Apr 13, 2022 | Blog, Shareholder & Investor Protection
Investors of Electric Last Mile Solutions who held Forum Merger III stock shares are encouraged to CLICK HERE to contact Kehoe Law Firm, P.C. and provide details of their securities holdings.
On June 24, 2021, Forum Merger III shareholders of record as of May 20, 2021 approved a merger between Forum Merger III and ELMS.
On February 1, 2022, after the market closed, ELMS announced that certain Electric Last Mile Solutions executives had resigned following an investigation conducted by a Special Committee of the Board of Directors of ELMS.
Additionally, Electric Last Mile Solutions acknowledged that its previously issued consolidated financial statements should be restated and, therefore, should no longer be relied upon.
On March 11, 2022, ELMS announced that the SEC is investigating matters discussed in previous Electric Last Mile Solutions filings, including disagreements with an accounting firm and compliance with NASDAQ’s listing rules.
ELMS SHAREHOLDERS WHO HELD FORUM MERGER III STOCK ARE ENCOURAGED TO CONTACT MICHAEL YARNOFF, ESQ., (215) 792-6676, EXT. 804, [email protected], [email protected], TO DISCUSS THE BREACH OF FIDUCIARY DUTIES INVESTIGATION AND POTENTIAL LEGAL CLAIMS.
Feb 9, 2022 | Blog, Shareholder & Investor Protection
SEC Proposes New Rule To Enhance Private Fund Investor Protection
On February 9, 2022, the SEC announced that it voted to propose new rules and amendments under the Investment Advisers Act of 1940 (“Advisers Act”) to enhance the regulation of private fund advisers and to protect private fund investors by increasing transparency, competition, and efficiency in the $18-trillion marketplace.
Among other things, the proposed rules would increase transparency by requiring registered private fund advisers to provide investors with quarterly statements detailing certain information regarding fund fees, expenses, and performance.
For more information, please click either Proposed Rule or Fact Sheet.
SEC Proposes Cybersecurity Risk Management Rules And Amendments For Registered Investment Advisers And Funds
On February 9, 2022, the SEC announced that it voted to propose rules related to cybersecurity risk management for registered investment advisers, and registered investment companies and business development companies (funds), as well as amendments to certain rules that govern investment adviser and fund disclosures.
The proposed rules, among other things, would require advisers and funds to adopt and implement written cybersecurity policies and procedures designed to address cybersecurity risks that could harm advisory clients and fund investors. The proposed rules also would require advisers to report significant cybersecurity incidents affecting the adviser or its fund or private fund clients to the SEC on a new confidential form.
For more information, please click either Proposed Rule or Fact Sheet.
SEC Issues Proposal to Reduce Risks in Clearance and Settlement
On February 9, 2022, the SEC announced that it voted to propose rule changes to reduce risks in the clearance and settlement of securities, including by shortening the standard settlement cycle for most broker-dealer transactions in securities from two business days after the trade date (T+2) to one business day after the trade date (T+1). The proposed changes are designed to reduce the credit, market, and liquidity risks in securities transactions faced by market participants and U.S. investors.
In addition to shortening the standard settlement cycle, the proposal includes rules directed at broker-dealers and registered investment advisers to shorten the process of confirming and affirming the trade information necessary to prepare a transaction for settlement so that it can be completed by the end of trade date. Further, the proposal includes a new requirement to facilitate straight-through processing, which would apply to certain types of clearing agencies that provide central matching services. Central matching service providers help facilitate the processing of institutional trades between broker-dealers and their institutional customers. The proposed rule would require new policies and procedures directed to straight-through processing and require an annual report on progress with the process.
For more information, please click either Proposed Rule or Fact Sheet.
Source: SEC.gov
Feb 24, 2020 | Shareholder & Investor Protection
SEC Enhances Its PAUSE Website Where SEC Provides a List of Entities That Falsely Claim to Be Registered, Licensed, and/or Located in the United States, As Well As Entities That Impersonate Genuine U.S. Registered Securities Firms and Fictitious Regulators, Governmental Agencies or International Organizations.
Kehoe Law Firm, P.C. is making investors aware that on February 24, 2020, the SEC announced that it updated its Public Alert: Unregistered Soliciting Entities (“PAUSE”) list by adding 25 soliciting entities and four fictitious regulators. The PAUSE Program lists entities that falsely claim to be registered, licensed, and/or located in the United States in their solicitation of investors. The PAUSE Program also lists entities that impersonate genuine U.S. registered securities firms as well as fictitious regulators, governmental agencies, or international organizations.
According to the SEC, the entities on the PAUSE list have been the subject of investor complaints. The latest additions are firms that SEC staff found were providing inaccurate information about their affiliation, location, or registration to solicit primarily non-U.S. investors. Under U.S. securities laws, firms that solicit investors, generally, are required to register with the SEC and meet minimum financial standards and disclosure, reporting, and record keeping requirements. Additionally, besides alerting investors to firms falsely claiming to be registered, the PAUSE list flags those impersonating registered securities firms and fictitious “regulators” who falsely claim to be government agencies or affiliates. The SEC stated that inclusion on the PAUSE list does not mean the SEC has found violations of U.S. federal securities laws or made a judgment about the merits of any securities being offered.
Unregistered Soliciting Entities
These are entities that falsely claim to be registered, licensed, and/or located in the United States in their solicitation of investors. In many cases, SEC investigation reveals that the soliciting entities are not registered in the United States as they claim or imply. For each of the entities listed, the SEC has determined that there is no U.S. registered securities firm with this name. The SEC stated that it will regularly update this list.
Fictitious Regulators
These are entities that falsely claim to be a regulator, governmental agency, or international organization that do not exist. In many cases, SEC investigation reveals that the so-called governmental agencies or international organizations claimed to have lent support to these solicitations do not exist. The SEC stated that it will regularly update this list.
Impersonators of Genuine Firms
These are legitimate entities/firms whose information was wrongfully appropriated. This information may include the legitimate entity’s name, address, registration number, and website likeness. According to the SEC, the information was wrongfully appropriated from publicly-available databases, such as EDGAR and FINRA’s BrokerCheck, and phony websites were set up to confuse and deceive investors. In other cases, these “spoofer” entities have appropriated the registration information of legitimate firms that recently terminated registration with the SEC and FINRA, or did so years ago. Similarly, representatives of the impersonating entities who cold-call investors often claim to be licensed employees of the legitimate firms being impersonated or of other legitimate firms. The SEC has determined that the impersonators have no connection with, and are not to be confused with, the genuine firms, whether active or defunct. The SEC stated that it will regularly update this list.
Source: SEC.gov
Nov 30, 2018 | Shareholder & Investor Protection
SEC Warns That Scammers May Try to Take Advantage of California Wildfires
On November 29, 2018, the SEC’s Office of Investor Education and Advocacy issued an investor alert warning investors, including individuals who may receive lump sum payouts from insurance companies and others as a result of damage from the California wildfires, about fraudulent investment scams.
The SEC advised that fraudsters often try to use natural disasters, like the recent California wildfires, as a way to lure victims into investment scams. These scams include:
- So-called “investments” in companies purportedly involved in cleanup, repair and recovery efforts;
- False claims of affiliation with state and federal governments or large, well-known companies; and
- Sales of stock in small publicly-traded companies as part of “pump-and-dump” scams (promising high returns for investments in companies that supposedly will reap huge profits from recovery and cleanup efforts).
Some scams, according to the SEC, are circulated through unsolicited e-mail or social media, as well as by telephone. Fraudsters also may target individuals receiving money from insurance companies or other sources. The SEC warns that individuals, including those receiving lump sum insurance payouts, should be extremely wary of potential investment scams.
Investors: Use Caution, Ask Questions
The SEC advises investors that one of the best ways to avoid investment fraud is to ask questions. Investors should be suspect, if approached by somebody touting an investment opportunity. It is important for an investor to ask that individual whether he or she is licensed and whether the investment is registered with the SEC or with a state. Investors should confirm their answers with an objective source, such as the SEC’s Office of Investor Education and Advocacy or a state securities regulator. Importantly, promises of high or guaranteed profits with little or no risk are classic signs of fraud.
Investors should carefully review their entire financial situation, before making any investment decision, especially if a recipient of a lump-sum payment. The SEC reminds investors that a payment may have to help finance rebuilding and recovery as well as last one and his/her family for a long time.
The SEC’s publication, Ask Questions, discusses many of the other questions to ask anyone who wants you to make an investment.
SEC Investor Resources
Source: SEC.gov
Aug 7, 2018 | Shareholder & Investor Protection
The SEC’s Office of Investor Education and Advocacy recently issued an Investor Bulletin containing the following basic, useful information about index funds:
What Is An Index Fund?
An “index fund” is a type of mutual fund or exchange-traded fund that seeks to track the returns of a market index. The S&P 500 Index, the Russell 2000 Index, and the Wilshire 5000 Total Market Index are examples of market indexes that index funds may seek to track.
A market index measures the performance of a “basket” of securities (e.g., stocks or bonds), which is meant to represent a sector of a stock market, or of an economy. One cannot invest directly in a market index, but because index funds track a market index, they provide an indirect investment option.
What Do Index Funds Contain?
Index funds may take different approaches to track a market index: some invest in all of the securities included in a market index, while others invest in only a sample of the securities included in a market index.
Market indexes often use a company’s market capitalization to decide how much weight that security will have in the index. Market capitalization (or “market cap”) is a measure of the total value of the company’s shares. The total value is equal to the share price times the number of shares outstanding. In a market-cap-weighted index, securities with a higher market capitalization value account for a greater share of the overall value of the index. Some market indexes, such as the Dow Jones Industrial Average, are “price-weighted.” In this case, the price per share will determine the weight of a security.
Some index funds may also use derivatives (like options or futures) to help achieve their investment objective.
How Do Index Funds Invest?
Generally, index funds have generally followed a passive, rather than active, style of investing. This means they aim to maximize returns over the long term by not buying and selling securities very often. In contrast, an actively managed fund often seeks to outperform a market (usually measured by some kind of index) by doing more frequent purchases and sales.
What Are The Costs Associated With Index Funds?
Because index funds generally use a passive investing strategy, they may be able to save costs. For example, managers of an index fund are not actively picking securities, so they do not need the services of research analysts and others that help pick securities. This reduction in the cost of fund management could mean lower overall costs to shareholders. However, keep in mind that not all index funds have lower costs than actively managed funds. Investors are reminded to always be sure to understand the actual cost of any fund before investing.
Fees and expenses reduce the value of one’sinvestment return. If the holdings of two funds have identical performance, the fund with the lower cost generally will generate higher returns for the investor. For more information, see Updated Investor Bulletin: How Fees and Expenses Affect Your Investment Portfolio
What Are Some Risks Of Index Funds?
Like any investment, index funds involve risk. An index fund will be subject to the same general risks as the securities in the index it tracks. The fund may also be subject to certain other risks, such as:
Lack of Flexibility. An index fund may have less flexibility than a non-index fund to react to price declines in the securities in the index.
Tracking Error. An index fund may not perfectly track its index. For example, a fund may only invest in a sampling of the securities in the market index, in which case the fund’s performance may be less likely to match the index.
Underperformance. An index fund may underperform its index because of fees and expenses, trading costs, and tracking error.
Some Things To Keep In Mind Before Investing In A Fund
The SEC recommends that investors carefully read all of the fund’s available information, including the fund’s prospectus and most recent shareholder report. Importantly, funds disclose their portfolio holdings quarterly in Form N-Q and shareholder reports. Usually, this information can be obtained from the fund’s website or one’s financial professional, as well as on EDGAR.
Asking the following questions may help:
What fees and expenses can I expect to pay for buying, owning, and selling this fund?
What specific risks are associated with this fund?
How is the makeup of the fund’s index determined?
How does the fund’s investment strategy fit with my investment goals?
NOTE: In recent years, new types of index funds that track custom-built indexes or benchmarks have become more common. The information provided in the SEC’s investor bulletin may not apply to “non-traditional” index funds, and the SEC encourages investors to review Investor Bulletin: Smart Beta, Quant Funds and other Non-Traditional Index Funds for more information about non-traditional index funds.
Source: Investor.gov
May 31, 2018 | Shareholder & Investor Protection
The SEC’s Office of Investor Education and Advocacy and Retail Strategy Task Force Warn Investors About Red Flags that a Broker May Be Running a Side Business Offering Investments Not Approved for Sale Through the Broker’s Firm
The SEC advises investors to always check the registration status and background of anyone recommending or selling an investment. Click here to research your investment professional.
Importantly, even if you are investing with a registered broker that you have known for years, make sure that your investments are approved for sale through the broker’s firm.
Ask your broker for an explanation and follow up with the firm’s compliance department if you encounter any of these potential red flags:
Your broker asks you to make out a check, or to wire money, to any person or to a different firm;
Your broker tries to sell you an investment without any paperwork about the investment;
Investments or deposits you made through your broker do not appear on your account statement from the firm; or
You receive an account statement that does not appear to be from the firm.
Investors: Use caution if your broker asks you to sign a letter that you consent to an investment that is not purchased through the firm. If you believe a broker is offering investments that may not be approved for sale through the firm, or to report other problems with a broker, submit a complaint to the firm and to the SEC or FINRA. Anytime you invest through a broker, confirm that the broker is registered and look out for signs that may indicate your investments are not being made through the broker’s firm.
SEC Charges Investment Professional in $8 Million Scam Targeting Long-Term Brokerage Customers
According to the SEC’s complaint, Steven Pagartanis (“Pagartanis”), who was affiliated with a registered broker-dealer, told some investors – including retirees who had been Pagartanis’s customers for many years – that he would invest their funds in either a publicly-traded or private land development company. He promised that the funds would be safe and also promised guaranteed monthly interest payments on the investments. At Pagartanis’s direction, his investors wrote checks payable to a similarly-named entity that was secretly controlled by Pagartanis. In all, the customers invested approximately $8 million, which Pagartanis used to pay personal expenses and make the guaranteed “interest” payments to his customers. To conceal the scam, which unraveled earlier this year when Pagartanis stopped making the so-called interest payments to customers, Pagartanis created fictitious account statements reflecting ownership interests in the land development companies.
The Suffolk County District Attorney’s Office has filed criminal charges against Pagartanis. The SEC’s complaint, filed in United States District Court, Eastern District of New York, charges Pagartanis with violating the antifraud provisions of the federal securities laws. The SEC is seeking a judgment ordering Pagartanis to disgorge his allegedly ill-gotten gains plus prejudgment interest, and to pay financial penalties.
Marc P. Berger, Director of the SEC’s New York Regional Office, said, “Regardless of how long investors have worked with their brokers, they should always confirm that recommended investments are approved for sale by their brokerage firm before transferring funds.”
Investors: The SEC’s enforcement action is an important cautionary reminder to be aware that even if you are investing through a broker you have known for years, you should be cautious if your broker asks you to make out a check or to wire money to an individual or to a different firm.
Source: SEC.gov and Investor.gov.
