Los Angeles Securities Fraud Attorney
I Represent Your Interests
In the wake of a worldwide economic recession, investors and brokers alike have suffered. Investments that seemed "smart" only a few years ago may appear naive in retrospect.
I am Jonathan Schwartz, an attorney with more than 30 years' experience in the securities industry. Earlier in my career, I served as a trial attorney for the U.S. Securities and Exchange Commission (SEC), an attorney advisor for the U.S. Federal Trade Commission (FTC) and a compliance attorney for the Office of Foreign Direct Investment — U.S. Department of Commerce (OFDI).
More recently, I have tried and arbitrated civil securities cases as a fully independent securities attorney who represents the interests of securities investors and brokers.
Because I owe no allegiances to big law firms, investment banks, corporate investors and government agencies, I can represent you completely and without conflict.
However, because of my broad experience in the industry, I know how to represent my clients effectively, whether they are investors seeking compensation in the aftermath of broker misconduct or securities fraud, or brokers in need of a competent defense against SEC allegations of insider trading or other alleged securities violations.
Recent Issues Facing Investors And Brokers
The following are just some of the recent issues affecting investors and brokers for which I regularly provide competent legal advice and representation:
- Recent events indicate a great increase in enforcement efforts directed toward investment advisors. The SEC is under intense pressure to be seen as an effective force in the financial world, following the Madoff mess, and one way the agency is going to try to do this is to turn up the heat on investment advisors of all kinds, including advisors to mutual funds, hedge funds, private-equity funds and others. One troubling development is the announced intention of the SEC's Enforcement Division to engage in quantitative analysis of registration documents, or Form ADVs, of high-risk investment advisors, looking for documents indicating questions concerning the actual extent of assets under management, or even such information as overstated credentials of individual advisors. (Did you really graduate Summa Cum Laude from that business school?)
Quantitative analysis is much less labor-intensive than on-the-spot investigations or inspections, but the signal to noise ratio can be disappointing. That is, some percentage of the inquiries will turn out to be wholly unfounded, but will nevertheless require a careful, full-dress response. No registered person or entity can afford to take lightly a letter of inquiry from the SEC. But remember, some of these fire alarms may turn out to be drills.
- On August 5 and 8, 2011, many customers of the options house Think or Swim (TOS) (now owned by TD Ameritrade) experienced difficulty entering trades due to glitches in the online software. Many millions of dollars were lost on these two trading days, when traders were unable to close losing options positions, or found themselves in undeserved margin debit situations due to trading problems which took place earlier during the period in question.
- Auction rate securities: Prior to February 2008, the market for auction rate securities (ARS) was estimated at more than $200 million. At the time, they were heralded as excellent investments by the corporations and high-asset investors who purchased them. Then the market failed. Today, many ARS accounts remain frozen, with investors left unable to sell them.
- Collateralized debt obligations: Also known as CDOs, these structured asset-backed securities were seen prior to 2008 as a reduced risk investment; however, market enthusiasm waned in the advent of the subprime mortgage crisis. Investors, especially those with investments in higher risk categories (or tranches), saw the values of these securities plummet.
- Ponzi schemes: This type of fraudulent investment scheme, named after its most famous instigator, Charles Ponzi, is best known these days due to the exploits of investment "guru" Bernard Madoff. In such schemes, investors may be led to believe they are funding legitimate investments; however, their investments are actually diverted to the scheme operator. Later investors' monies are used to pay false "returns" to earlier investors, and so on. These schemes ultimately fail when they are discovered, become too complicated to continue, or when sufficient new investment cannot be obtained to sustain the enterprise. Late investors in such schemes expect high returns, but instead see their portfolios crushed beneath the weight of the collapsing scheme. Early Ponzi winners may find themselves defending against clawback actions for so-called earnings they may have already spent.
- Structured products: This broad category of pre-packaged investments takes many forms — including single securities, "basket" securities, options, commodities, debt issuance and swaps. However, all involve two elements: a note and a derivative. Investors typically see a fixed return on the note and use the interest to fund a potentially high-return derivative. Structured products have been popular among corporations that wish to purchase low-risk debt cheaply and among investors seeking to potentially reap big returns. Many structured products are considered risky by the Financial Industry Regulatory Authority (FINRA), and some are not insured by the Federal Deposit Insurance Corporation (FDIC).
- Non-tradable Real Estate Investment Trusts (REITs). Popular with some brokers for their high commissions, these illiquid investments carry a high degree of risk, and have gained a bad reputation in the financial community.
Los Angeles, California, Securities Fraud Lawyer | Jonathan Schwartz | 310-496-5770
For a free telephone consultation with a Southern California securities lawyer who understands the industry and can fight for tangible results, contact me online at The Law Office of Jonathan Schwartz. You may also call me at 310-496-5770.