in this case involving the theft of millions of dollars from a family run limited partnership that retained our law firm. The arbitration took more than three years to resolve as attorneys for Wachovia Securities n/k/a Wells Fargo Advisors employed numerous delaying tactics before their client was ultimately ordered to pay the partnership $2.75 million. The case arose out of Wells Fargo's failure to detect and investigate over 100 unauthorized transactions involving millions of dollars transferred from the partnership's account at the brokerage firm. One of the brokerage employees went so far as to create a false power of attorney to give an unauthorized person control over the account that held most of the assets that were illegally transferred. There were numerous red flags. Had the brokerage enforced its own policies and procedures and followed industry rules and regulations, it certainly would have detected the theft. The arbitrators recognized the brokerage firm's negligence and gave the partnership the justice it deserved.

    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 23 2:10 PM | Link | Comment!
  • J.P. TURNER OWES $700,000 FOR UNSUITABLE ETFS AND MUTUAL FUND INVESTMENTS

    J.P. Turner & Co., LLC (J.P. Turner) was ordered by the Financial Industry Regulatory Authority (FINRA) to pay over $700,000 in restitution to more than 80 customers for sales of unsuitable leveraged and inverse exchange-traded funds (ETFs) and for excessive mutual fund switches by its registered representatives. This was just the tip of the iceberg and undoubtedly many more J.P. Turner customers have suffered from these unlawful sales practices.

    Leveraged and inverse ETF's are highly complex and risky investments. According to Brad Bennett, FINRA's Chief Enforcement Officer, "Registered representatives must understand the complex products they are selling and the risks inherent to the products, and be able to determine if they are suitable for investors before recommending them to retail customers. Firms also have a fundamental obligation to monitor conservative investments such as mutual funds to ensure that investors are not abused by excessive trading recommended by their registered representatives."

    Leveraged and inverse ETF's are short-term investments. Investors who buy and hold them probably do not understand the nature, mechanics and risks of these investments. They "reset" daily, meaning they are designed to achieve their objectives on a daily basis and their performance can quickly diverge from the performance of the underlying Index or benchmark. Investors who purchased these ETFs for the long term can suffer significant losses even if the long-term performance of the Index showed a sizable gain. In volatile markets, the losses on a daily basis can be extreme.

    FINRA alleged that J.P. Turner did not have the necessary supervisory practices and procedures in place for leveraged and inverse ETF's. They cannot be supervised the same way as traditional ETFs. FINRA found that J.P. Turner's registered representatives were not properly trained to understand the nature and risks of these investments. The regulatory agency determined that J.P. Turner allowed it's salesmen to recommend these complex products without performing reasonable due diligence. Many J.P. Turner customers purchased and held leveraged and inverse ETF's for many months which was inappropriate.

    In the course of FINRA's investigation, it also discovered an unacceptable pattern of unsuitable mutual fund switching in clients' accounts at J. P. Turner. Unlike leveraged and inverse ETF's, mutual fund shares are typically held as long-term investments and are not proper vehicles for short-term trading because of the high transaction costs. FINRA alleged that J.P. Turner had an insufficient supervisory system designed to prevent such unsuitable mutual fund switching and lacked procedures to monitor such excessive trading in mutual funds. According to FINRA, there were more than 2800 mutual fund switches resulting in excessive commissions and sales charges.

    Of course J.P. Turner 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 J.P. Turner has been sanctioned by FINRA. There are over 21 regulatory events and 12 customer arbitration complaints reported against J.P. Turner. 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 unsuitable recommendations, material misrepresentations, omissions, and/or other fraudulent activity by their broker can bring forth claims to recover damages against broker-dealers like J.P. Turner, 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 20 3:42 PM | Link | Comment!
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