Investor Alert – NASAA and SEC Warn about Cryptocurrency Related Investments

On January 4th, the same day I posted about a recent FINRA Investor Alert regarding cryptocurrency, there was a new press release from the North American Securities Administrators Association (NASAA) with further guidance on the same topic. NASAA’s analysis and warning amounts to this: Initial Coin Offerings (“ICOs”), and all other investment products related to cryptocurrency or the blockchain, pose a threat to investors.

“A NASAA survey of state and provincial securities regulators shows 94 percent believe there is a ‘high risk of fraud’ involving cryptocurrencies. Regulators also were unanimous in their view that more regulation is needed for cryptocurrency to provide greater investor protection.”

The same day, the SEC made a public statement from Chairman Jay Clayton and Commissioners Kara M. Stein and Michael S. Piwowar, in wholehearted agreement with NASAA:  “The NASAA release also reminds investors that when they are offered and sold securities they are entitled to the benefits of state and federal securities laws, and that sellers and other market participants must follow these laws. Unfortunately, it is clear that many promoters of ICOs and others participating in the cryptocurrency – related investment markets are not following these laws. The SEC and state securities regulators are pursuing violations, but we again caution you that, if you lose money, there is a substantial risk that our efforts will not result in a recovery of your investment.”

“High risk of fraud”? That’s a polite understatement. The conditions in this cryptocurrency market are the perfect conditions for bad actors to harm investors and cause investment losses. How? Fraud through market manipulation. Fraud through technical manipulation. Fraud through plain theft. Adverse terms and conditions on a clickthrough agreement. Technical failure, incompetence, malfeasance on the part of the provider. Cyberthreats from third parties online, vandals or burglars. Misrepresentations of the real possibility that cryptocurrency is an object of temporary interest, the bubble will pop, and prices will drop.

And, of course, bad actor conduct includes flawed recommendations by financial advisors to jump in and buy these new, complicated products related to cryptocurrency. If your portfolio contains investments that, on closer examination, are not plausible or not understandable, that’s one of the ten red flags of financial fraud.

As a securities attorney, I represent investors nationwide who have lost money due to the conduct of a financial professional or a defective investment product.

The Investor Defenders at Samuels Yoelin Kantor LLP help investors get their money back from brokerage fraud, fraudulent investments, elder financial abuse, and other situations.  Our specialized investment litigation practice combines familiarity with complex financial modeling, experience with specialized FINRA arbitration rules and securities laws, and empathy for our clients whose financial losses have become personal.

If you have concerns about how your money is being handled by your financial professional, or if your broker has stopped returning your calls, contact me for a free, confidential consultation at 1-800-647-8130.

Darlene Pasieczny’s practice at Samuels Yoelin Kantor focuses on all stages of corporate and securities law issues, securities litigation and FINRA arbitration, fiduciary litigation in trust and estate disputes, and complex civil litigation. Darlene’s practice also includes representing investors nationwide in investment disputes. To read more about her cases and the results she gets, visit our Investor Defenders site.

Tax Reform Now: Five Actions to Consider Before December 31, 2017

Congress officially passed the Tax Cuts and Jobs Act on December 20th. Despite conflicting reports on when President Trump will sign the Act, he will sign it. Here are five last-minute actions you should consider for tax planning before the New Year to minimize your 2017 and 2018 tax liability.

One: Make Your Oregon Fourth Quarter Estimated Tax Payment by December 31st

Individuals who pay quarterly state income taxes should consider making their fourth quarter payment by December 31st. The Act limits the deduction for state and local taxes to $10,000 unless the taxes are paid and accrued in carrying on a trade or business.  In Oregon, the fourth quarter estimated payment is due on January 16, 2018. Paying by December 31st assures that these individuals can maximize their 2017 state and local tax deduction one last time. Strongly consider this action if you receive substantial investment income or are self-employed. The final version of the Act only allows a deduction for payments made for tax years on or before 2017, so do not make an estimated payment for 2018 taxes.

Two: Give More to Your Favorite Charities

Give and you shall receive . . . more in 2017 than 2018. For itemizing taxpayers, charitable contributions are one of the most well-known and utilized deductions. The Act’s decease to the marginal tax rates and the doubling of the standard deduction means a charitable deduction claimed on a 2017 tax return will yield more tax savings than the identical deduction on future tax returns. If you expect your marginal tax rate to decrease, or if you itemize now but might not under the new law, consider talking to your tax advisor about how some last minute giving could be the best gift you receive this holiday season. If you do not have a charity in mind, consider donating to Oregon’s Campaign for Equal Justice, whose mission is to make equal access to justice a reality for all Oregonians.

Three: Pay Your Local Property Taxes in Full for 2017-2018

Starting in 2018, individuals will not be able deduct more than $10,000 of their state and local income taxes and their local property taxes. While Oregon allows property taxes to be paid in installments, to be assured an individual can deduct the maximum amount of property taxes paid for the 2017-2018 year, consider writing a check for the installments due in 2018 to your county before the year end. Check with your tax advisor if you are subject to the AMT. The AMT limits the amount of the property tax deduction.

Four:  Pay and Claim Those Unreimbursed Employee Expenses and Other Miscellaneous Deductions Now – Including Your Tax Preparation Fees and Certain Legal Fees

As of 2018, miscellaneous itemized deductions will become a deduction of the past. This includes the deduction for tax preparation expenses, certain legal fees, and unreimbursed employment expenses. Unreimbursed employment expenses can include everything from tools & supplies, union dues, expenses for work related travel, subscriptions to business journals, attending seminars and more. If you expect to pay these expenses next year you should consider paying for them before December 31st. Of course, if you are self-employed or own a business, you will still be able to deduct some of these expenses against business income under the new law. In short: Consider paying your CPA for 2017 tax advice and your 2017 tax filing by December 31st.

Five: Delay That Taxable Gift

Taxpayers considering gifts that would result in the payment of gift taxes or GST may want to wait until 2018. The exemptions for both double in 2018 and a delay in the timing of the gift could reduce or eliminate any tax liability incurred. However, do not hesitate to make that 2017 annual exclusion gift!

Stay Tuned

This article is the first in a series planned to address the numerous changes to tax law imposed by the Tax Cuts and Jobs Act. We strongly recommend you consult with your tax attorneys and tax advisors on the impact of the act on your 2017 taxes and to plan for future years.

Caitlin M. Wong brings her passion for tax law and her commitment to empowering others to her practice at Samuels Yoelin Kantor LLP. Caitlin has experience with all aspects of both federal and state taxation, including tax planning for companies as well as individuals, audits, appeals, tax court litigation, estate planning and trust and estate litigation.

FINRA Expels New York Stockbroker Hank Mark Werner

On November 8, 2017, the Financial Industry Regulatory Authority (FINRA) announced that a broker named Hank Mark Werner of upstate New York had been barred from the securities industry. The headline: FINRA Hearing Panel Bars Broker for Defrauding Elderly, Blind Customer”.

The pattern of this behavior is outrageous but not all that unusual. It makes a good example of how financial professionals fail their clients.

According to the FINRA news release, Mr. Werner served as the licensed broker for an elderly couple since 1995. The husband died in 2012. Mr. Werner made some 700 trades on “behalf” of his client, a sightless 77-year old recently widowed woman in poor health between October 2012 and December 2015. He ultimately collected $210,000 in commissions. The panel’s decision includes an order of restitution to the widow, a fine, Mr. Werner’s banishment from the industry, and a further fine and censure for his employer – Legend Securities, brokerage firm expelled from the securities industry as of April, 2017.

The hearing panel found that Mr. Werner engaged in a pattern of “fraudulently churning and excessively trading” the client’s brokerage accounts – trades executed only for the sake of generating commissions. Compounding the excessive number of trades, Mr. Werner’s commission rates were so above range as to be “exorbitant”.

“Churning” is one common way investors can be defrauded by financial professionals. On a commission-based account, where a fee is generated for the broker for each purchase and sale, it’s easy to see how an unscrupulous broker might take advantage of a client with unnecessary trading.

Mr. Werner also steered his elderly client’s money into “unsuitable recommendations” — specifically a risky variable annuity that was not suitable based on his client’s age, heath, financial position, and other factors. Why do bad actors love putting their clients’ money into high-risk investments? It’s not just incompetence or the urge to gamble (although there’s that too). Again, it comes down to commissions. There’s a whole class of dubious variable annuities, commodities instruments, exotic real estate investment trusts (REITs), and other extremely complicated investments that are engineered to carry all kinds of risk, while cloaked in the appearance of a moderate investment, and which richly reward any broker who signs somebody up.

We applaud FINRA’s enforcement actions. But FINRA can’t help everybody.

As a securities litigator, I represent investors who have lost money due to the conduct of a financial professional or a defective investment product. If you have concerns about how your money is being handled, or if your broker has stopped returning your calls, contact me for a free, confidential consultation at 1-800-647-8130 or InvestorDefenders.com

Darlene Pasieczny’s practice at Samuels Yoelin Kantor focuses on all stages of corporate and securities law issues, securities litigation and FINRA arbitration, fiduciary litigation in trust and estate disputes, and complex civil litigation. Darlene’s practice also includes representing investors nationwide in investment disputes.

Pasieczny Elected to PIABA Board of Directors & Recognized for Outstanding Service

SYK Attorney Darlene Pasieczny receives Outstanding Service Award and is elected to PIABA Board of Directors.

Congratulations to SYK litigator Darlene Pasieczny. Darlene was recently awarded an Outstanding Service Award from the Public Investors Arbitration Bar Association (PIABA) for 2017, as co-chair of the PIABA Self-Regulatory Organization (SRO) Committee. As well as the award, Darlene was also elected to the PIABA Board of Directors, a position she will serve for a three year term.

PIABA is an international bar association, whose members represent investors in disputes with the securities industry. The SRO Committee reviews rule proposals and regulatory notices issued by the Financial Industry Regulatory Authority (FINRA) and the SEC, and drafts comment letters that related to PIABA’s mission of promoting the interests of the public investor in securities arbitration. FINRA is the self-regulatory organization that regulates and licenses securities brokerage firms and individual brokers across the country. FINRA arbitration is the main forum in the securities industry for resolution of legal disputes between investors and these industry professionals.

Darlene is a sought-after speaker, moderator and panelist, and is praised for her unique ability to provide clear explanations about complex legal processes. Darlene’s practice at Samuels Yoelin Kantor focuses on all stages of corporate and securities law issues, securities litigation and FINRA arbitration, fiduciary litigation in trust and estate disputes, and complex civil litigation. Darlene’s practice also includes representing investors nationwide in investment disputes.

For more information on the types of securities disputes that Darlene and the SYK securities litigation team work on, visit www.investordefenders.com.

Play it Forward for Houston!

Play it Forward received a call for help from Kelly Wells, former Portlander and current Houston resident, when Kingwood High was flooded by Hurricane Harvey and their music program was completely destroyed.
Join us as we answer the call to replace their instruments, raise money and…
Play it Forward for Houston!

Tuesday, November 21, 2017 | 7:30 pm
The Old Church |1422 SW 11th Avenue, Portland, OR 97201
Purchase Tickets Now!

SYK attorney Stephen Kantor recently accepted a position on the Board of Play it Forward, a local organization that provides musical instruments to students who otherwise would not have access. SYK attorney Victoria Blachly, another advocate for the organization, serves as an Advisory Board Member. Stephen and Victoria, along with the rest of SYK, encourage you to purchase a ticket and join Play it Forward for a memorable evening of great music and community spirit.

Portland stars at the event will include:
Michael Allen Harrison,
Tom Grant, Julianne Johnson,
Mac & Hailey Potts, Renato Coranto,
Haley Johnson, Andrew Woodworth, Brian Harrison,
The Brown Sisters, John Nilsen, Bill Lamb and
Play It Forward Kids

Hands-Free Really Means Just That: Oregon Stiffens Ban on Distracted Driving

October 1, 2017, marks the start of stiffer fines and tougher penalties for distracted driving with cell phones.

Oregon had allowed limited use of smart phones while driving, but beginning October 1, it is now illegal for drivers to use or hold an electronic mobile device. You are allowed a single touch or swipe to activate or deactivate a device or function, but do not talk on speaker mode while holding your phone, or you could be looking at a fine of $130 to $1,000 for your first offense, $220 to $2,500 for your second offense and a minimum of $2,000 and up to 6 months in jail for a third offense.

This revision to Oregon law expands the distracted driving law from the existing ban on cellphones in the driver’s seat to include all electronic mobile devices. Phone calls are still allowed if the driver uses a hands-free device, such as a Bluetooth headset, or routing calls to the vehicles stereo system — but only if the phone is not in the driver’s hand. The law uses the phrase “mobile electronic device” rather than “communication device” to account for the array of modern devices and their uses, and specifies that “driving” includes idling in a traffic jam or at a light. A driver can only start using the device if the vehicles has “stopped in a location where it can safely remain stationary,” such as a parking space or pulled off to the side of the road.

There are some exceptions for things like medical emergencies and truck and bus drivers, but Oregon has made it clear that hands-free really does mean what it says.

2017 Chambers High Net Worth Again Recognizes SYK & Two of Our Partners

Friday, Chambers and Partners released their annual rankings for their Chambers High Net Worth publication. Chambers HNW is objective, independent and research-based; the guide recognizes the world’s leading high net worth advisers.

SYK is proud to again be recognized as a firm, as well as to celebrate the individual recognition received by SYK partners Steve Kantor – estate and tax planner extraordinaire – and Victoria Blachly – ferocious fiduciary litigator.

Cheers!

Six Attorneys Recognized by Best Lawyers in America 2018

Congratulations to the Samuels Yoelin Kantor LLP attorneys recognized by Best Lawyers in America 2018 – including one “Lawyer of the Year.”

Robert S. Banks, Jr.

Arbitration, Portland, OR 
Litigation – Securities, Portland, OR 

Banks leads the securities litigation group at SYK. He frequently presents to lawyers, financial services industry professionals and investors on investment loss recovery issues and FINRA arbitration. He was first recognized by Best Lawyers in 2015. This is his fourth year being recognized for Securities – Litigation, and his first for Arbitration.

Victoria Blachly

Litigation – Trusts and Estates, Portland, OR 

Blachly, an Oregon Uniform Law Commissioner and Oregon Commissioner for Senior Services, was also recognized in the 2016 Chambers High Net Worth annual publication for her experience in fiduciary litigation.

Christine R. Costantino

Family Law, Portland, OR   

Costantino, who serves on the Oregon Board of Governors, leads the family law group at SYK.

 

Stephen E. Kantor

Closely Held Companies and Family Businesses Law, Portland, OR  
Tax Law, Portland, OR  
Trusts and Estates, Portland, OR  

Kantor was first recognized by Best Lawyers in 2013, and has been every year since. He was also included in the 2016 Chambers High Net Worth annual publications as a Band 1 Leading Individual for Private Wealth practitioners.

Kantor also received recognition this year as “Lawyer of the Year” for Closely Head Companies and Family Businesses Law in Portland, Oregon. This is his third year being recognized as “Lawyer of the Year.”

Van M. White III

Litigation – Construction, Portland, OR 

White is well known for his work in Construction litigation. He currently serves as president of the Building Material Dealers Association (BMDA).

 

Eric J. Wieland

Trusts and Estates, Portland, OR  

Wieland is a member of the Estate Planning and Administration Section Executive Committee of the Oregon State Bar, where he serves as its CLE Chair.

New Handheld Device Law: What Washington Drivers Need to Know

A new law in Washington makes use of handheld electronic devices illegal – in any capacity – even at the red light.

Washington State Governor Jay Inslee recently accelerated the enforcement of the Driving Under the Influence of Electronics (DUIE) Act. The Act now forbids virtually all use of handheld gadgets such as phones, tablets, laptop computers and gaming devices while driving.

In its statewide observational survey of distracted drivers, the Washington Traffic Safety Commission found cell phone use is the most common type of distraction, with 71% of distracted drivers engaged with their phones while operating their vehicles. The survey also found 1 out of 10 drivers in Washington State are distracted while driving, and fatalities from distracted driving increased 32% from 2014 to 2015.

Although texting or holding a cellphone to your ear while driving was already illegal in the state of Washington, motorists often skirted the rules by holding their phones between their legs or below their necks. The new law now makes handheld use in any capacity illegal – and drivers cannot use handheld devices while at stop signs or red-light signals. Drivers are still allowed to use a mounted hands-free phone, and may also use minimal touch features in order to operate apps such as a smartphone’s navigation app. Handheld devices may also be used if the driver has pulled off the roadway or traffic lanes, where the vehicle “can safely remain stationary.”

A DUIE is a primary offense, and a ticket for distracted-driving might raise one’s insurance rates, as it will be reported on a motorist’s record. According to the Washington State Department of Transportation, a standard fine of $126 will apply for first time offenders, and rise to $235 for a second offense. Miscellaneous distractions will be a secondary offense, with the penalty being an extra $30.

Bottom line: Keep your eyes on the road and your electronic devices safely tucked away.