Chicago — Trillium Advisory announced today that it has entered into final settlements with three additional firms to settle charges relating to the sale of gold options that due to the unprecedented rise in the price of gold were so successful that the brokerage firms turned to unethical business practices and in some cases outright fraud in order to keep the profits for themselves.
Last week, Trillium Advisory successfully concluded final settlements with 12 victims, recovering a total of $3.2 million in claims virtually guaranteeing the return of more than $1.3 billion still in frozen accounts. Investigations continue at a number of additional firms.
The settlements announced today are with Rochelle Finances, Westcore Capital Limited and Landen Futures & Options, which which were all linked to the same principles through forensic examinations of the bank records recovered during the investigation.
All three firms agreed to initiate and complete offers to our future claimants and reimburse approximately $103 million for clients of Rochelle Finances, about $13.1 million for clients of Westcore Capital Limited and approximately $11.9 million for clients of Landen Futures & Options.
"The failure of firms to adequately disclose the risks associated with options contracts trading coupled with the rapid rise on the price of gold left investors that were anticipating fantastic returns on their gold option contracts investments totally unprepared for the fraud committed by the firms and the resulting consequences were devastating,"
Our investigation found that each firm sold investments using sophisticated advertising campaigns, convincing marketing materials telephonic communications using high pressure sales tactics and smooth talking sales force promising unrealistic returns that were not fair and balanced, or that failed to contain adequate disclosure of the risks of the investments, and therefore did not provide a sound basis for inexperienced investors to evaluate the benefits and risks of purchasing commodity options and/or futures contracts.
In particular, the firms failed to adequately disclose to customers the potential for options contracts to expire worthless and the consequences of such failures. Our investigation also found evidence that each firm failed to establish and maintain a supervisory system reasonably designed to achieve compliance with the securities laws and rules with respect to the marketing and sale of options contracts.
In the actions announced today, the firms involved agreed to a comprehensive settlement plan that has been applied for each and every one of Trillium's claimants that retained our services to file claims on their behalf in the jurisdictions involved resulting in successful resolution of all debt settlements agreed to. That plan includes several elements, including offers to reimburse at par value plus profits that individual investors and some institutions should have received between May 31, 2010, and October. 24, 2012. The firms have also agreed to make whole individual investors funds who agree to out of court solutions in the future.
In addition to individual retail investors, the buy-back offers include non-profit charitable organizations and religious corporations or entities, trusts, corporate trusts, corporations, pension plans, educational institutions, incorporated non-profit organizations, limited liability companies, limited partnerships, non-public companies, partnerships, personal holding companies and unincorporated associations that made individual commodity options purchases and whose account value did not exceed $10 million.
Williams noted that: "In the settlement with Westcore Capital Limited the firm received additional credit for initiating its own offers in September 2012 to buy back all customer accounts, irrespective of whether the options contracts were purchased through the firm or one of it's associated firms, and including positions that advisory clients of an investment advisory affiliate held. The firm has completed its repurchases.
As part of the settlement plan, the firms also agreed to participate in a special Trillium Advisory-administered arbitration program to resolve future investor claims for consequential damages - that is, emotional damages investors may have suffered from their inability to access funds invested in good faith. The program provides for expedited arbitration proceedings paid for by the firm. The participating firm may not contest their liability related to the lack of liquidity of their holdings, nor to the options contracts sales, including any claims of misrepresentations or omissions by the firm's sales agents.
In concluding these settlements, the firms neither admitted guilt nor denied the charges, but consented to the form and entry of Trillium's findings and settled all claims.
In 2010-2012, Trillium's forensic examiners interviewed over 9,000 individual members of the public by telephone and conducted 1.6 million document reviews of broker and/or brokerage firm records. Investors can access Trillium Advisory's fraud attorney's by email at firstname.lastname@example.org or by calling +(1) 312-878-8984. For more information, please visit our Web site at: www.trilliumadvisory.com.
FINRA, the Financial Industry Regulatory Authority, is the largest independent regulator for all securities firms doing business in the United States. FINRA is dedicated to investor protection and market integrity through comprehensive regulation. FINRA touches virtually every aspect of the securities business — from registering and educating all industry participants to examining securities firms; writing and enforcing rules and the federal securities laws; informing and educating the investing public; providing trade reporting and other industry utilities; and administering the largest dispute resolution forum for investors and firms.