News & Articles - Law Offices of Robert Wayne Pearce, P.A

Sep 3, 2026

What Are Closed-End Funds (CEFs)?

A closed-end fund is a registered investment company that raises a fixed pool of capital through an initial public offering. A closed-end fund issues a fixed number of shares and then trades on a stock exchange like any other listed security. If you own one and have never been told how the price is set, you are in the same position as most of the investors who come to us. The fund does not issue new shares when demand rises and does not redeem shares when you want out. Instead, closed-end fund shares change hands between other investors on an exchange such as the New York Stock Exchange, at whatever price the market will bear on any trading day. Closed-end funds, or CEFs, as some listings abbreviate them, are a long-established structure. The fund’s investment strategy is set out before launch, and buying the fund’s shares on the exchange is the only way in. They are actively managed and professionally managed portfolios, and the fund’s investment objectives are set out in a prospectus filed with the Securities and Exchange Commission. How Do Closed-End Funds Work? A closed-end fund raises money once, then investors trade the shares among themselves. The share price and the value of the portfolio behind it are therefore two separate numbers. The IPO and the Fixed Share Count A closed-end fund launches at a set offering price and raises a fixed amount of capital before the offering closes for good. Where the sponsor pays the selling brokers out of those proceeds, the fund begins life holding less than the investors actually paid in. Rights offerings and share buybacks can change the count later, though neither happens often enough to rely on. That fixed share count is the defining feature of the whole structure. Trading on the Secondary Market From the day it lists, you buy and sell a closed-end fund through a broker on the secondary market. Unlike an open-end mutual fund, you generally trade with other market participants rather than redeeming your shares directly with the fund. The price comes from what other people are willing to pay rather than from the value of the fund assets. A publicly traded CEF’s share price moves with the stock market and with investor sentiment, and thin trading volume makes some funds expensive or slow to sell. Liquidity can be a real concern when you need to sell quickly. And because the market price can differ from the value of the fund’s assets, there’s one more figure you need to know before you buy: the fund’s net asset value. Net Asset Value (NAV) vs Market Price Net asset value is the total net assets of the underlying holdings minus liabilities, divided by the outstanding shares. A closed-end fund’s market price is a separate number set by the market. An open-end mutual fund transacts at NAV, and a closed-end fund does not. A CEF trades at a discount when its market price is below NAV and at a premium when it is above NAV. Before you buy, compare the two to see whether the shares are trading below or above the value of the fund’s assets. Why Closed-End Funds Trade at a Discount If a fund trades below its net asset value, something about the manager, the fees, or the assets is keeping buyers away. Investors may distrust the management, or the fees may run high relative to peers, or the portfolio assets may be illiquid and hard to value. A persistent discount is not automatically a bargain, and finding that out after you have bought is an expensive way to learn it. A discount can narrow, and that narrowing is where your investment return comes from if you buy well, but nothing forces a discount to close, and it can widen instead. Now look at the opposite case, because paying above net asset value carries its own cost. Why Closed-End Funds Trade at a Premium Paying a premium means handing over more than a dollar for every dollar of assets you receive. Buyers usually pay it because of the size of the distribution or the reputation of the manager. High distributions may attract plenty of buyers. But if demand fades, the premium can narrow even when the fund’s portfolio has not lost value. Someone who bought at that premium can lose money simply because the market price moves closer to NAV. Closed-End Funds vs Open-End Mutual Funds Open-end funds create and cancel shares on demand, so you buy from the fund, and you sell back to the fund. Both transactions happen at the net asset value calculated after the market closes, while closed-end funds trade at a market price all day. Freedom from redemption pressure lets a closed-end fund manager hold illiquid securities without worrying that a wave of withdrawals will force a sale at the worst moment. You carry the liquidity risk instead, and it shows up as a share price that may not track the portfolio for years at a time. The same structural difference also shapes what these funds are able to hold. Types of Closed-End Funds and Related Investment Vehicles Closed-end funds invest in many different asset classes. Some of them are: Nearly all of these funds exist to pay you income, and that is why most people buy them rather than for capital appreciation. What Are Interval Funds? An interval fund is a registered closed-end fund that offers to repurchase shares from investors at set intervals rather than listing on an exchange. Brokers sometimes present them as ordinary closed-end funds without explaining the difference, and the difference is the part that will affect you. Repurchase offers come round every three, six, or twelve months, and each one covers between five and twenty-five percent of the shares outstanding. Interval funds do not list on an exchange or trade on an over-the-counter market, so there is no market price and no discount to track. The word limited is doing a great deal of work in that...

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Sep 3, 2026

FINRA Series 7 vs. Series 79: What’s the Difference?

The Series 7 licenses a person to sell securities to the investing public, while the Series 79 licenses a person to advise companies on investment banking deals. Take the Series 7 if you want to recommend and trade stocks, bonds, and funds for retail customers at a broker-dealer. Take the Series 79 if you want to work on offerings, mergers, and restructurings for the companies issuing those securities. The investment fraud lawyer team at the Law Offices of Robert Wayne Pearce, P.A. has spent 45 years representing investors, and we see how often the license behind a recommendation shapes the claim that follows it. In this guide, we explain what each license permits, how the two exams compare, which career path takes which exam, and how to check any professional’s licenses yourself. What Is the Difference Between the Series 7 and the Series 79? The Series 7 and the Series 79 are securities licensing exams from the Financial Industry Regulatory Authority (FINRA) that authorize two different jobs for a registered representative. A Series 7 holder works with the investing public, and a Series 79 holder works with the companies that issue securities. One license is retail, and the other is corporate, which is why most investors meet Series 7 holders constantly and Series 79 holders almost never. The distinction sounds academic until money is lost, because the license determines what its holder was permitted to do, what rules governed the work, and which forum hears a dispute about it. Both are top-off exams, built on the Securities Industry Essentials exam, the SIE exam FINRA requires as a corequisite before either registration becomes effective. If a person you invest with holds one of these licenses, the one they hold tells you what they are actually allowed to do for you. Because the licenses authorize different work, the place to start is what each holder can do. What Can Each License Holder Do? The two registrations authorize different activities, and neither substitutes for the other. FINRA defines both in its exam outlines, and the definitions draw the line clearly. The Series 7: General Securities Representative A Series 7 holder is a general securities representative, licensed to solicit orders and trade securities for public customers through a broker-dealer. That covers the full retail menu: stocks, bonds, options, mutual funds, exchange-traded funds and other investment company products. The firm may earn commissions or other transaction-related compensation, but that depends on its compensation structure. The registration also allows the representative to open customer accounts, assess a customer’s financial profile and investment objectives, and carry out orders based on that information. FINRA’s exam outline reflects the range of activities covered by the registration. Their recommendations are governed by Regulation Best Interest, the SEC rule requiring a broker to act in your best interest at the time a recommendation is made. You can read how this license compares with the adviser side in our Series 65 vs. Series 7 guide. The Series 79: Investment Banking Representative The Series 79 qualifies professionals for the investment banking representative registration, which covers debt and equity offerings, mergers and acquisitions, tender offers, financial restructurings, and asset sales. FINRA’s own exam outline defines the role in exactly those terms, and the definition is worth reading closely. Notice who the client is: the issuing company rather than the investor, which is why most retail investors never deal with a Series 79 holder directly. Their work still reaches you, though, through the securities that the deal work produces. When a company sells bonds to fund an acquisition, an investment banking representative structured that offering, priced it, and prepared the disclosure investors later relied on. Investment bankers are the start of the chain that ends in your portfolio. Day-to-Day Responsibilities of an Investment Banking Representative The day-to-day work behind the Series 79 involves core investment banking functions rather than customer accounts. It covers offerings, M&A, and financial restructuring. Debt and Equity Offerings and Private Placements The offerings half is underwriting: registered public offerings of debt and equity, and private placements sold to investors under an exemption from registration. Equity securities offerings range from initial public offerings to follow-on sales, while debt work runs from investment-grade bonds to the high-yield issues that fund riskier companies. Investment bankers run both ends of that range. We recommend noting the Series 82 here too, the private securities offerings representative license, since that narrower registration covers private offerings alone. Series 79 representatives can participate in private and public offerings as part of their investment banking activities. Other registered representatives may handle the solicitation or sale of the investment to customers. If you lost money on a private placement, you need to look at who recommended or sold the investment and what role the firm played in the transaction. Mergers, Acquisitions, and Financial Restructuring The other half of the job is mergers and acquisitions, tender offers, and financial restructuring transactions. The investment banking activities FINRA lists include advising the buyer or the seller, valuing the target, and running the tender process when one company bids for another’s shares. FINRA Series 79 exam reflects these areas too. Of its 75 scored questions, 37 focus on data analysis and evaluation, 20 on underwriting and new financing, and 18 on M&A, tender offers, and financial restructuring. Restructuring work includes distressed companies, which is the corporate end of events investors usually experience as losses. A financial restructuring reshapes what a company owes and to whom, through exchanges, amendments, or asset sales, and bondholders usually come out holding something different from what they bought. The banker advising the company and the investor holding its bonds are on opposite sides of the same transaction. How Hard Is Each Exam? Both exams are entry gates rather than rankings, and each tests the knowledge for its own job. FINRA’s exam pages publish no pass rate for either, and difficulty comparisons between them are mostly folklore, because almost nobody takes both exams under the same conditions. The figures below are...

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Sep 3, 2026

Unauthorized Trading: When Your Broker Trades Without Permission

Unauthorized trading is a broker buying or selling in your investment account without your permission and without the written authority to trade on their own. In a Ponzi scheme, the fraud is the investment itself, but here the fraud is the decision: someone else made it in your account. If a trade confirmation has ever arrived for a transaction you do not remember approving, you have seen how this problem announces itself. In this guide, our investment fraud lawyer team will walk you through what unauthorized trading is and what the FINRA rules require. We also cover how discretionary accounts change the answer, and how to spot unauthorized transactions on your statements. What Is Unauthorized Trading? Unauthorized trading happens when a broker or financial advisor places a trade in a customer’s account without instruction and without written discretionary authority. You gave that instruction either by directing the trade yourself or by signing a discretionary agreement beforehand. Outside of that, the trade was not the broker’s to make. The violation is the missing permission rather than the outcome, so an unauthorized trade is misconduct even when it makes money. Any financial harm it causes may be the firm’s to answer for. A profitable trade you never approved is still a decision someone else took with your account, and the next one may not be profitable. Federal law and FINRA rules both reach this conduct, from different directions. Because the rules are specific, it helps to see what they actually require. What the Financial Industry Regulatory Authority Rules Say The Financial Industry Regulatory Authority treats unauthorized trading as a violation of FINRA Rule 2010, which requires members to observe high standards of commercial honor and just and equitable principles of trade. Trading a customer’s account without proper authorization fails that standard on its face. FINRA Rule 3260 adds the specifics for discretionary accounts: no broker may exercise discretion in a client’s account until the customer has given prior written authorization and the brokerage firm has accepted the account in writing. Obtaining authorization first, in writing, and getting the firm’s acceptance is the rule’s whole point. The same rule bans discretionary trades that are excessive in size or frequency, which is where unauthorized trading meets excessive trading. We advise complaining promptly and in writing when a transaction you did not approve appears, because a dated written objection anchors everything that follows. So when exactly is a broker allowed to trade in your account without asking first? Discretionary vs. Non-Discretionary Investment Accounts A broker can trade without calling you first if you have a discretionary account, one where you’ve granted written trading authority and the firm has approved it. The SEC notes that a broker may be able to sell securities in a margin account without consulting you if the account falls below the firm’s requirements. But in other investment accounts, the broker needs your instruction before making a trade. It doesn’t matter what strategy you and the broker have already discussed. Our guide to discretionary and non-discretionary accounts covers how to choose between them. The line itself is the point: a verbal “you handle it” habit does not create discretionary authority, however friendly the relationship. Many investors believed a standing phone arrangement counted as permission. It does not, and that paperwork failure belongs to the firm rather than to you. How to Spot Unauthorized Transactions on Your Account Statements Your account statements and trade confirmations are where unauthorized transactions surface, usually within days of the trade. If you suspect unauthorized trading, we recommend reading each confirmation against what you actually instructed: If a trade you authorized is marked as unsolicited, that can raise questions. The best thing to do is object in writing the moment you see a trade you did not approve, and keep a copy. Because if you delay, it may become harder to dispute the trade later. Contact Our Investment Fraud Attorneys About Unauthorized Trading We understand how unsettling it is to find your account did things without you. The firm may argue you consented, and the paper record decides that argument. Here at the Law Offices of Robert Wayne Pearce, P.A., we have 45 years of experience representing investors and have recovered more than $185 million for our clients. Our success rate across litigation, arbitration, and settlements is 99%. We work on a contingency basis, so there is no fee unless we recover for you. Claims like these are heard in FINRA arbitration rather than in court. Call us at (800) 732-2889 for a free consultation, or read more about unauthorized trading claims and recovery.

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Sep 3, 2026

Unauthorized Trading: When Your Broker Trades Without Permission

Unauthorized trading is a broker buying or selling in your investment account without your permission and without the written authority to trade on their own. In a Ponzi scheme, the fraud is the investment itself, but here the fraud is the decision: someone else made it in your account. If a trade confirmation has ever arrived for a transaction you do not remember approving, you have seen how this problem announces itself. In this guide, our investment fraud lawyer team will walk you through what unauthorized trading is and what the FINRA rules require. We also cover how discretionary accounts change the answer, and how to spot unauthorized transactions on your statements. What Is Unauthorized Trading? Unauthorized trading happens when a broker or financial advisor places a trade in a customer’s account without instruction and without written discretionary authority. You gave that instruction either by directing the trade yourself or by signing a discretionary agreement beforehand. Outside of that, the trade was not the broker’s to make. The violation is the missing permission rather than the outcome, so an unauthorized trade is misconduct even when it makes money. Any financial harm it causes may be the firm’s to answer for. A profitable trade you never approved is still a decision someone else took with your account, and the next one may not be profitable. Federal law and FINRA rules both reach this conduct, from different directions. Because the rules are specific, it helps to see what they actually require. What the Financial Industry Regulatory Authority Rules Say The Financial Industry Regulatory Authority treats unauthorized trading as a violation of FINRA Rule 2010, which requires members to observe high standards of commercial honor and just and equitable principles of trade. Trading a customer’s account without proper authorization fails that standard on its face. FINRA Rule 3260 adds the specifics for discretionary accounts: no broker may exercise discretion in a client’s account until the customer has given prior written authorization and the brokerage firm has accepted the account in writing. Obtaining authorization first, in writing, and getting the firm’s acceptance is the rule’s whole point. The same rule bans discretionary trades that are excessive in size or frequency, which is where unauthorized trading meets excessive trading. We advise complaining promptly and in writing when a transaction you did not approve appears, because a dated written objection anchors everything that follows. So when exactly is a broker allowed to trade in your account without asking first? Discretionary vs. Non-Discretionary Investment Accounts A broker can trade without calling you first if you have a discretionary account, one where you’ve granted written trading authority and the firm has approved it. The SEC notes that a broker may be able to sell securities in a margin account without consulting you if the account falls below the firm’s requirements. But in other investment accounts, the broker needs your instruction before making a trade. It doesn’t matter what strategy you and the broker have already discussed. Our guide to discretionary and non-discretionary accounts covers how to choose between them. The line itself is the point: a verbal “you handle it” habit does not create discretionary authority, however friendly the relationship. Many investors believed a standing phone arrangement counted as permission. It does not, and that paperwork failure belongs to the firm rather than to you. How to Spot Unauthorized Transactions on Your Account Statements Your account statements and trade confirmations are where unauthorized transactions surface, usually within days of the trade. If you suspect unauthorized trading, we recommend reading each confirmation against what you actually instructed: If a trade you authorized is marked as unsolicited, that can raise questions. The best thing to do is object in writing the moment you see a trade you did not approve, and keep a copy. Because if you delay, it may become harder to dispute the trade later. Contact Our Investment Fraud Attorneys About Unauthorized Trading We understand how unsettling it is to find your account did things without you. The firm may argue you consented, and the paper record decides that argument. Here at the Law Offices of Robert Wayne Pearce, P.A., we have 45 years of experience representing investors and have recovered more than $185 million for our clients. Our success rate across litigation, arbitration, and settlements is 99%. We work on a contingency basis, so there is no fee unless we recover for you. Claims like these are heard in FINRA arbitration rather than in court. Call us at (800) 732-2889 for a free consultation, or read more about unauthorized trading claims and recovery.

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Aug 20, 2026

What is Financial Advisor Misconduct? Everything You Need to Know

Financial advisor misconduct is when a financial professional violates their legal and ethical obligations to act in your best interests. It can involve unsuitable investment recommendations, excessive trading, unauthorized transactions, misrepresentation of products, or outright theft of client funds. These violations cause undue financial harm to investors who placed their trust and their savings in the hands of an advisor who was supposed to protect them. Misconduct in the financial advisory industry is more common than most people realize, and it affects investors at every income level and stage of life. When it happens, you may be entitled to compensation through FINRA arbitration or other legal channels, depending on the facts of your case. Here at the Law Offices of Robert Wayne Pearce, P.A., we concentrate on cases involving financial advisor misconduct, breach of fiduciary duty, and related investment fraud claims. With over 45 years of experience and more than $185 million recovered for our clients, we understand what it takes to hold advisors and their firms accountable. In this guide, we will walk you through the most common types of misconduct, how widespread the problem is, how to check your advisor’s record, and what steps to take if you believe your advisor has acted against your interests. What is Financial Advisor Misconduct? Financial advisor misconduct can involve unethical or illegal behavior that violates the legal, regulatory, or professional obligations a financial professional owes to a client. If you trusted someone with your retirement savings or your family’s financial future, you deserve to know what misconduct looks like and when your advisor has crossed the line. Misconduct can range from recommending unsuitable investments to outright theft of client funds, and it takes many forms depending on the advisor’s relationship with the brokerage firm and the type of accounts involved. The Financial Industry Regulatory Authority (FINRA) oversees almost 640,000 registered financial professionals who collectively manage trillions of dollars in investable assets across the finance and insurance sector. A landmark study from researchers at Stanford University and the University of Chicago, published in the Journal of Political Economy, was the first to document the economy-wide extent of misconduct among financial advisers in the United States. The researchers studied financial advisers in the United States between 2005 and 2015, and their data represented about 10% of employment in the finance and insurance sector. What they found confirmed what many investors already suspected: misconduct is far more common than the industry has acknowledged. Common Types of Financial Advisor Misconduct The most frequent forms of advisor misconduct include: Unauthorized trading and the falsification of investment documents, including forging client signatures on transaction forms, give rise to customer disputes, FINRA complaints, and civil claims against both the advisor and the employing firm. How Common is Financial Advisor Misconduct? According to a prominent study published in the Journal of Political Economy (but originally from the National Bureau of Economic Research), about 7% of active financial advisers had a recorded history of misconduct, with the rate exceeding 15% at some of the largest advisory firms. The research also found: These findings suggest that misconduct can persist when advisers with prior records remain in the industry or move between firms. That’s why it’s important for investors to review an adviser’s professional history before entrusting them with their money. Why Misconduct Persists in the Financial Advisory Industry Misconduct persists because the labor market absorbs advisors with tainted records, and the commission structures used across the industry create direct incentives for recommending unsuitable products. Research from Duke University’s Fuqua School of Business found that investment funds maximize their profits by offering commissions to advisors who sell specialized, higher-risk products to clients. These commissions reward advisors for prioritizing fund revenue over client-investment fit. The consequences for advisers who engage in misconduct can be surprisingly limited. Advisers who lose their jobs after regulatory action can find work at other firms, especially firms willing to hire people with prior misconduct records. Those firms also face few consequences for repeatedly hiring advisers with a history of violations, which can make it easier for the cycle to continue. We understand how frustrating it is to learn that the system designed to protect you has structural weaknesses. When regulators improve their detection capabilities, funds respond by raising commission payouts to offset the increased risk of getting caught. Unethical advisors adapt as well, building clean reputations early in their careers and then increasing misconduct in later years when the reputational cost of getting caught has less impact on their accumulated earnings. Which Firms and Counties Have the Most Misconduct Some of the largest advisory firms in the United States have misconduct rates that are five to twenty times higher than firms with a clean reputation, and the concentration follows clear geographic and demographic patterns. The Stigler Center at the University of Chicago Booth School of Business publishes the Market for Financial Advisor Misconduct Index (chicagobooth.edu/research/stigler), which ranks firms, counties, and states by the percentage of advisors with misconduct disclosures. The underlying data is available for public download and provides an independent way to evaluate the track record of any firm you are considering. The research shows that misconduct concentrates at firms serving retail customers and in counties with lower education levels, elderly populations, and higher incomes. The findings are consistent with some firms catering to unsophisticated consumers who lack the resources to vet their advisors. By contrast, firms with cleaner records tend to serve clients who are better equipped to evaluate financial professionals. First Allied Securities and Oppenheimer had misconduct rates of nearly 18% or higher, while Morgan Stanley and Goldman Sachs were closer to 1%. How to Check a Financial Advisor’s Misconduct Record FINRA BrokerCheck is the primary tool available to the public for reviewing an advisor’s professional history, including customer disputes, regulatory actions, employment terminations, and criminal disclosures. You can search by the advisor’s name or their CRD number at the FINRA BrokerCheck portal. The full report gives you more detail than the summary, including information...

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Aug 20, 2026

What Is a Ponzi Scheme? Meaning, Madoff, & More

A Ponzi scheme is investment fraud that pays existing investors with money collected from new investors instead of profits from real business activity. In a Ponzi Scheme, the fraudster pays out fake returns to early investors using money from new investors without making any real profit. It is named after Charles Ponzi, who ran a famous Ponzi scam in the 1920s. If you have been offered an investment promising consistent double-digit returns with no apparent downside, you have already encountered the standard pitch. The structure behind it does not change. In this guide, our investment fraud lawyer team will walk you through how Ponzi schemes work, how Ponzi scheme promoters operate, famous cases, and the red flags that can help you spot one. We’ll even give advice on how you could get your money back, depending on the circumstances. What is a Ponzi Scheme? A Ponzi scheme is investment fraud that pays existing investors with money collected from new investors instead of profits from real business activity. Unlike mutual funds and other legitimate investments, no trading, lending, or operating business generates the returns. Every payout pulls from the same pool of incoming deposits. The promoter typically promises high returns with little or no risk, describes the strategy as proprietary or too complex to explain in detail, and points to early investors’ returns as proof that the investment works. Those early returns are real payments, but they come from other investors’ deposits, not from market performance. The scheme collapses when new deposits are no longer enough to cover what the promoter owes existing investors. And that can happen when fewer people put money into the scheme or when existing investors cash out all at once. How Do Ponzi Schemes Work Ponzi schemes move through five stages. Each one depends on the stage before it, and the entire structure fails the moment any single stage breaks down. Here’s how a Ponzi scheme typically works: Signs of a Ponzi Scheme The clearest signs of a Ponzi scheme are returns that never vary, withdrawals getting harder over time, and no independent custodian. We will elaborate more on each of these signs below: Red Flags You Are Dealing With a Ponzi Scheme The SEC (Securities and Exchange Commission) has published a consistent set of red flags that appear in many Ponzi schemes regardless of the product or technology involved. They are as follows: Ponzi Scheme vs Pyramid Scheme The Ponzi scheme and a pyramid scheme take the money in different ways. A Ponzi scheme usually keeps the source of the payouts hidden from investors. In a pyramid scheme, participants are told that recruiting new members is how they earn money. If you invest in a Ponzi scheme, you believe you hold a position in a trading account, lending pool, or business venture. The operator issues statements showing exactly that, which is why early investors recommend the opportunity in good faith. They do not know how their returns are funded. Pyramid scheme members pay a fee to join and are promised payments for recruiting new participants, with the organizers taking all or a large percentage of each fee. Participants know from the beginning that recruiting others is how they earn money, even if they do not fully understand the risks involved. Both require a continuous supply of new participants and collapse when that supply thins. These two schemes also make people who joined last absorb nearly the entire loss. Famous Ponzi Schemes The two largest schemes in US history show how long the structure can run when the operator carries institutional credibility. Bernie Madoff Bernie Madoff ran the largest Ponzi scheme on record and reached $64.8 billion in claimed value across two decades. His firm operated as a legitimate market maker before the fraud began, giving the investment arm credibility that no outside promoter could manufacture. He described the strategy as a split-strike conversion, a method involving blue-chip stocks and options. The account records were built from historical trading data covering activity that never occurred. When the 2008 financial crisis produced withdrawal requests he could not cover, the operation collapsed within weeks. He received a 150-year sentence and died in prison in 2021. Allen Stanford You may not have heard of Allen Stanford, but his scheme defrauded investors of roughly $7 billion, making it the second-largest in US history. Stanford issued certificates of deposit through his offshore bank in Antigua. The CDs promised fixed rates well above what US banks offered, backed by a portfolio he described as conservative and diversified. But the investments were not what Stanford had represented them to be. Because of that, he received a 110-year sentence in 2012, and receivership recoveries have returned only a fraction of investor losses over the years since. You may not have heard of Allen Stanford, but his scheme defrauded investors of roughly $7 billion, making it the second-largest in US history. FINRA Arbitration for Victims of Ponzi Schemes You can file a FINRA arbitration claim when a registered broker sold you the investment, even if the brokerage firm never approved the product. Selling an unapproved investment is often referred to as selling away, a practice where a broker offers securities or investments outside the firm’s approved product list. FINRA Rule 3280 restricts these transactions unless the broker follows the required notice and approval procedures. A firm that fails to detect or stop selling away can be held liable for the resulting investor losses in FINRA arbitration, even though the investment never appeared on the firm’s books. The brokerage firm may also be held responsible for the losses. While the promoter may have little left to recover by the time the scheme collapses, the brokerage firm may have other resources available to satisfy a claim. It’s important to know that there are two limits that apply. FINRA arbitration generally requires a FINRA member firm or associated person subject to FINRA’s arbitration rules. And Rule 12206 makes a claim ineligible once six years have passed from the...

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Aug 19, 2026

Equity Linked Notes: How They Work, What They Pay, and What You Can Lose

An equity-linked note (ELN) is a short-to-medium-term financial instrument issued by banks and other institutions. A bank borrows your money and agrees to pay you back on a set date, but instead of paying you regular interest along the way, your return depends on how a stock, a basket of stocks, or a market index performs over the term. With an equity-linked note, the bank splits your money between a bond that repays your principal and equity options that generate your upside. If the underlying rises, you collect a share of that gain. If it falls, what you get back depends entirely on the protection written into your terms, and plenty of these notes carry very little. As with all forms of investments, ELNs carry some risks. Take the time to understand what and where they come from to achieve better results. Below, our team of investment fraud lawyers will walk you through what these notes are, how the participation rates, caps, and barriers actually determine your payout, and which risks can cost you your principal, so you can make the best investment decisions moving forward. What is an Equity-Linked Note? An equity-linked note, or ELN investment, is a debt instrument whose payout depends on the performance of a stock, a basket of stocks, or a market index rather than a fixed interest rate. Banks and other financial institutions issue these notes with a set maturity date, and you collect your return on that date. When the note tracks an index, you may see it called an equity index-linked note. Most ELNs split into two pieces, with one portion that is often a zero-coupon bond sold below face value, and an equity option portion tied to the underlying. That second piece decides whether you earn anything above what you put in. If a broker sold you one of these as a safer alternative to stocks and you later discovered how much you had at risk, we understand how unsettling that is. How do Equity-Linked Notes Work? When a bank issues an equity-linked note, it spends part of your money on the bond component and the rest on equity options. If the issuer buys a zero-coupon bond large enough to repay your full principal at maturity, the note is called principal-protected, and you recover your original investment even when the underlying falls. Check the note’s terms to see whether principal protection applies. Plenty of issuers skip it. Instead, they offer a participation rate, which determines how much of the underlying’s gain passes through to the investor. Say the participation rate is 80% and the index rises 10% over the term. The investor receives the original principal plus 8%, and the bank that sold the note keeps the remaining 2%. Of course, there is a tradeoff, and it falls on your principal. When the underlying loses value, and your note carries no protection, that decline comes straight out of your investment. Participation Rates, Caps, and Leverage The participation rate sets your share of the gain from the underlying stock or market index, and the cost of structuring and managing the note usually pulls that rate below 100%. At a 75% participation rate, a 5% gain in the underlying earns you only 3.75%. A cap works in the opposite direction by putting a ceiling on your return, so once the underlying climbs past that level, additional gains stop reaching you. There is one more term you should look for. Some notes apply leverage, sometimes called gearing, which multiplies your exposure to the underlying’s movement. If your note has 150% upside gearing, a 10% gain in the underlying becomes a 15% return. Some notes also calculate returns using the average index level on several observation dates and not a single closing value. But if the index jumps near the end of the term, the late gain may not be fully reflected in your return. Equity-Linked Note Example Let’s walk one note through three markets so you can see how this plays out. Consider a $50,000 note with a two-year term, linked to the S&P 500, carrying a 120% participation rate, a 20% cap, and protection that holds only if the index closes at or above 85% of its starting level. Bull Market The index gains 15% over the two years. Your 120% participation rate turns that into an 18% return, which comes in under the cap, so you receive $59,000 at maturity. Had the index gained 25% instead, the cap would have limited your return to 20%, and the issuer would have kept the extra performance. Bear Market The index drops 25% and breaks the 85% barrier, so protection no longer applies and your principal absorbs the decline. You receive $37,500 back on a $50,000 investment. That same barrier did nothing for you in the good scenario, and here it is what costs you. Partial protection is not a guarantee, and the worst case usually appears deep in the offering documents. You may be feeling that nobody walked you through this outcome before you signed. Flat Market The index finishes where it started, and the underlying equity remains unchanged over the investment period. So, there is no gain to convert, and you receive your $50,000 back. Your statement may show no loss, but you also missed two years of dividends and the chance to earn a return. What Are the Benefits of Equity-Linked Notes? A broker likely sold you on the four points below, and each holds up under the right conditions. Higher Return Potential Linking returns to equities lets an ELN pay more than a conventional bond of similar length. That upside comes from the equity option component rather than from any coupon, which means it rises with your participation rate and shrinks under a cap. Principal Protection Principal protection means the issuer commits to returning your initial investment at maturity, funded by the zero-coupon bond inside the structure. Notes built this way are sold as principal-protected notes. Pull your own paperwork and...

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Aug 19, 2026

FINRA Series 65 vs. Series 7: What’s the Difference

The Series 7 licenses a person to sell securities for a commission, while the Series 65 licenses a person to advise clients for a fee. Take the Series 7 if you want to work at a broker-dealer and earn commissions on the stocks, bonds, options, and funds you place for clients. Take the Series 65 if you want to work at a registered investment adviser, charge fees for your advice, and owe a fiduciary duty to the people you serve. The investment fraud lawyer team at the Law Offices of Robert Wayne Pearce, P.A. has spent 45 years representing investors in claims involving both, and we see how often the license behind a recommendation shapes the claim that follows it. In this guide, we explain the key differences between the Series 65 and Series 7. We’ll cover what each exam authorizes, how hard each one is to pass, the other FINRA and NASAA exams you may see on a registration record, what happens when someone holds both, and how to check any of it yourself. What Is the Difference Between the Series 65 and the Series 7? The Series 65 and the Series 7 are securities licensing exams that authorize separate jobs. Your financial professional’s license affects the fees and the legal standard they follow when giving you advice. The Series 65, known as the Uniform Investment Adviser Law Exam, qualifies a person to register as an investment adviser representative, or IAR, and charge clients a fee for ongoing advice. The Series 7, or the General Securities Representative Qualification Examination, allows a person to work as a registered representative of a broker-dealer and earn commissions on the securities they sell. One person is paid for advice while the other is paid for transactions. You may also see the Series 65 referred to as a FINRA exam, but that’s not technically correct. The Series 65 belongs to the North American Securities Administrators Association (NASAA), and FINRA, the Financial Industry Regulatory Authority, only administers it on NASAA’s behalf, while the Series 7 is FINRA’s own exam. What Can Each License Holder Do? A Series 7 holder recommends and executes securities transactions for a commission, and a Series 65 holder gives continuing investment advice for a fee. Each license permits different activities. With a Series 7, a registered representative can sell you stocks, bonds, options, mutual funds, exchange-traded funds, and other investment company products. The firm earns a commission each time you transact. The recommendations provided are governed by Regulation Best Interest, the SEC rule requiring a broker to act in your best interest at the time a recommendation is made. A Series 65 holder registers as an IAR of a registered investment adviser, or RIA, and is paid a flat fee, an hourly rate, or a percentage of the assets under management for portfolio management and ongoing investment advice. That person owes you a fiduciary duty under the Investment Advisers Act of 1940, which is an ongoing obligation. Note on Investment Fraud: If something goes wrong, this distinction might affect your claim. A broker who put you into an unsuitable product is answering for a specific recommendation, while an adviser who let a portfolio drift against your stated goals is answering for an entire relationship. How Hard is Each Exam? Each exam focuses on different responsibilities, but both require serious preparation. The Series 7 runs 125 scored questions over 225 minutes, requires 90 correct answers to pass, and costs $395 as of 2026 after FINRA raised the fee from $300. A candidate also needs the Securities Industry Essentials exam as a co-requisite and a FINRA member firm to file a Form U4 opening the testing window, which in practice means no job offer, no Series 7. The Series 65 runs 130 scored questions plus 10 unscored pretest items over 180 minutes, requires 92 correct answers, and costs $187. No sponsor is needed, so anyone can open an enrollment window through FINRA and sit for it, which is why career changers often take it first. In some cases, someone holding an active CFP, CFA, ChFC, PFS, or CIC designation can request a waiver of the Series 65 in most states. So, your adviser may be registered as an IAR without ever having sat the exam at all. Other FINRA or NASAA Exams Two exam numbers rarely describe a securities professional’s full registration history. Most people who sell or advise on investments hold a stack of qualifications, and the other numbers on that stack tell you what else the person is permitted to do. Each one covers a narrower slice of activity, and either FINRA or NASAA owns each. When you pull a registration record and see a column of exam codes, these are the four you are most likely to find sitting alongside the Series 65 and the Series 7. SIE The Securities Industry Essentials exam is the entry-level FINRA exam covering products, markets, regulators, and prohibited practices. It carries 75 scored questions, costs $100, and requires 70 percent to pass. Anyone can take it without sponsorship, but on its own it authorizes nothing at all. It is a co-requisite for the Series 6 and the Series 7, and passing it does not permit anyone to sell you a security. Series 6 The Series 6 is a limited FINRA representative license covering investment company and variable contract products. A holder can sell mutual funds, variable annuities, variable life insurance, and unit investment trusts, and nothing beyond them. It’s common among bank and insurance channel representatives, and it pairs with the SIE the same way the Series 7 does. But a representative with only a Series 6 license is not authorized to sell individual stocks. Series 63 The Series 63 is NASAA’s Uniform Securities Agent State Law Examination, and it registers a person as a securities agent within a state. It runs 60 scored questions, requires 43 correct answers, and costs $147. The content is state law, prohibited practices, and the authority of...

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Jul 31, 2026

Citigroup Global Markets Broker Elijah Goble Under Investigation For Unsuitable Barrier Note and Improper Handling of Customer Account FINRA Complaints

Our firm is investigating Citigroup Global Markets Inc. broker and financial advisor Elijah Grant Goble (CRD# 6760147) of Costa Mesa, California for potential investment-related misconduct arising from customer complaints alleging an unsuitable coupon barrier note recommendation and improper handling of a municipal debt account. Elijah Grant Goble’s Financial Advisor Career History According to his FINRA BrokerCheck report, Elijah Grant Goble has been registered in the securities industry since 2017 and is currently licensed in numerous states and with multiple self-regulatory organizations. He is presently registered as a General Securities Representative and investment adviser representative with Citigroup Global Markets Inc. (CRD# 7059), working through Citi Retail Banking branch offices in Costa Mesa, California, and affiliated locations. He has been with Citigroup Global Markets Inc. since March 26, 2018. Goble’s prior investment-related employment includes: Merrill Lynch, Pierce, Fenner & Smith Inc. in Irvine, California, where he was employed as a financial advisor from February 2017 through March 2018 and registered with the firm from April 2017 through March 2018. Bank of America, N.A. in Irvine, California, where he served as a financial advisor from August 2017 to March 2018.

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Jul 30, 2026

Realta Equities and Realta Investment Advisors Broker Ashley Romiti Under Investigation For Unsuitable DST and Real Estate Securities Recommendations FINRA Complaint

Ashley Quinn Romiti (CRD# 7636987). Our firm is investigating Realta Equities, Inc. broker and Realta Investment Advisors, Inc. investment adviser representative Ashley Quinn Romiti of San Juan Capistrano, California for potential investment-related misconduct involving allegedly unsuitable recommendations in Delaware Statutory Trust (DST) and other real estate securities. Financial Advisor’s Career History According to her FINRA BrokerCheck report, Ashley Quinn Romiti is currently registered as a General Securities Representative with Realta Equities, Inc. and as an investment adviser representative with Realta Investment Advisors, Inc. She has been registered with both firms since March 3, 2025, working primarily out of San Juan Capistrano, California, while also listing a Wilmington, Delaware office address. Romiti has passed the Securities Industry Essentials (SIE) exam, the Series 7TO General Securities Representative Examination, and the Series 66 Uniform Combined State Law Examination. She is licensed in all 50 U.S. states, the District of Columbia, and Puerto Rico. Before joining Realta Equities and Realta Investment Advisors, Romiti was registered with Arkadios Capital (broker) and Arkadios Wealth Advisors (investment adviser) from July/August 2023 through March 2025. Prior to that, she was associated with Emerson Equity LLC as both a broker and investment adviser from November 2022 through November 2023, based in Irvine and San Mateo, California. Her employment history also includes investment-related business development roles at Perch Wealth, Verada, and Topside Real Estate, as well as non-investment-related positions in business development and case management

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