Florida-based Riera Law Firm represents investors who have suffered financial harm at the hands of brokers or financial advisors that sold them fraudulent investment products.

Brokers usually play an important role in helping investors make sound investment decisions. But when brokers are not upfront and sell investment products that are not legitimate they put investors at great risk of financial harm. 

Northstar Financial Services (Bermuda), as a segregated accounts company, was regulated by the Bermuda Monetary Authority. Northstar Financial Services sold investment products to affluent international investors through broker-dealers in the United States. Northstar Financial Services was known for its fixed-rate investment products and variable annuities products that were issued under a Bermuda trust structure to purportedly to facilitate wealth transfer and estate planning at no additional cost. Northstar Financial Services touted the benefits of a Bermuda trust structure, which included financial security, as well as segregated account protection, generous liquidity terms, a variety of commitment periods, annual free withdrawal privileges, and the trust income was not subject to Bermuda tax. 

Last year, Greg Lindberg, the owner of Northstar Financial Services (Bermuda) was convicted of federal bribery charges and wire fraud. A few months later, after determining that it was cash flow insolvent Northstar Financial Services (Bermuda) filed for bankruptcy. In March 2021, the Supreme Court of Bermuda issued a winding up order against Northstar Financial Services (Bermuda). 

Northstar Financial Services (Bermuda) recently informed investors that they had discontinued payments of any redemption requests at this time. Northstar Financial Services (Bermuda) also disclosed that it had identified an issue concerning the designation of segregated accounts. The present view, subject to court approval, is that investors holding variable investment products are segregated account holders and will be entitled to make a secured claim against the client money pool held within that specific segregated account. While investors with investments made with fund proceeds or holding fixed investment products are considered non-segregated accounts and their claims will be unsecured.

At least two brokerage firms in Florida are known to have sold Northstar investment products, Ocean Financial Services, LLC and SunTrust Investment Services, Inc. (changed its name to Truist Investment Services, Inc.). Brokers and financial advisors at brokerage firms offered a range of Northstar global investment products to high-net worth investors outside of the U.S. including: 

• Global Advantage
  
  
• Global Advantage Elite
  
  
• Global Advantage Plus
  
  
• Global Advantage Select
  
  
• Global Equity Protect
  
  
• Global Index Protect
  
  
• Global Interest Accumulator
  
  
• Global VIP 
  
  
• Global VIP Elite

Risks Related to Variable Annuities

Variable annuities involve investment risks, just like mutual funds. If the investment choices the investor selects for the variable annuity performs poorly, the investor can lose money including potential loss of the original investment. Investors pay significant charges when they invest in a variable annuity. Often, investors do not understand all the charges before investing. These charges reduce the value of your account and the return on your investment. Most variable annuities typically have high fees and charges that may include deductions from purchase payments, surrender fees, and significant ongoing fees and expenses associated with owning a contract.

The Securities and Exchange Commission’s (SEC) has issued some warnings to investor’s about variable annuities, such as:

• Variable annuities are not suitable for meeting short-term goals. 
  
  
• Variable annuities involve investment risks just like mutual funds do. If the investment choices you selected for the variable annuity perform poorly, you could lose money.
  
  
• Contract fees may go towards your financial professional’s compensation. That means they may receive higher compensation for selling some contracts or investment products than for others.
  
  

Despite these many warnings, brokers frequently push variable annuity products to enrich themselves at the investor’s expense. 

How Can You Recover Your Investment Losses?

Broker-dealer firms are subject to the securities laws, and as such, they are responsible for conducting proper due diligence on investments recommended to investors, and brokers must make suitable recommendations. Frequently, investors making these types of claims involve issues related to the level of due diligence that was conducted by the firm and the financial advisor, and whether material risks were properly disclosed to the investor. 

Brokerage firms are responsible for properly supervising brokers they employ, broker’s transaction involving the sale of investment products, and the investor’s account. In cases where negligence or impropriety can be established, investors are able to file a claim to recover their investment losses. Under these circumstances, investors can file FINRA arbitration claims against the brokers alleging negligence, misrepresentation, breach of contract, unjust enrichment and negligent supervision. If investor’s claims are successful they can recover damages and interest, and in some cases punitive damages, attorney’s fees, and any further relief the arbitration panel deems proper.

If you invested with a broker or financial advisor and suffered investment losses due to a brokerage firm’s failure to supervise its broker, you may be able to pursue a claim in FINRA arbitration. Please contact Riera Law Firm at 305-204-9779 for a free case evaluation. We work on a contingency fee basis, meaning our firm receives a fee only if we recover money for you.