Posts belonging to Category Alternative Investments



Front-End Bonus Payments May Need To Be Disclosed

 

If your broker or financial adviser told you he was moving to another brokerage firm and asked you to move your account there, would you want to know if he was being paid thousands or millions of dollars to make the move?  The Financial Industry Regulatory Authority (FINRA) thinks so, and is proposing a new [...]

Alternative Investments – Big Problems

 

According to financial advisers, do not be fooled by the recent market in stocks into believing that we are in for a continuing period of sustained low volatility.  Those advisers want you to expect lots of volatility and market corrections and to invest accordingly. In light of the foregoing, investors should adopt alternative investment strategies [...]

Promissory Note Award Hits Broker-Dealer Hard

 

A Financial Industry Regulatory Authority (FINRA) Arbitration Panel has ordered MML Investors Services LLC to pay $1,137,923 to a California investor in connection with the sale of an unregistered security (a promissory note) issued by Diversity Lending Group, Inc. (“DLG”).  The award includes compensatory damages plus reimbursement for expert witness fees, deposition costs, and the [...]

OppenheimerFunds Pays $35 Million to Settle Charges

 

OppenheimerFunds  Inc. has agreed to pay more than $35 million to settle SEC charges that it  made misleading statements about two of its mutual funds during the credit crisis in late 2008.  The payments include a penalty of $24 million, disgorgement of $9,879,706, and prejudgment interest of $1,487,190. According to the SEC, Oppenheimer used total [...]

Alternative Investments – Are They All They Are Cracked Up To Be?

 

Rising interest rates may be death to traditional bonds and bond funds, but a number of alternative investment strategies allegedly designed to protect principal in a rising interest rate environment are springing up to take their place.  It remains to be seen whether they will provide ballast when bond prices fall. For decades, bond investors [...]

CDOs Haunt UBS

 

Swiss banking giant UBS AG is reported to be engaged in settlement discussions with the U.S. Securities and Exchange Commission regarding its structuring and underwriting of an allegedly fraudulent mortgage bond deal.  The SEC has alleged that UBS defrauded clients that invested over $748 million in notes linked to a CDO known as ACA ABS [...]

Hedge Fund Scams Harm Investors

 

Anastasios “Tommy” Belesis, owner of John Thomas Financial, a brokerage firm, and George R. Jarkesy Jr., a hedge fund manager, worked together to defraud investors in the John Thomas Bridge and Opportunity Fund LP I and John Thomas Bridge and Opportunity Fund LP II, according to a recently filed SEC complaint.  The funds reportedly invested [...]

Regulators Focus on Complex Alternatives

 

The Financial Industry Regulatory Authority (FINRA), as well as the SEC and state regulators, have announced that they are concerned about broker/adviser sales practices involving alternative investments including variable annuities and equity-indexed annuities. They have the distribution of these complex products on their radar screens.  On January 11, 2013, FINRA sent a letter to its [...]

Investors are Gorging on Junk Bonds

 

Prices of “junk” bonds keep rising as investors continue to buy the riskier debt.  Yields on junk bonds, which move inversely to bond prices, settled at a record low of 5.56% recently.  Demand for junk bonds is part of the yield-seeking behavior recommended by advisers to many fixed income investors, as they venture further out [...]

Structured Products Pose Major Risks for Investors

 

Danger lies ahead for investors in structured products. Structured products were once used only by institutions and sophisticated investors that had the education, training and experience needed to fully understand these complex and opaque alternative investments.  Over the past several years, however, structured products have been sold to individual investors, who do not understand the [...]

Alternative Investments are no Panacea

 

Why do investors continue to be enamored with hedge funds and other alternative investments? The press recently reported that institutional investors are expected to increase allocations to hedge funs by 300% this year, and hedge fund assets are expected to increase by 11% to $2.5 trillion, according to the 11th annual survey of institutional investors [...]

Bond Market – ‘Irrational Exuberance?’

 

Recent warnings regarding dangers in the bond market were recently issued by bond maestro Bill Gross. These warnings are reminiscent of Alan Greenspan’s implicit warning in a 1996 speech when he asked: “How do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions?”  Specifically, Mr. [...]

Low Yields Push Investors into Very Risky Alternatives

 

The financial world continues to beat the drum warning investors about the risk of bonds.  When interest rates rise (or when the market believes a significant rise in interest rates is imminent) bond prices will fall, and investors in bond funds and individual bonds will suffer declines in value and/or losses.  Retirees and others, who [...]

Deutsche Bank Loses $934,000 in Arbitration

 

On February 8, 2013, a Financial Industry Regulatory Authority (FINRA) arbitration panel ordered Deutsche Bank and its former registered representative, Karl Hahn, to pay $934,000 to a couple who had sought to recover $2,193,931 for losses associated with the improper sale of premium-financed life insurance.  The award included $100,000 in attorney’s fees.  Hahn worked in [...]

Court Finds Against Morgan Keegan in Auction Rate Securities Case

 

Federal District Court Judge William Duffey Jr. has ruled that Morgan Keegan was negligent in telling clients that $2 billion of auction rate securities it was selling in late 2007 and 2008 had “zero risk.”  In the action filed by the SEC, Morgan Keegan was ordered to buy back some of the auction rate securities [...]