Translate This!: “I have a call option on fruit leather stock.”

By: Julio Perez, Fall 2017 IAC Graduate Research Assistant

Investing is defined by options – you have options in how, what when and where you invest, and no two investment portfolios look the same. That being said, why is “options” used as a technical term in investing? Options give you the right (but not obligation) to buy or sell a security at a fixed price within a specific period of time.

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My Clinic Story: Kori Eskridge

By Kori Eskridge, Fall 2014 Intern

eskridgeThis is my last blog post as a student intern in the Investor Advocacy Clinic. Looking back on the semester, I am glad that I had the opportunity to take this class. The clinic was unlike any other class I have had in law school, with the possible exception of my internship I completed second year. Working in the clinic allowed me to gain valuable perspective with regards to working with clients and working with other attorneys in a team. These are skills that are hard to learn in other law classes. Additionally, we were allowed to brainstorm and think outside-the-box to try to come up with beneficial solutions for our clients. I enjoyed my time in the clinic and feel confident that I am better equipped with practical skills to take into the workplace after graduation.

Friday’s Fraud: Hot Air is Not Just for Balloons

By Kori Eskridge, Fall 2014 Intern

balloonsIf it sounds too good to be true, it probably is. That’s what many investors have learned after investing in high-yield investment programs (HYIPs). HYIPs, also called Prime Bank Investments, offer extremely high daily, weekly or monthly rates of return via the Internet but often, as the SEC noted, those returns are just a bunch of “hot air.” Continue reading

Be Sure to Dredge when you Invest in a Hedge

By: Kori Eskridge, Fall 2014 Intern

hedgeWhen you were little, it was easy for things like baseballs and toys to get lost in the hedges. Hedges are dense, shadowy and can make it hard to find missing items. Much like the hedges you might use for landscaping, hedge funds have some similar characteristics.  It can be easy for investor information to be hidden in the fine print or the flashy details of great past performance. Continue reading

Investor Advocacy Clinic Comments on FINRA Proposed Rule Change 2014-028

By: Ryan Corbin , Fall 2014 Student Intern

LAW_IACThe GSU Investor Advocacy Clinic is committed to protecting the interests of individual investors. Therefore, in addition to providing legal services and participating in investor education and outreach, the clinic is also actively involved in the public comment process relating to rule changes proposed by FINRA.

The Proposal: SR-FINRA-2014-028

FINRA recently proposed SR-FINRA-2014-028, which would “refine and reorganize the definitions of ‘non-public arbitrator’ and ‘public arbitrator.’” Individuals affiliated with the financial industry are typically considered “non-public arbitrators” and individuals unaffiliated with the financial industry are typically considered “public arbitrators.”  The new rule would provide that persons who worked in the financial industry for any duration during their careers would always be classified as non-public arbitrators.  The change would also provide that persons who represent investors or the financial industry as a significant part of their business would also be classified as non-public arbitrators, but could become public arbitrators after a cooling-off period.

The Clinic’s Comment

On November 6, 2014, the clinic submitted a comment letter expressing its opposition to this proposed rule change.  The proposed rule would actually serve to diminish the availability of public arbitrators and remove qualified arbitrators with no ties to the industry from the pool of available arbitrators.  The proposed rule also does not achieve its goal of broadening the definition of “non-public arbitrators.”  This is of significant importance to small investors since they may arbitrate their claims before an all-public panel.  The proposed change will drastically decrease the amount of public arbitrators available to hear these types of disputes.

The clinic recommended that the definition of non-public arbitrators include anyone who has ties, whether current or former, to the financial industry including individuals associated with hedge funds, mutual funds, and non-traded REITS. It is essential that the investing public feel that they have a fair and unbiased tribunal in which to arbitrate their claims.  The clinic further recommended that claimants lawyers and other professionals serving the investing public not be classified as non-public.

The primary student author of the comment letter, Kori Eskridge, was assisted by student interns Ryan Corbin and Kristina Ludwig.

Wednesday’s Word: Hedge Funds

By Kori Eskridge, Fall 2014 Student Intern

hedgeHedge funds are a type of investment where investors’ money is pooled and invested in an effort to make a profit. The pooled money is often invested in a variety of markets, and common investment practices include short-selling and other speculative strategies. This makes hedge funds more risky than mutual funds. According to the SEC,

“hedge funds are not subject to some of the regulations that are designed to protect investors.  Depending on the amount of assets in the hedge funds advised by a manager, some hedge fund managers may not be required to register or to file public reports with the SEC. Hedge funds, however, are subject to the same prohibitions against fraud as are other market participants, and their managers owe a fiduciary duty to the funds that they manage.”

Hedge funds are not required to give the same disclosures as mutual funds, making it more difficult for investors to know what they are getting into.