FINRA awards money to client of Tucker & Ludin, P.A.

FINRA RULES AGAINST SPENCER INTERNATIONAL ADVISORS, INC. AND SCOTT A. SPENCER

In a unique case of breach of fiduciary duty, an arbitration panel of the Financial Industry Regulatory Authority (FINRA) awarded $205,529.98 to a 75 year old, Pinellas Park widow.

The claimant, Shirley Jeup had been a customer of Spencer International Advisors, Inc, a Clearwater investment advisory company since 1998. When Mrs. Jeup wanted to help her children build the Waterin’ Trough country western bar on 66th Street North in Pinellas Park, Scott Spencer, President of Spencer International, advised 13 of his elderly customers to purchase 15% notes to raise the money. Jeup agreed to guarantee these notes.

By November 2007, when the notes were to come due, the failing economy made it very difficult to find substitute financing. Spencer agreed to act as agent for the note holders and pressured Jeup to pay a 2% note extension fee and transfer virtually all of her IRA savings to an account for the benefit of the note holders. He also had Mrs. Jeup sign an agreement not to encumber on the Waterin’ Trough property.

By March 2009, when the notes were still not paid, and even though Mrs. Jeup was close to securing replacement financing from Regions Bank, Spencer sued Mrs. Jeup as agent for the note holders. The filing of this suit was reported in the St. Petersburg Times on March 20, 2008.

“The suit was filed by Mr. Spencer as the note holder’s agent against Mrs. Jeup, even though he continued to act as Mrs. Jeup investment advisor and certified financial planner,” said Mr. Eric Ludin, Mrs. Jeup’s attorney.

Ludin added that, “Mr. Spencer was Mrs. Jeup’s fiduciary and held a position of trust. Therefore, he could not represent the interest of his note holders against Mrs. Jeup because he had a clear duty to all parties and had a conflict of interest.”

Just before the Waterin’ Trough notes went into default, the St. Petersburg Times reported about other notes in default owned by Spencer’s elderly clients. The other notes benefited a condo development owned by developer John Loder. After the default on these notes was reported in the media, Charles Schwab discontinued acting as the broker/dealer for Spencer.
It is believed by Mrs. Jeup that the failure of the Loder notes and Schwab’s decision to terminate its broker/dealer relationship put added pressure on Spencer to act aggressively against Mrs. Jeup, his client.

Mr. Spencer earned over $60,000 by recommending the Waterin’ Trough notes to his customers. Mrs. Jeup lost over $200,000 from her IRAs.

Eric E. Ludin, of the law firm of Tucker & Ludin, P.A. has represented investors against broker/dealers and registered investment advisors since 1990 in cases involving fraud, breach of fiduciary duty, and account mismanagement.

Trust me, my name is on the door....

Even brilliant people can be victims of fraud and deceit. It is difficult to believe how many major players in the world's economic scene lost millions (and, in some cases, billions) to a reported ponzi scheme engineered by Bernard Madoff. How did he rip off so many highly educated sophisticated people?

Recently, Madoff's website was changed to report on the appointment of a receiver of his assets and news about the legal process. But, before the lid blew off of his scheme, the website shed light on how he managed to pull it off. I have pasted below an except from his old home page:


The Owner's Name is on the Door

In an era of faceless organizations owned by other equally faceless organizations, Bernard L. Madoff Investment Securities LLC harks back to an earlier era in the financial world: The owner's name is on the door. Clients know that Bernard Madoff has a personal interest in maintaining the unblemished record of value, fair-dealing, and high ethical standards that has always been the firm's hallmark.


How ironic is that? Madoff may have engineered to biggest ponzi scheme in world history. He did it by gaining his customer's trust. He was selective about which customers he accepted. He only took on people who had complete faith in him and, most importantly, had lots of money to lose.

Almost every one of my clients is embarrassed about their losses. They feel that if they had only been a little smarter and had a better understanding of their investments, they would not have lost so much of their estate.

Now we know that even smart, highly educated and sophisticated businessmen and women can be taken to the cleaners. Perhaps they should have known better. Perhaps someone should have asked Mr. Madoff for more detail about how their money was being "invested". But, if you do not have the same level of education and investment acumen as Mr. Madoff's customers, you certainly have nothing to be ashamed of.

If you lost money in the market and feel that your portfolio might have been mismanaged, you owe it to yourself and your family to see an attorney for a review. You may have a claim worth pursing.

For more information go to my website: http://www.tuckerludin.com/securitiesclaims.html

What does it cost to find out if you have a claim against your stock broker?

Have you been watching the value of your portfolio decline in recent weeks? Are you wondering if these losses could have been avoided? Did your broker do his/her job to help protect your hard earned money?

I have found that many people do not bother to have their portfolio reviewed by an attorney for two main reasons. First, people are embarrassed. They feel that they must have lost their money because of their own stupidity or poor judgment. The second main reason is because they are concerned about the cost. They have already lost money and do not want to throw good money after bad.

With regard to the first issue, unless you are trained in investment management, why feel foolish because you lost money? Our lack of financial training is exactly why we pay big commissions and management fees to a broker. We want an expert to help us manage our portfolio. We have the right to rely on their advice and expect that they will recommend trades suitable for our own financial needs and investment objectives. Do not be embarrassed that you have lost money. As long as you were following the advice and guidance of your broker, you are hardly responsible for what happened.

With regard to the cost, my firm, as well as many others, will offer a free consultation to discuss your potential claim. Simply call me at 727-572-5000 and we can talk about it without charge. If I feel that you do have a case, we will discuss the benefits and expense of retaining an expert to perform an analysis and provide us with a summary of the transactions. But, I will only recommend that you incur this expense if I believe there is a strong likelihood of a recovery once we have this information.

Do not let embarrassment or cost stand in the way of calling a lawyer. If you have seen your life savings shrink and are concerned about how you will make ends meet, give me a call. Even if you do not have a claim, you will sleep better knowing that you explored this option.

Please go to my website for more information.

What Did Your Broker Do To Protect You From This Mess??

This morning I see that the Dow has lost 400 points by 10 am due to an "overseas selloff". We do not know how the day will end or whether the market will rebound Monday, but, one thing we know for sure is that our economy is in serious trouble. What a mess we are in. Has there been a period in your lifetime when the market has dropped so much and so fast? How many times have you heard that we have not seen anything like this since the great depression?

Most people I meet do not see how the losses in their accounts could possibly be blamed on their broker. After all, isn't the market tanking because of wall street greed, risky home loans, and recession?

Yes, it is true that the problems in the general economy were not caused by your favorite broker. But, your broker's job is to make certain that the transactions in your accounts are suitable in light of your financial situation and needs. Did he/she do their job?

In January 2008, I spoke before a business group and described the basic duties imposed on brokers under the NASD (now FINRA) rules. I recently reviewed my notes and was surprised to see that in January, I began my presentation as follows:

We are living in a time of economic uncertainty. For the first time in years
experts are discussing whether this is a recession. It is obvious
everyone needs to be concerned about their investment portfolios. The gains
we have been seeing in the market since the "tech wreck" may soon be
coming to an end.

When I made this statement, I was not making a bold predicting about the future performance of the market. I was merely repeating what was in the newspaper and restating the common knowledge at the time. We all realized there were clouds on the horizon at least 10 months ago.

What did your broker do with this information? Most are paid by you to manage your accounts, especially those who charge a percentage of the value of your portfolio on a monthly basis. If they are not watching your account, what are they doing to earn these fees? So, if your broker is at least pretending to earn his/her fee, did they call you to discuss diversification, liquidation, or changing your investments to something that will not be heavily influenced by dramatic drops in the S & P?

If you go to the doctor for almost any reason, they always take your blood pressure first. If they find that your blood pressure is high, do they act on that information? Of course they do. They recommend medication, exercise and/or diet changes. When your broker checks the pulse of the economy, they should also recommend action when they see something wrong. You should not expect anything less from your investment professional.

If you want to learn more about this, visit my website at www.tuckerludin.com/securitiesclaims.html

Are you about to get a margin call?

Have you received a margin call? If you have money that you borrowed on margin, you may be about to receive a margin call requiring you to deposit funds or have your securities liquidated to pay the debt to your brokerage firm. This call may be made, not because of anything you did, but because your portfolio has suddenly declined in value.

Why did this happen? It may have been because of the general losses in the securities market. However, it may also have happened because your portfolio was not invested conservatively enough in light of the debt you owed to the brokerage firm. You should be asking yourself whether your broker was correct in recommending that you borrow money on margin. Also ask if your portfolio was adequately diversified and primarily invested in secure conservative securities.

Under the NASD (now FINRA) conduct Rule 2310, a broker/dealer should only recommend transactions that are suitable for the customer in light of the customer's financial status, investment objectives and such other information considered to be reasonable in making recommendations to a customer. If you suspect that your broker may have breached this duty, you should contact an attorney with experience handling these types of claims.

For more information, go to www.TuckerLudin.com/securitiesclaims.html

Have you heard about Wall Street corruption and greed? Read about an example below.

October 11, 2008
The former general counsel of UBS AG agreed Tuesday to pay $6.5 million to settle insider trading claims stemming from the collapse of the auction rate securities market. According to the agreement announced by New York Attorney General Andrew Cuomo, David Aufhauser will also be barred for two years from working with any company involved in the securities industry, from practicing law in New York and from serving as a director or officer of any public company. Aufhauser neither admitted nor denied guilt in the matter, according to the settlement. Aufhauser allegedly instructed his personal broker to dump $250,000 in auction rate securities after receiving an e-mail from UBS' chief risk officer on Dec. 14, 2007, that outlined the problems facing the ARS market.
According to the settlement agreement, Aufhauser sent the e-mail to his broker 10 minutes after forwarding the risk officer's e-mail to two other UBS lawyers requesting a meeting. Aufhauser allegedly restated the sell order to his broker the following Monday, and the auction rate securities were sold on Dec. 18 and 21, the settlement said. After hearing in February, immediately before the ARS market collapsed, that two other high-level executives had vacated their positions in the securities, Aufhauser allegedly told his broker to buy back the auction rate securities that had been sold two months earlier. When the broker was unable to carry out the order, Aufhauser told his broker to purchase as close to the same position as possible in auction rate securities.
The broker ended up purchasing $300,000 in ARS, $50,000 more than Aufhauser's original position, the settlement said. UBS stopped supporting ARS auctions the very next day, the settlement said.

For more information about what you can do if you lost money in the market go to www.tuckerludin.com/securitiesclaims.html

Have you been losing your savings in the stock market?

The law firm of Tucker & Ludin handles claims that brokerage firm customers might have against their broker. Not all client losses in the market can be recovered from the broker/dealer. However, this firm is experienced in assessing the merits of potential claims and pursuing a recovery of client losses.
There are many reasons why a client may be able to recover losses incurred in the stock market. Often a broker will make recommendations that are not suitable for their customer in light of their financial situation and needs. If the decision to buy, sell or hold unsuitable securities results in losses to the customer, this firm may be able to help. We will also study your claim to determine whether the broker violated any State or Federal laws, whether they made unauthorized trades, churned your account or otherwise breached duties owed to their customer.
Pursuing these types of claims can be time consuming and expensive. However, we will handle your case as quickly and efficiently as possible without sacrificing results. Usually we will be able to represent you on a contingent fee basis with your only obligation being payment of costs.
If you want more information of what types of claims you may be able to bring against a broker/dealer to recover losses in your account visit our website at www.tuckerludin.com/securitiesclaims.html or call me at 727-572-5000.