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Massachusetts Securities Division Issues Subpoenas To 15 Brokerage Firms Regarding Their Sales Practices Of Alternative Securities To Senior Citizens

In early July 2013, the Massachusetts Securities Division began a massive investigation of 15 brokerage firms regarding their sale of alternative investments to senior citizens. Alternative investments include, but are not limited to, oil and gas partnerships, private placements, structured products, hedge funds, tenant-in-common offerings and real estate investment trusts (“REITS”). According to reports, the launch of the investigation includes the Massachusetts Securities Division sending information subpoenas to the following firms: Morgan Stanley, Merrill Lynch, UBS Securities LLC, Fidelity Brokerage Services Inc., ING Financial Partners Inc., LPL Financial LLC, Commonwealth Financial Network, MML Investor Services LLC, Investors Capital Corp., Signator Investors Inc., Meyers Associates LP, and WFG Investments Inc. The information subpoenas request that the broker-dealers provide information regarding the sale of any alternative product sold over the past year, the identity of the investor, the commissions generated, the review and compliance process related to such sale, and the related training and marketing materials. The firms were required to comply with the information subpoena by July 24, 2013. Massachusetts Secretary of the Commonwealth, William Galvin, stated that the recent investigations into REITS and other alternative investments, “heightened my concern that the senior marketplace is being targeted for the sales of these high-risk, esoteric products. . . While these products are not unsuitable in and of themselves, they are accidents waiting to happen when they are sold to inexperienced investors by untrained agents who push the products to score . . . large commissions.”

Lax & Neville LLP has nationally represented small broker-dealers, financial services professionals and securities industry companies in regulatory matters and securities-related and commercial litigation. Additionally, Lax & Neville has extensive experience in successfully prosecuting claims on behalf of customers who have suffered losses. Please contact our team of attorneys for a consultation at (212) 696-1999.