Securities Lawyers Blog
The securities lawyers of Gana Weinstein LLP recently filed a complaint on behalf of a client alleging that William Fox (Fox) and The Fox Alliance, registered with New England Securities (now MML Investors Services LLC) and First Allied Securities, Inc., (First Allied) and the firms failed to supervise Fox’s recommendations and investment activity in alternative investments. The complaint alleges that Fox constructed an investment plan for the Claimants that violated multiple securities laws.
Claimants trusted their investment advisor to prudently invest their income savings that was to be used for their retirement. Fox’s website boasts that the firm’s definition means “a collaboration designed with the intent of leveraging expertise, increasing returns and/or appropriately reducing risk for the parties involved.” Further, Fox claims to provide investors with “institutional caliber investments.”
However, the Claimants alleged that in fact Fox did the exact opposite of what he claims and abused Claimants’ trust by recommending an investment strategy consisting of large concentrations in illiquid, low-quality, speculative, high commission alternative investments that no institution would ever touch. For more than a decade the claim stated that Fox recommended that Claimants invest over $2 million in illiquid securities such as non-traded real estate investment trusts (Non-Traded REITs), private placements, equipment leasing programs, oil and gas programs, and annuities. Of the nearly $3 million Claimants gave Fox to invest the vast majority ended up in these types of programs.
The claim alleged that Respondents enjoyed an immediate profit of over $140,000 in commissions and fees, excluding additional investment advisory fees. Further, the Claimants alleged that Respondents failed to conduct the necessary due diligence before selling these investments to Claimants and otherwise omitted and misrepresented the investments.
The claim states that Fox solicited Claimants to liquidate their safe income generating municipal bond holdings to invest heavily in alternative investments claiming that these investments were both safe and would produce more income than municipal bonds. Instead, after more than a decade of Fox’s investment advice it is clear that virtually every investment Fox made has resulted in large losses or generated returns far inferior to safe municipal bonds.
Further, the claim alleges that the Claimants losses are not due to “market forces” or because of “unforeseen events” as the brokerage industry claims often claims. Instead, the alternative investments failed – as predicted by numerous industry studies – due to their high costs and conflict of interest riddled structures that make these products inferior to all other known asset classes.
In sum, Claimants alleged that they have been deprived of the ability to generate the reasonable returns they were entitled to and were promised by Fox had they been invested in a well-managed and diversified portfolio of equities and bonds and is now trapped in illiquid investments.
Fox entered the securities industry in 1986. From 1986 through November 2014 Fox was associated with New England Securities. Since November 2014 Fox has been registered with First Allied out of the firm’s Round Rock, Austin, and San Antonio, Texas office locations.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. Investors may be able recover their losses through securities arbitration. The attorneys at Gana Weinstein LLP are experienced in representing investors in pump and dump cases and brokerage firms’ failure to disclose conflicts of interests to their clients. Our consultations are free of charge and the firm is only compensated if you recover.