Articles Posted in Mutual Funds

Our Closed-End Mutual Fund Investment Loss Attorneys Work With Retail Investors, Retirees and Others 

Priority Income Fund Investors Are Wondering What To Do After Liquidity Strategy Changes

While many investors generally think of mutual funds as safe, low-risk investments, that is not always the case. Now, in the wake of Priority Income Fund disclosing to the US Securities and Exchange Commission (SEC) that there has been a change to its liquidation strategy, investors of this closed-end mutual fund may be grappling with what they should do to protect their money.

Brokerage Firms Sold Infinity Q Diversified Alpha Fund and Volatility Alpha Fund to Investors

The US Securities and Exchange Commission (SEC) has filed civil charges against James Velissaris, the founder and ex-chief investment officer of Infinity Q Capital Management. According to the regulator, Velissaris allegedly overvalued assets by over $1B while “pocketing” tens of millions of dollars in fees. 

This is bad news for investors who were marketed and sold the Infinity Q Diversified Alpha mutual fund and the Volatility Alpha private fund by broker-dealers and their financial advisors. The two funds purportedly had about $3B in assets under management.  

FINRA Suspends Cincinnati, Ohio Financial Advisor  

The Financial Industry Regulatory Authority (FINRA) has suspended former Ameriprise (AMP) stockbroker, Angel W. Bardeche, for nine months over allegations that she engaged in unsuitable mutual fund switches over a two-year period that earned her $450K in commissions. 

The self-regulatory organization (SRO) also contends that the ex-Ameriprise Financial broker made 109 trades in eight non-discretionary customer accounts without authorization. Bardeche will pay a $10K fine and $5K in disgorgement.

Proprietary, Non-Traded Oil, Gas and Energy Investments Plunged  In Value

If your David Lerner Associates broker recommended and sold you any of the firm’s proprietary non-traded oil and gas investments and you sustained significant losses, you may have grounds for an investor fraud claim for damages. 

The privately-held broker-dealer exclusively sold investments and mutual funds to customers in its Spirit of America Energy Fund (NASDAQ: SOAEX), as well as its Energy 11 LP and Energy Resources 12 LP. 

Market Volatility Forces Arbitrage Funds to Temporarily Close

Reports of arbitrage funds temporarily shuttering in the wake of the impact of the novel coronavirus (COVID-19) on the markets has caused concern for investors. 

At Shepherd Smith Edwards and Kantas (SSEK Law Firm), our investment fraud lawyers are offering free case assessments to help you determine whether you have grounds for an investor claim. We understand the difficulties that US citizens are facing in the wake of COVID-19 and want to assure that we are here to help during this time. 

Summit Investment Management To Pay Investor $100K 

A Financial Industry Regulatory Authority (FINRA) panel said that Summit Investment Management and portfolio manager, Thomas Carroll, must pay one firm client $100K for investing his money in funds from the investment manager, LJM Partners, which is no longer in operation. 

The LJM Preservation and Growth Fund (LJMIX) has been named in numerous complaints since early last year when it suffered a huge plunge in value of over 80% in two days. This happened after the CBO Volatility Index experienced a spike. 

The US Securities and Exchange Commission (SEC) has filed civil charges accusing Cetera Advisors of defrauding its retail clients through $10M in unnecessary commissions and fees. The regulator is accusing the registered investment adviser (RIA) of selling these customers costlier share classes even though they qualified to invest in less expensive share classes of the same funds. The clients paid the additional compensation to the firm during the time that they held the more costly investments.

According to the Commission’s complaint, from at least 9/2016 through 12/2016, these Cetera customers were invested and held in mutual fund share classes that charged them 12b-1 fees that were recurring instead of shares that didn’t charge these fees. The SEC said that aside from the fees, which was compensation paid to Cetera, the share classes were identical.

The regulator also claims that Cetera took part in a program with its clearing firm in which the latter would share service fees and revenues it was paid from certain mutual funds with the RIA. Hence, this was incentive for Cetera to sell these mutual funds  instead of other investments to clients. Cetera purportedly received $1.7M as a result of this deal.

The US Securities and Exchange Commission (SEC) is accusing Commonwealth Equity Services, also known as Commonwealth Financial Network, of not notifying clients that it had material conflicts of interest involving certain investments. This purportedly allowed the investment adviser and brokerage firm to earn more than $100M in revenue sharing involving certain mutual funds.

The SEC contends that since at least 2007, Commonwealth had a deal with National Financial Services and a Fidelity Investments affiliate that the majority of its Preferred Portfolio Service advisory clients were obligated to utilize when trading in their accounts. As part of the agreement, clients have to choose National Financial Services as its clearing broker for their investment accounts.

Whenever these advisory clients would invest in specific mutual fund shares, Commonwealth received a portion of the money that certain mutual fund companies paid National Financial Services to make trades on the platform. Also as part of the deal between National Finance Services and Commonwealth is that the clearing broker would share recurring mutual fund fees with the investment adviser. This was determined by the latter’s client assets that were invested in specific mutual fund share classes that didn’t charge a transaction fee.

The Financial Industry Regulatory Authority (FINRA) announced that because of its mutual fund waiver initiative, it has arrived at a settlement with 56 broker-dealers that will provide almost 110,000 retirement and charitable accounts with $89M in restitution.

Two of the firms, Western International Securities and Park Avenue Securities, settled on the same day that the self-regulatory organization (SRO) announced the multi-firm resolution. According to FINRA, the brokerage firms neglected to wave mutual fund sales charges for accounts that were eligible and they did not properly supervise the  sales.

FINRA’s Mutual Fund Waiver Initiative

Massachusetts Secretary of the Commonwealth William Galvin has filed charges against broker-dealer Janney Montgomery Scott accusing the firm of not properly supervising broker Stephen Querzoli during his trading of Class A mutual fund shares from 2012 to 2017. According to the state regulator, these alleged mutual fund sales violations caused investors, mostly older customers, to pay nearly $200K in unwarranted commissions that were shared between Janney and Querzoli.

Class A mutual fund shares usually charge higher fees of up to 5.7% at the front-end. They also lead to higher commissions for the investment advisers and brokers selling them compared to what other mutual fund class shares would render.

Although Class A shares are meant to be held for at least five years, according to the Massachusetts regulator, Querzoli would sell clients’ Class A shares within months of their acquiring them, thereby engaging in short-term trading. This resulted in higher and additional commissions charged to customers.

Contact Information