Mutual Fund Fraud
7 8 6 2
Securities regulators have found widespread sales abuses at 13 out of 15 Wall Street brokerages probed in the sale of mutual fund shares. As a result of these sales abuses, investors lost money. Our experienced team has expertise in this sub-specialty area and can help you recover losses.
The unethical or illegal practices are described below:
- Late trading:
When investors illegally buy or sell shares after the 4 p.m. ET close but get the 4 p.m. price. If big news breaks after the close of trading, late traders are virtually assured of a quick profit or of avoiding a loss. Late trading is akin to betting on a horse after the race is completed.
- Market timing:
When investors make frequent trades, typically in international funds, to exploit "stale" prices due to time differences. It is legal but might violate fund rules. It can give market timers a profit at the expense of long-term shareholders.
Breakpoints are discounts given to investors who make large purchases in mutual funds with front-end fees. For example, American Express Financial Advisors has six levels of breakpoints, ranging from a 5.75 percent fee on an investment of less than $50,000 in stock funds to zero on investments of $1 million or more. If breakpoints exist, the fund must disclose them. In addition, a brokerage firm that is a member of the NASD should not sell you shares of a fund in an amount that is "just below" the fund's sales load breakpoint simply to earn a higher commission.
- Class B sales abuses:
Mutual funds and brokerage firms receive compensation for the sale of mutual funds in the form of a commission or an administrative fee. The majority of Mutual funds are purchased as either a class "A" share or a class "B" share. The commission for class "A" are paid when the purchase is made and with class "A", one receives breakpoints.. The brokerage firm also receives its commission up front with Class "B" mutual funds, however the client pays a backended surrender fee if the client sells the mutual fund with in five or six years instead of a front ended commission and also does not receive breakpoints. Class "B" funds charge a higher yearly administrative fee. If a client is making a large dollar mutual fund purchase in the same family of funds, then a Class A is more appropriate and if the brokerage firm has solicited a Class B purchase, there may be sales abuse issues.
Wall Street Fraud is dedicated to aggressively recovering annuities losses and stock market losses caused by brokerage firms and investment counselors.
About the Wall Street Fraud Law Firm
Public service is an integral part of our firm. We provide service to the community by educating the public and other lawyers about investment fraud, elder fraud, and elder law. We also provide extensive pro bono service to the indigent elder community.
We welcome new clients, as well as referrals from present clients and other lawyers and law firms. At Wall Street Fraud, we are dedicated to offering assistance to those who have been hurt by improper corporate or investment practices. Our talented and aggressive legal and professional staff is eager to help you recover your losses. We look forward to working with you.