Valenti Hanley PLLC

Legal Issues Blog

Are the securities you're purchasing protected by Blue Sky law?

As savvy investors know, before investing, potential investors should review the investment for viability and suitability. But how can investors trust the information regarding the investment? One way to verify legitimacy is to see if the securities are registered with Kentucky's Securities Division in accordance with Blue Sky laws.

Warning Signs Of Broker Fraud

You count on an investment broker to not only safeguard your investments but to grow them into a comfortable nest egg for your retirement or other monetary goals. Partnering with a well-known brokerage firm with an excellent reputation seems like a great way to leverage your savings into something more substantial.

However, despite the great trust that investors across the United States place in their brokers, some investment accounts are irreparably damaged by investment fraud. Perpetrated by the exact individuals they trusted so much, the unfettered access investors gave brokers to their portfolios can easily turn into securities fraud. 

Unauthorized Trading

Carlos Benavidez, Jr. (CRD #5013554, Louisville, Kentucky) submitted an AWC in which he was fined $10,000 and suspended from association with any FINRA member in any capacity for two months. Without admitting or denying the findings, Benavidez consented to the sanctions and to the entry of findings that he exercised discretion in effecting hundreds of securities transactions in customers' accounts without obtaining the customers' prior written authorization or his firm's prior written approval.

The findings stated that Benavidez participated in the backdating of customers' notes that had been created in a firm program in order to falsely reflect that he or another representative had conversations with customers on a previous date, before the trades were affected. As a result, Benavidez caused his firm to have inaccurate records.

Investigating Kentucky Broker Christopher Lee Hibbard

We are investigating claims by investors against former Louisville, Kentucky-based broker Christopher Lee Hibbard, who was fired by Merrill Lynch in February 2018 in the midst of an ongoing investigation over allegations of fraud, theft, and unauthorized trading relating to customer accounts. Hibbard was with former brokerage firm Morgan Keegan (acquired by Raymond James) from 2004 to 2010, before joining Merrill Lynch in July 2010. 

What happens if my securities fraud claim is never paid?

Can you imagine suffering from investment fraud, going through the motions to pursue a successful securities arbitration claim against the brokerage firm that defrauded you and then never getting paid after receiving a favorable arbitration award?

Unfortunately, this situation happens from time to time, leaving defrauded investors in a lurch, but a new Senate bill could protect harmed investors from this outcome. The Financial Industry Regulatory Authority (FINRA) may soon be required to set up a fund that will pay securities fraud arbitration claimants their unpaid arbitration award money.

Tesla shareholders file suit amid post-tweet stock price drop

Shareholders in Kentucky and throughout the country who own stock in Tesla, Inc. were intrigued and more than a little concerned when its chief executive officer, Elon Musk, took to Twitter. On Aug. 7, he posted this cryptic tweet: "Am considering taking Tesla private at $420. Funding Secured."

The tweet first sent the stock price up to nearly $380 -- an 11 percent jump. However, over the next two weeks, it plummeted when no evidence of this funding could be found. Investors began to doubt the veracity of Musk's statement, and by Aug. 30, the stock price was just over $303.

Investment advisers must behave ethically or clients can suffer

Making investments isn't for the weak-hearted. There are some instances in which you can lose massive sums of money. You might hope for the best, but the market is unpredictable. While it is often tolerable to lose money due to factors like a dip in the market or a sudden drop in the price of a stock, you should never have to worry about a loss due to your financial adviser acting in an unethical manner.

Unfortunately, there are times when these advisers might do things that shouldn't be done with your account. There are several behaviors that can fall under this category. Here are a few:

  • Making unauthorized transactions
  • Excessively trading or churning your accounts
  • Failing to disclose the risks
  • Giving you unsuitable recommendations
  • Breaching fiduciary duty
  • Failing to supervise broker-dealer agents

Did Your Moderate Risk Growth and Income Portfolio Tank in Value While the Market Continued to Go Up? That May Be Due to the Malfeasance of Your Broker and Brokerage Firm Rather than Simple Bad Luck.

We are investigating claims by investors, particularly the elderly and retirees, who suffered steep losses in their accounts as a result of recommendations by brokers to purchase the following securities during 2014-2016 : Breitburn Energy, Horsehead Holding, NOW, Inc., Linn Energy, Cypress Energy, Ocwen Financial, Prospect Capital, and Fannie Mae Preferred Shares. Many of these companies paid no dividends or stopped paying dividends, were highly leveraged with debt, and some went bankrupt. 

People looking for investment professionals should be careful

Putting money into investment opportunities requires that the person who is handing over money ensures that they aren't participating in a scam. Unfortunately, there are many scams present in the investing sector that cost people a lot of money.

When you are considering an investment, you should exercise due diligence. Most people who work with investments have to register with the Financial Industry Regulatory Authority (FINRA). You should always check the FINRA registry to determine if the investment advisor  who is trying to gain your business has done this. If the person isn't on the FINRA registry, you should exercise caution before giving them your money and perhaps consult an attorney who is seasoned with handling cases involving investment related matters.

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Valenti Hanley PLLC
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Suite 1950
Louisville, KY 40202

Toll Free: 866-617-6209
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