Published on:

West Palm Beach Securities Fraud Lawyer Explains: Equity Compensation is Not Just for CEOs Anymore

Equity compensation, also known as a stock award, is a form of non-cash compensation that represents ownership in a company.  If the company does well and the value of its stock goes up, the future value of the stock award could be higher than if the employee was given cash today.  Equity compensation is one way for a company to attract or retain talent without having to pay out large salaries.

The popularity of equity compensation for rank-and-file employees, especially among cash-strapped start-up companies, is on the rise.  According to a study done in 2010 by the National Center for Employee Ownership, 28 million employees in the U.S. owned stock or stock options in their companies.  The most common types of equity compensation are stock options and restricted stock units (RSUs).

Published on:

When Selling Municipal Bonds What are the Broker’s Obligations

Many brokers and customers mistakenly believe that municipal bonds are always a “safe” place to be.  The recent debacle in Puerto Rico proves this is not the case.

The law imposes special obligations upon brokers who sell municipal bonds.

Published on:

Helping Families of Kids With Special Needs Save for the Future  – ABLE Plans

Starting July 1, Florida families with children who have special needs will have another option available to help them save for the future costs of caring for their loved one.  Florida’s ABLE United Program is one of four such plans nationwide.  The ABLE (Achieving a Better Life Act) investment plan will allow families to save tax-free for future expenses, while maintaining government benefits such as Supplemental Security Income and Medicaid.

Who is eligible for a Florida ABLE United Program account?

Published on:

Brokerage account statements can be lengthy and complicated.  Having a basic idea of what you are looking at, however, can help you spot mistakes, unauthorized activity, and even fraud. Here are the key types of information generally found on monthly account statements and some potential red flags that warrant follow-up with your brokerage firm.

General Appearance

Account statements should look professional and not look altered in any way.  The brokerage firm’s information and logo should be uniform throughout the statement and should match all of the other documentation you have received from the company – trade confirmations, new account forms, and correspondence.

Published on:

The headlines are full of stories of identity theft and investment fraud.  There are steps you can take to keep from being an easy target.

  • Guard your Social Security number! Memorize the number and don’t carry your Social Security card unless you know you are going to need it (for example, it’s your first day at a new job and the employer will want to make a copy of it.)
  • Just Say No. Don’t give your Social Security number to everyone who asks. If you have private insurance, doctors, dentists, laboratories, and other healthcare providers generally do not need your Social Security number to process your claim – they should only need your insurance information. If the medical provider asks for it, ask why they want it and what happens if you don’t want to give it. Be prudent in deciding whether to give it to them. Similarly, public schools, summer camps, and frequent shopper cards often request Social Security numbers, but if the number isn’t required to enroll in those programs, you shouldn’t give it.  For more information, review the Social Security Administration’s pamphlet Identity Theft and Your Social Security Number.
Published on:

If you have a brokerage account, you have probably received a pitch from your broker for a securities-backed line of credit (SBLOC).  Contrary to the flashy marketing brochure you may have seen, SBLOCs aren’t the best things since sliced bread.  Know the facts before you consider one.

An SBLOC is a non-purpose revolving line of credit using the securities held in your brokerage account as collateral. “Non-purpose” means you do not have to use the proceeds for a specific purpose like you do with an auto loan or home mortgage.  Basically, you can borrow cash against the value of your investment portfolio to finance basically anything from travel and college expenses to home renovations and buying a car.  Pretty much the only thing you can’t do with an SBLOC is use the money to purchase or trade securities.  This “easy money,” however, doesn’t come without cost or risk.

Typically, an SBLOC agreement will allow you to borrow between 50-95% of the value of your investment portfolio depending on the value of your overall portfolio and the types of investments in the account (i.e. stocks, bonds, etc.)  The interest rates charged on an SBLOC usually follow the broker-call, prime or LIBOR rates plus some stated percentage. SBLOCs typically require you to make minimum payments every month, oftentimes the minimum payment is the calculated interest amount. Because the published interest rates fluctuate, the amount of interest you are charged daily may also fluctuate.

Published on:

We have received several inquiries recently about investments in master limited partnerships (MLPs).  It seems that, although the popularity of MLPs is growing, many investors still don’t understand exactly what an MLP is or the risks involved in investing in one.

An MLP is a kind of limited partnership that is publicly traded on an exchange. It is similar to any other limited partnership, in that, 1) the limited partners provide the capital to the entity in return for periodic distributions of income; and 2) it is run by a general partner who receives compensation in return for management services rendered.

What are some risks of MLPs?

Published on:

As many readers may know, “crowdfunding” is a modern innovation for raising money.  Typically using internet sites like Indiegogo, Kickstarter, or GoFundMe, a person can set up a website to raise money to develop a product or initiate some kind of project.  Projects funded through crowdfunding range the gamut from feature films to video games to new styles of clothing.  Virtually any project can be funded through crowdfunding.  In return, “investors” will get some small benefit, like early access to the feature film.

As of this week, new SEC regulations have been put in place to allow the sale of securities in small business through crowdfunding.  This securities crowdfunding will be overseen and regulated by FINRA.

According to FINRA, anyone can invest in crowdfunded securities, but the amount one can invest depends on an individual’s income and net worth.  For instance, if your annual income or your net worth is less than $100,000, then you can invest a maximum of $2,000, or 5% of either your income or net worth (whichever is greater).  If, however, your annual income and your net worth are both over $100,000, then you can invest up to 10% of your annual income or net worth (whichever is greater).  The total amount invested in crowdfunded securities can never exceed $100,000.

Published on:

Here’s something you probably don’t think about when you hire an investment advisor: who will I be able to sue if this person steals my money?

Maybe you should think about it.

If you’re dealing with a major brokerage firm like Merrill Lynch, Morgan Stanley, UBS or Charles Schwab, the answer is simple.   You can sue one of those giant companies and, if you win, the odds or pretty good the giant, multi-national corporation will have the money to pay you.  (They will also have the money to fight you tooth and nail before paying you a dime).