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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
  • MARGOT HELEN MYERS FINED AND SUSPENDED BY FINRA FOR FALSIFYING AND FORGING INVESTMENT ADVISOR DOCUMENTS

    Margot Helen Myers, a broker employed by Scottsdale, Arizona-based Arque Capital, LTD submitted an Offer of Settlement in which she consented to, but did not admit to or deny, the described sanctions and the entry of the Financial Industry Regulatory Authority's (FINRA) findings that she falsified and forged investment advisor (IA) documents. Ms. Myers met with customers to discuss Roth and Traditional Individual Retirement Accounts (IRAs) as well as the 401(k) plan for their company. FINRA stated that the customers decided to have solely the Roth IRAs managed by an outside IA. Subsequently, one of the customers notified Ms. Myers that the IA was not managing the customers' Roth IRAs because the accounts did not contain the minimum account balances to qualify for management. Thereafter, FINRA alleged that without the customers' knowledge, consent, or authorization, Ms. Myers changed the date on the IA documents that authorized the IA to manage the customers' Roth IRAs (so it would appear they were signed on a later date), copied the documents, changed the account type from Roth IRA to 401(k) on the new copies, and changed the date to the later date on the new copies, which resulted in the creation of documents that appeared to authorize the IA to manage the customers' 401(k) accounts. The IA ultimately rejected the documents because Ms. Myers used the wrong form and the accounts did not contain the required minimum account balances. Ms. Myers allegedly printed new IA documents from a related website which would authorize the IA to manage the customer's 401(k) accounts, completed these documents, forged the customers' signatures, and submitted the documents to the IA. This caused the IA to begin managing the 401(k) accounts.

    In addition, Ms. Myers allegedly completed a separate written disclosure statement, which indicated the IA would pay Ms. Myers a referral fee of up to 20 percent of the advisory fee charged and paid by the customers' company. As a result of all this, Ms. Myers, of Phoenix, Arizona, was fined $7,500 and suspended from association with any FINRA member in any capacity for five months. The suspension is in effect from August 5, 2013, through January 4, 2014.

    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 account document falsifications and/or forgery by their broker can bring forth claims to recover damages against broker-dealers like Arque Capital, which should consistently oversee its brokers' 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 11 2:43 PM | Link | Comment!
  • MAYAGUEZ, PUERTO RICO BOND INVESTORS WILL SOON OWN JUNK BONDS

    We last wrote about UBS Puerto Rico, Santander Securities and Popular Securities brokers recommending that their Mayaguez, Puerto Rico clients get back into the Puerto Rico bond market and we warned you against doing so. We hope you listened because yesterday the Fitch Ratings agency said it may soon strip the heavily indebted Puerto Rico of its investment grade credit rating. Fitch Ratings threatened to tag the U.S. territory with junk bond status. Fitch Ratings said it had placed Puerto Rico's BBB- General Obligation bond rating on negative watch, meaning it was considering a further reduction in the ratings to junk bond status. Undoubtedly, Puerto Rico bond prices will continue to fall, interest rates will continue to rise and the cost of issuing new debt in Puerto Rico will rise as well.

    None of this looks good for Mayaguez, Puerto Rico bond investors because the Puerto Rican economy, where interest rates have risen sharply in the last 3 months amid worries about its finances, appears to be tumbling back into recession. The additional financing costs will only accelerate the economic decline.

    For example, the cost to insure Puerto Rico debt against default has soared as measured by the credit default swaps market. A contract to insure 100 million of Puerto Rico bonds for 5 years is just below its peak last month of 799 basis points that including the 20.4% or $20.4 million in upfront costs to insure $100 million of Puerto Rico's bonds.

    The negative ratings were not limited to Puerto Rico's General Obligation bonds but also attached to the Puerto Rico building authority government facilities revenue bonds, the Puerto Rico Aqueduct and Sewer us Authority bonds and debt issued by the Employees Retirement System of the Commonwealth of Puerto Rico.

    We can clearly see a market decline in the prices for the individual Puerto Rico bonds. However, and perhaps it's because UBS Puerto Rico wants to hide the bad news, we cannot see the immediate effect of the lower ratings on the prices of the UBS Puerto Rico Closed-End Bond Funds. UBS Puerto Rico has not published the most recent valuation of the funds. The last reported valuation on the UBS Puerto Rico website was November 6, 2013 as follows:

    Name of the Fund - NAV

    • Tax-Free Puerto Rico Fund: 5.189
    • Tax-Free Puerto Rico Fund II: 4.614
    • Tax-Free Puerto Rico Target Maturity Fund: 4.432
    • Puerto Rico AAA Portfolio Target Maturity Fund: 7.779
    • Puerto Rico AAA Portfolio Bond Fund: 7.291
    • Puerto Rico AAA Portfolio Bond Fund II: 8.202
    • Puerto Rico GNMA & US Govmt. Target Maturity Fund: 8.108
    • P.R. Mortgage-Backed & US Govmt. Securities Fund: 6.161
    • Puerto Rico Fixed Income Fund: 3.637
    • Puerto Rico Fixed Income Fund II: 4.267
    • Puerto Rico Fixed Income Fund III: 4.047
    • Puerto Rico Fixed Income Fund IV: 5.204
    • Puerto Rico Fixed Income Fund V: 4.648
    • Puerto Rico Fixed Income Fund VI: 5.549

    Think back Mayaguez, Puerto Rico investors and remember what they were telling you last year as the market started to decline. These advisors are only looking for investors to swap out Puerto Rico closed-end bond funds and Puerto Rico bond investments with other investors who have threatened to sue (and rightfully so) for the misrepresentations, unsuitable recommendations, the use of margin or non-purpose loans to buy the bond funds, and/or excessive concentration of their retirement nest eggs in junk bonds.

    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 10 10:12 AM | Link | Comment!
  • JILL MEREDITH CARR FINED AND SUSPENDED BY FINRA FOR FORGING CUSTOMER SIGNATURES

    Jill Meredith Carr, a former broker employed by Overland Park, Kansas-based Waddell & Reed, Inc., submitted a Letter of Acceptance, Waiver and Consent in which she consented to, but did not admit to or deny, the described sanctions and the entry of the Financial Industry Regulatory Authority's (FINRA) findings that she forged the signatures of at least 15 firm customers on forms and altered information on other forms after those forms had been signed. FINRA stated that in connection with a firm-required update of certain suitability forms, which are utilized to update current suitability information for all customers' accounts, Ms. Carr forged the customers' signatures on update forms without the customers' knowledge, authorization, or consent. Ms. Carr also allegedly forged the signatures of additional customers on update forms as an accommodation to those customers, forged a customer's signature on an Exchange Account Service Request form, and forged the signatures of some other customers on variable annuity Delivery Receipt forms. According to FINRA, Ms. Carr altered the information on a New Account Form after it had been signed and kept at least two signed, but otherwise blank, Exchange Account Service Request forms in another customer's file. Ms. Carr, of Ellicott City, Maryland, was fined $10,000 and suspended from association with any FINRA member in any capacity for two years. The suspension was in effect from August 5, 2013, through August 4, 2015.

    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 forged signatures by their broker can bring forth claims to recover damages against broker-dealers like Waddell & Reed, which should consistently oversee its brokers' 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 10 9:50 AM | Link | Comment!
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