International Investing Issues and Risks

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Investing in any security requires careful consideration, and investor risk increases considerably with international investing. Special issues and risks when making investments overseas include:

Legal remedies. Where you purchase a security can impact whether you have, and where you can pursue, legal remedies against the foreign company or any other foreign-based entities involved in your transaction, such as a foreign broker. Even if you sue successfully in a U.S. court, you may not be able to collect on a U.S. judgment against a foreign company, entity or person. You may have to rely on legal remedies that are available in the home country, if any.

Working with a broker or investment adviser. If you are working with a broker, make sure the broker is registered with the SEC. It is against the law for a broker, foreign or domestic, to contact you and solicit your investment unless it is registered with the SEC. If you directly contact and work with a foreign broker not registered with the SEC, you may not have all the protections under the laws of the United States as would be the case if the broker were registered with the SEC.

Costs of international investments. International investing can be more expensive than investing in U.S. companies. In some countries there may be unexpected taxes, such as withholding taxes on dividends. In addition, transaction costs such as fees, broker’s commissions and taxes may be higher than in U.S. markets. You also should be aware of the potential effects of currency conversion costs on your investment. Mutual funds that invest abroad may have higher fees and expenses than funds that invest in U.S. securities, in part because of the extra expense of trading in foreign markets.

Fort Lauderdale Securities Litigation Attorney and FINRA Arbitrator

Contact Fort Lauderdale securities litigation attorney Howard N. Kahn, Esq. if you or someone you know has a securities or broker dispute. In addition to being an experienced securities litigation attorney, Mr. Kahn also serves as a FINRA arbitrator for individual investors, brokers, and brokerage firms. You can reach him at 954-321-0176 or online.

Residential Condo Boom in Sunny Isles, FL

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A major real estate redevelopment campaign is taking place on the east side of Collins Avenue, the main thoroughfare in Sunny Isles, FL. Zoning laws now ensure that view corridors and beach access pathways will always offer residents a life with a view. To the west of Collins Avenue, the City is building parks, improving the infrastructure and laying the groundwork for future redevelopment.

According to the Miami Herald, “Developers are proceeding with at least six condo towers — nearly 15 percent of the more than 45 towers proposed for the tri-county South Florida region through July 2012 — with at least 530 luxury units to be constructed in a community that stretches less than 40 blocks along Collins Avenue.”

The 43-story Regalia project, featuring 39 units priced in the range of $6 to $7 million each, is the only condominium tower currently under construction. Other planned projects include the Chateau Beach and the Mansions at Acqualina.

The Sunny Isles strategy is to steadily replace outdated motels with luxury residential oceanfront development. Much of the residential construction is not for year-round occupancy, although statistics show a steady growth in young families who desire to be near the ocean.

This “City of Sun and Sea,” is located on a barrier island in the northeast corner of Miami-Dade County, bounded by the Atlantic Ocean on the east and the Intracoastal Waterway on the west. Almost one million vacationers visit Sunny Isles Beach annually.

South Florida Condominium and Real Estate Attorney

Contact South Florida condominium attorney Marcy Resnik to discuss your need for legal services with a condominium purchase, sale, or business dispute. You can contact Ms. Resnik online or call her at 954-321-0176.

 

Royal Palm Bank of Florida, Naples, FL, in FDIC Receivership

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On Friday, July 20, 2012, The Royal Palm Bank of Florida, Naples, FL was closed by the Florida Office of Financial Regulation, and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed.

All deposit accounts, including brokered deposits, have been transferred to First National Bank of the Gulf Coast, Naples, FL (“assuming institution”) and will be available immediately. The former The Royal Palm Bank of Florida locations will reopen as branches of First National Bank of the Gulf Coast during regular business hours.

Transferred deposits will be separately insured from any accounts that a customer may already have at First National Bank of the Gulf Coast for six months after the failure of The Royal Palm Bank of Florida. Checks that were drawn on The Royal Palm Bank of Florida that did not clear before the institution closed will be honored as long as there are sufficient funds in the account.

Vendors that provided a service or product, leased space, furniture, or equipment to The Royal Palm Bank of Florida prior to Friday, July 20, 2012 and have not been paid, may be entitled to a claim against the bank.

Details on the closure are available at Failed Bank Information for The Royal Palm Bank of Florida, Naples, FL.

Fort Lauderdale Banking Attorney

Banking attorney Howard Kahn, Esq., represents lenders and creditors in connection with commercial and residential financing and loan transactions, title claims, mortgage fraud, and related litigation. Bringing a concierge service approach to banks and other lenders, he is available as needed to provide trusted legal counsel both during business hours and as emergencies arise at other times. Read more about our Florida banking law services. Contact Mr. Kahn online or at 954-321-0176.

Americans with Disabilities Act Marks 12th Anniversary

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The Americans with Disabilities Act (ADA), which prohibits discrimination against people with disabilities in employment, transportation, public accommodation, communications, and governmental activities, was first signed into law by President George H.W. Bush on July 26, 1990.

Discrimination is only one obstacle that a disabled person may experience. Highly trained professionals who suffer an unexpected disability through illness or injury are at risk of a significant and sudden drop in income. Even if disability insurance is in effect, the insurance carrier may make it very difficult for the professional to receive the level of monetary benefits to which they are entitled under the disability policy.

Your Legal Rights to Disability Benefits

The disability attorneys at Kahn & Resnik, P.L. are experienced in working with doctors and business professionals who have trouble obtaining expected disability insurance benefits. We understand potential coverage issues, including:

  • Date at which benefits become available (elimination periods)
  • Length of time benefits are received
  • Compensation history on which benefits are calculated
  • Definition of comparable work
  • Full-time versus part-time work
  • Estimates of future earnings
  • Total disability versus residual or partial disability claims

Our attorneys have helped many professionals pursue disability benefits in claims against the country’s leading disability insurance carriers throughout the United States.

Contact a Fort Lauderdale Disability Attorney for Professionals

If you are a highly skilled medical or business professional, contact attorney Howard Kahn, Esq. if your disability insurance benefits are in dispute following an injury or illness. Mr. Kahn works with physicians, internists, specialists, surgeons, podiatrists, dentists, chiropractors, accountants, architects, attorneys, business owners and other professionals in need of assistance with a disability claim.

Peregrine Financial Group Losses Draw Investor Lawsuits

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Peregrine Financial Group (“PFG” or “PFGBest”) is the subject of an increasing number of lawsuits following its bankruptcy filing last week.

The financial derivatives brokerage firm, based in Cedar Falls, Iowa with offices in Chicago, collapsed when founder Russell R. Wasendorf, Sr. was rescued during a suicide attempt. A note he left admits, “Through a scheme of using false bank statements I have been able to embezzle millions of dollars from customer accounts at Peregrine Financial Group, Inc.”

PFG was one of the largest non-clearing U.S. Futures Commission Merchants, with customers, affiliates and brokerage offices in more than 80 countries, according to the firm’s website. For 13 consecutive years, PFGBEST was ranked as one of the nation’s Top 50 Brokers in Futures magazine annual roundup.

A “Futures Commission Merchant” (“FCM”) is defined as an individual or entity that solicits or accepts orders for the purchase or sale of any commodity for future delivery on or subject to the rules of any exchange. FMCs also accept payment from or extend credit to those whose orders are accepted.

Investors are charging that the firm violated a basic broker regulation forbidding the commingling of client funds with other firm monies.

The Commodity Futures Trading Commission, in accordance with the Commodity Exchange Act, requires that customer funds to be segregated and separately accounted for. Specific regulations include:

  • All customer funds shall be separately accounted for and segregated as belonging to commodity or option customers. Such customer funds when deposited with any bank, trust company, clearing organization or another futures commission merchant shall be deposited under an account name which clearly identifies them as such and shows that they are segregated.
  • Each futures commission merchant shall treat and deal with the customer funds of a commodity customer or of an option customer as belonging to such commodity or option customer. All customer funds shall be separately accounted for, and shall not be commingled with the money, securities or property of a futures commission merchant or of any other person, or be used to secure or guarantee the trades, contracts or commodity options, or to secure or extend the credit, of any person other than the one for whom the same are held, with some additional provisions.

The rules of the Chicago Mercantile Exchange (“CME”) similarly prohibit commingling of customer funds with other firm funds.

Approximately $200 million in client funds are allegedly missing.

Fort Lauderdale Securities Litigation Attorney and FINRA Arbitrator

Contact Fort Lauderdale securities litigation attorney Howard N. Kahn, Esq. if you or someone you know has a securities dispute. In addition to being an experienced securities litigation attorney, Mr. Kahn also serves as a FINRA arbitrator for individual investors, brokers, and brokerage firms. You can reach him at 954-321-0176 or online.

Divorce of Tom Cruise and Katie Holmes Shows Benefits of a Prenup

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While a divorce is never easy, the apparent ease with which Tom Cruise and Katie Holmes reached agreement on the dissolution of their marriage demonstrates the benefits of a prenuptial agreement.

Ms. Holmes initiated divorce proceedings on June 29th, and the couple, affectionately known as “TomKat” by fans, reached a divorce agreement just a week later after five years of marriage. Ms. Holmes gains primary custody of the couple’s 6-year old daughter Suri.

According to celebrity news reports, the actress will receive up to $15 million ($3 million for each year of marriage) under the terms of their 2006 prenuptial agreement.

Reaching agreement in advance of a marriage as to how assets, liabilities, and family obligations will be handled makes it easier for the parties to focus on achieving a mutually supportive marital relationship.

A prenuptial agreement, entered into before the marriage date, gives each party the comfort of knowing that their wishes are legally binding.

Common provisions in a prenuptial agreement address key factors such as:

  • Property rights and obligations of each party for property owned by either party
  • Property disposition in the event of divorce, death, or a separation
  • Transfer of assets to children in a blended family
  • Spousal support arrangements
  • Treatment of any death benefits from a life insurance policy
  • Estate planning

Child custody is almost always a highly emotional issue in any divorce. In this case Tom Cruise and Katie Holmes recently issued a joint statement stating, “We are committed to working together as parents to accomplish what is in our daughter Suri’s best interests.” They went on to say, “We want to keep matters affecting our family private and express our respect for each other’s commitment to each of our respective beliefs and support each other’s roles as parents.”

This was the first marriage for Ms. Holmes and the third for Mr. Cruise, who has two children with his second wife Nicole Kidman.

Click on the link to read more about the benefits of a prenuptial agreement.

Contact a Fort Lauderdale Divorce Attorney

If you have questions about a divorce or dissolution of marriage, contact Fort Lauderdale divorce attorney Marcy Resnik. You can contact her online or call her at 954-321-0176.

Investors Warned about Exchange-Traded Notes

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An Investor Alert titled Exchange-Traded Notes—Avoid Unpleasant Surprises was issued today by The Financial Industry Regulatory Authority (FINRA).

Exchange-traded notes (ETNs) are a type of debt security that trade on exchanges and promise a return linked to a market index or other benchmark. However, unlike exchange-traded funds (ETFs), ETNs do not buy or hold assets to replicate or approximate the performance of the underlying index.

Some of the indexes and investment strategies used by ETNs can be quite sophisticated and may not have much performance history. The return on an ETN generally depends on price changes if the ETN is sold prior to maturity (as with stocks or ETFs)—or on the payment, if any, of a distribution if the ETN is held to maturity (as with some other structured products).

As FINRA’s Investor Alert explains, an ETN’s closing indicative value is computed by the issuer and is distinct from an ETN’s market price, which is the price at which an ETN trades in the secondary market. Investors should understand that an ETN’s market price can deviate, sometimes significantly, from its indicative value.  If the ETN is trading at a significant premium to its closing or intraday indicative value, investors might want to consider similar products that are not trading at a premium.

“ETNs are complex products and can carry a raft of risks. Investors considering ETNs should only invest if they are confident the ETN can help them meet their investment objectives and they fully understand and are comfortable with the risks,” said Gerri Walsh, FINRA’s Vice President for Investor Education.

Exchange-Traded Notes describes the specific risks associates with ETNs, including:

  • Credit Risk. ETNs are unsecured debt obligations of the issuer.
  • Market Risk. As an index’s value changes with market forces, so will the value of the ETN in general, which can result in a loss of principal to investors.
  • Liquidity Risk. Although ETNs are exchange-traded, a trading market may not develop.
  • Price-Tracking Risk. Investors should be wary of buying at a price that varies significantly from closing and intraday indicative values.
  • Holding-Period Risk. Some leveraged, inverse and inverse leveraged ETNs, are designed to be short-term trading tools, and the performance of these products over long periods can differ significantly from the stated multiple of the performance (or inverse of the performance) of the underlying index or benchmark during the same period.
  • Call, Early Redemption and Acceleration Risk. Some ETNs are callable at the issuer’s discretion.
  • Conflicts of Interest. The issuer of the notes may engage in trading activities that are at odds with investors who hold the notes (shorting strategies, for instance).

FINRA’s new Investor Alert also contains a step-by-step checklist to help investors determine if an ETN is right for them. Click on the link to read the full ETN investor alert.

Fort Lauderdale Securities Litigation Attorney and FINRA Arbitrator

Contact Fort Lauderdale securities litigation attorney Howard N. Kahn, Esq. if you or someone you know has a securities dispute. In addition to being an experienced securities litigation attorney, Mr. Kahn also serves as a FINRA arbitrator for individual investors, brokers, and brokerage firms. You can reach him at 954-321-0176 or online.

Beware of Timeshare Resale Fraud

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Telemarketing companies that market their advertising services to timeshare owners interested in selling or renting their timeshare interests are attracting the attention of the Florida Attorney General. Many of these companies charge exorbitant fees and perform very few services, according to the Attorney General’s Office.  

Under Florida law, these companies are called “Resale Service Providers” and are required to provide a written disclosure of the fees and costs relating to advertising, listing, or sale of a timeshare interest, as well as other disclosures. Consumers also should request a contract in writing prior to providing any payment information.

In addition, consumers should be cautious of any business that may request an advance fee prior to performing any services. Furthermore, no government entity will require a consumer to pay money up front in order to assist that consumer in pursuing a fraud claim or prior to making attempts to secure a refund for a consumer. Also, consumers should be aware that the Florida Office of the Attorney General does not contract with any third party companies to assist in obtaining refunds or restitution for individuals. Should any company imply that they are working with the Florida Office of the Attorney General, consumers are encouraged to file a complaint.

Also be suspicious of any business that requests fees be paid by certified bank check, cashier’s check, money order, or wire transfer. These forms of payment leave little recourse for the consumer should there be any difficulty with the business providing their services as contracted.

Consumers who are considering conducting business with a timeshare reseller or recovery company should research the company.

Fort Lauderdale Condominium Litigation Attorney

This update on news affecting South Florida condominium owners is offered as a service of Fort Lauderdale condo attorney Marcy Resnik. Contact her to discuss legal questions you might have in regard to your condominium association or timeshare unit. You can reach Ms. Resnik online or call her at 954-321-0176.

SEC Freezes Assets of Aubrey Lee Price for Florida, Georgia Scam

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A $40 million investment fraud by Aubrey Lee Price targeting Florida and Georgia investors has resulted in a court order freezing the assets of the Georgia-based investment adviser, who has apparently gone into hiding.

The SEC alleges that Aubrey Lee Price raised money from more than 100 investors living primarily in Georgia and Florida by selling shares in an unregistered investment fund (PFG) that he managed. Price purported to invest fund assets in traditional marketable securities, but he also made illiquid investments in South America real estate and a troubled South Georgia bank.

In order to conceal mounting losses of investor funds, Price created bogus account statements with false account balances and returns that were provided to investors and bank regulators.

According to the SEC’s complaint filed in U.S. District Court for the Northern District of Georgia, Price is believed to be a resident of Lowndes County in Georgia after moving from Manatee County, Florida.

The SEC alleges that Price began his scheme in 2008. According to PFG’s private placement memorandum, the investment objective was to achieve “positive total returns with low volatility” by investing in a variety of opportunities, including equity securities traded on the U.S. markets.

A significant portion of PFG investor funds – approximately $36.9 million – was placed in a securities trading account at a broker-dealer. The trading account suffered massive trading losses and money was frequently wire-transferred to PFG’s operating bank account. Throughout the time during which PFG suffered trading losses, client account statements prepared by Price were made available to investors indicating fictitious amounts of assets and investment returns.

According to the SEC’s complaint, Price has sent a letter to some individuals dated June 2012 and titled “Confidential Confession For Regulators – PFG, LLC and PFGBI, LLC Summary.” In the 22-page letter, Price admits that he “falsified statements with false returns” in order to conceal between $20 million and $23 million in investor losses.

The SEC’s complaint charged Price and his related companies, PFG, LLC; PFGBI, LLC; Montgomery Asset Management, LLC (Florida); and Montgomery Asset Management, LLC (Georgia) with violations of Section 10(b) and of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and further charged Price and Montgomery Asset Management, LLC (Florida) with violations of Sections 206(1), (2) and (4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder.

The Honorable Timothy C. Batten, Sr. granted the SEC’s request for a temporary restraining order and entered an asset freeze for the benefit of investors against Price, PFG, and his affiliated entities. Judge Batten has scheduled a court hearing on July 13, 2012 for the SEC’s motion for a preliminary injunction.

Anyone with information about Price’s whereabouts should contact the Atlanta office of the Federal Bureau of Investigation at 404-679-9000 or the Lowndes County Sheriff’s Office at 229-671-2985. [SEC v. Aubrey Lee Price, et al. Case No. 1:12-CV-2296 (N.D. Ga.)] (LR-22409)

Fort Lauderdale Securities Litigation Attorney and FINRA Arbitrator

Contact Fort Lauderdale securities litigation attorney Howard N. Kahn, Esq. if you or someone you know has a securities dispute. In addition to being an experienced securities litigation attorney, Mr. Kahn also serves as a FINRA arbitrator for individual investors, brokers, and brokerage firms. You can reach him at 954-321-0176 or online.

Florida Condos Face Flood Insurance Rate Hikes

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The National Flood Insurance Program (NFIP) was extended through September of 2013 as part of recent legislation passed by Congress and signed into law by President Obama on June 29, 2012. South Florida condo associations are among many flood insurance policyholders who are likely to see higher premiums.

The federal flood program, which was set to expire at the end of July 2012, is $18 billion in debt. Several rate increases are authorized in the new law in an effort to restore solvency, including:

  • Annual allowable premiums may jump from 10 percent to 20 percent a year. Under the maximum allowable annual increase, flood insurance rates could conceivably double in as little as four years.
  • Owners of currently subsidized homes considered to be high risk, such as vacation homes or homes with repeated claims, may see required annual rate increases of 25 percent. South Florida coastal areas are particularly at risk.
  • Deductibles will be set at a minimum of $1,000 or $2,000, depending on the property.

Florida homeowners and condominium owners make up a disproportionate share of the NFIP program. More than a third of the flood insurance program’s 5.6 million policies are in Florida, according to the Sun-Sentinel, including about 930,000 policies in Broward, Palm Beach and Miami-Dade counties.

Statewide, 80 percent of Florida’s 15 million residents live or work near the coast, according to the Federal Emergency Management Association (FEMA). Many others live near the state’s rivers or other inland floodplains. That means most Florida residents face the dangers of flooding, according to state and federal officials.

Fort Lauderdale Condominium Litigation Attorney

This update on news affecting South Florida condominium owners is offered as a service of Fort Lauderdale condo attorney Marcy Resnik. Contact her to discuss legal questions you might have in regard to your condominium association. You can reach Ms. Resnik online or call her at 954-321-0176.