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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
  • MARTINEZ-AYME SECURITIES SANCTIONED AGAIN FOR SECURITIES LAW VIOLATIONS

    The Martinez-Ayme Financial Group Inc. D/B/A Martinez-Ayme Securities was recently sanctioned by the Financial Industry Regulatory Authority (FINRA) for alleged violations of Rule 101 of Regulation M of the Securities Exchange Act of 1934 and the self-regulatory agencies rules in connection with a series of private placement offerings, including a company described as CPWV. This company's business was the development, commercialization and marketing of a series of electric generating power systems designed to produce electrical power with zero omissions or waste byproducts.

    Martinez-Ayme Securities has been a broker-dealer since August 6, 2001. The firm had 10 registered representatives during the relevant period with its principal office located in Miami, Florida. The broker-dealer engaged in the business of corporate debt, day trading, market making, mutual funds, internet/online accounts, private placements, proprietary trading inequities and served as an underwriter of corporate securities to the public.

    The brokerage firm was the manager and exclusive placement agent for several securities offerings by CPWV. According to FINRA, the broker-dealer raised $2.7 million from investors and was paid a placement agent and management fee of 10% of the gross proceeds but never notified FINRA of its participation in the offerings. FINRA also charged that Martinez-Ayme was subject to prohibitions regarding the bidding for or purchasing of CPWV shares during restricted periods but did so anyway during the period March 1, 2010 through July 31, 2012. FINRA alleged that the broker-dealer also failed to establish, maintain, and enforce written supervisory procedures pertaining to the firm's compliance with Regulation M or FINRA Rule 5190 during that period. Martinez-Ayme Securities consented to a $25,000 fine and censure without admitting or denying the allegations.

    This is one of four regulatory sanctions brought against the Miami, Florida based brokerage firm. In 2009 FINRA censured and fined Martinez-Ayme for failing to adequately implement or enforce its Anti-Money Laundering program. In 2005, it was fined for permitting registered representatives whose registrations were inactive due to failure to satisfy continuing education requirements to serve as brokers with the firm. Prior thereto, the broker-dealer was in trouble with the Maryland Division of Securities. In our opinion, the reoccurrence of regulatory violations is symptomatic of poor compliance and supervisory practices and procedures.

    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 Martinez-Ayme Securities, 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 19 2:36 PM | Link | Comment!
  • UBS PUERTO RICO BOND FUND INVESTORS CONTINUE TO LOSE

    Although there was a blip in the UBS sponsored Puerto Rico closed-end bond fund prices recently, the net asset values (NAVs) of the various funds have continued their move downward. The decline is a reflection of the Puerto Rican economy which has been in recession for nearly 8 years. The most recent NAV's published on November 27 and 29, 2013, put the value of the funds as follows:

    Although there was a blip in the UBS sponsored Puerto Rico closed-end bond fund prices recently, the net asset values (NAVs) of the various funds have continued their move downward. The decline is a reflection of the Puerto Rican economy which has been in recession for nearly 8 years. The most recent NAV's published on November 27 and 29, 2013, put the value of the funds as follows:

    Name of the Fund - NAV

    • Tax-Free Puerto Rico Fund: 5.08
    • Tax-Free Puerto Rico Fund II: 4.58
    • Tax-Free Puerto Rico Target Maturity Fund: 4.46
    • Puerto Rico AAA Portfolio Target Maturity Fund: 7.74
    • Puerto Rico AAA Portfolio Bond Fund: 7.31
    • Puerto Rico AAA Portfolio Bond Fund II: 8.26
    • Puerto Rico GNMA & US Govmt. Target Maturity Fund: 8.07
    • P.R. Mortgage-Backed & US Govmt. Securities Fund: 6.14
    • Puerto Rico Fixed Income Fund: 3.61
    • Puerto Rico Fixed Income Fund II: 4.22
    • Puerto Rico Fixed Income Fund III: 4.02
    • Puerto Rico Fixed Income Fund IV: 5.12
    • Puerto Rico Fixed Income Fund V: 4.56
    • Puerto Rico Fixed Income Fund VI: 5.42
    • Puerto Rico Investors Tax-Free Fund: 4.13
    • Puerto Rico Investors Tax-Free Fund II: 3.98
    • Puerto Rico Investors Tax-Free Fund III: 4.40
    • Puerto Rico Investors Tax-Free Fund IV: 3.87
    • Puerto Rico Investors Tax-Free Fund V: 4.23
    • Puerto Rico Investors Tax-Free Fund VI: 5.01
    • Puerto Rico Tax-Free Target Maturity Fund: 0.96
    • Puerto Rico Tax-Free Target Maturity Fund II: 1.60
    • Puerto Rico Investors Bond Fund: 4.44

    Notwithstanding, UBS Puerto Rico financial advisors have continued to recommend the funds as a defensive measure against lawsuits and arbitration claims. 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! The Puerto Rican economy has not turned the corner. In fact, it has not even approached the corner. Governor Alejandro Garcia Padilla is working hard, but the Federal government has offered nothing but another bureaucratic advisory council to the island. There can be no dispute that the combination of a long recession, a shrinking population, high unemployment, an unmotivated workforce, a population with a great dependence upon welfare benefits and overwhelming debt with a debt service at the highest rates will continue to crush the hopes of any recovery. The UBS Puerto Rico 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 18 3:21 PM | Link | Comment!
  • PUERTO RICO: DEFAULT TALK RAMPS UP!

    A couple of months ago when the press began its aggressive coverage of the Puerto Rican municipal bond market, default was never an option. However, Justin Vélez-Hagan, executive director of The National Puerto Rican Chamber of Commerce has called it inevitable. The Chamber of Commerce official has cited more than 10 facts for his opinion: 1) $70 billion of debt is now held by institutional investors and mutual funds; 2) the debt-to-GDP ratio is now nearly 70% and growing; 3) including pension obligations the debt-to-GDP ratio exceeds 90%; 4) the per capita debt load is $19,000 per person on this tiny island, which is many multiples over the debt load in any state; 5) the eight-year recession has contracted the economy by over 16%; 6) the 2014 budget deficit is estimated between $300-$800 million; 7) the repeal of IRS Rule 936 has caused the giant pharmaceutical manufacturers and many other mainland corporations to continue to close their businesses on the island; 8) Puerto Rico has become a welfare state with only 40% of eligible workers seeking employment; 9) federal government assistance programs account for 21% of Puerto Rico's economy; and 10) debt service is now 20% of the budget and before long, even if interest rates remain at 9%, the debt service will increase to 30, 40 or even 50% of the budget.

    There is no sign of relief. Officials in San Juan and Washington are adamant that a federal bailout is not on the table. The effort to raise taxes has run into political opposition and contributed to the faltering economy. The economy will continue to suffer with a mass exodus of young Puerto Ricans seeking employment on the mainland. Although Puerto Rico's Constitution offers bondholders strong guarantees that they would be paid before pensioners and public workers if the Government went broke, where will that money come from when the Commonwealth becomes a state of anarchy? The Commonwealth will simply not be able to refinance its debt as it has for the last 10 years, and if it does, the debt service expense will continue to spiral out of control.

    Notwithstanding, some UBS Puerto Rico, Santander Securities and Popular Securities financial advisors are still telling their clients not to worry about their overly concentrated and overly leveraged Puerto Rico securities portfolios. When will these advisors stop lulling Puerto Rico investors into believing that this market is a buying opportunity and their portfolios' market value will rebound? In the securities litigation world, the broker-dealers are engaging in what is known as fraudulent concealment. The brokers are covering up their misdeeds to avoid lawsuits and arbitration claims. It's time for Puerto Rico's investors to fight back against the profiteers of this faulty debt market of many years.

    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 17 11:20 AM | Link | Comment!
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