Veterans should be wary of financial planners or investment advisors recommending an insurance annuity to qualify elderly or disabled veterans for a pension from the U.S. Department of Veterans Affairs.

This month the National Association of Insurance Commissioners (“NAIC”), issued a Consumer Alertindicating that some planners are placing injured and senior veterans in unsuitable insurance annuities or failing to adequately explain the potential drawbacks.

Veterans who are disabled or at least 65 years old and have an annual income lower than the prescribed maximum may qualify for the VA Pension Program. The current maximum yearly income for a veteran without dependents to qualify for a pension is $12,256, assuming the veteran’s net worth is not “excessive.” The VA Pension Program is intended to provide supplemental income to low-income elderly or disabled wartime veterans.

The Financial Industry Regulatory Authority (FINRA) and its predecessor the NASD have long required financial advisors and securities firms to have a reasonable basis to believe a recommended investment is suitable for the investor. On July 9, 2012, NASD Rule 2310 was replaced by FINRA Rule 2111 (Suitability) that clarifies these suitability requirements. The new rule requires a financial advisor to exercise reasonable diligence to determine the customer’s investment profile. Factors considered for a profile determination include:

•     The customer’s age
•     Other investments
•     Financial situation and needs
•     Tax status
•     Investment objectives
•     Investment experience
•     Investment time horizon
•     Risk tolerance
•     Liquidity needs.

Exchange-Traded Notes are unsecured debt securities where the issuer promises to pay a distribution tied to the performance of an underlying index or benchmark. ETNs can be tied to indexes tracking commodities, foreign currencies, stocks, emerging markets, volatility, or other benchmarks as selected by the issuer. ETNs are traded throughout the market day much like stocks or Exchange-Traded Funds (“ETFs”).

A leveraged ETN is a promise to pay a multiple of performance of the index or benchmark it tracks. For example, TVIX is a “2x” ETN issued by Credit Suisse that tracks two times the performance of the VIX short-term futures index. Inverse ETNs track the opposite of the performance of the underlying index. Inverse-leveraged funds seek to track a multiple of the opposite of the underlying index. Some of these complex ETNs are designed to follow their stated objectives on a daily basis only, not over longer periods. In other words, the inverse and/or leveraged return is calculated on a daily basis and then reset, increasing risk for investors who hold these products for an extended period. For more information please see the FINRA Investor Alert.

Houston based law firm Moulton & Arney, LLP is handling investment fraud cases including claims related to “Nutraceuticals” on behalf of investors nationwide.

“Nutraceutical” (derived by combining the words “nutrition” and “pharmaceutical”) refers to foods or food products that claim to provide health and medical benefits, such as weight loss, increased energy, muscle growth, or even a remedy for the common cold. Whether or not these products provide their touted health benefits, the companies that offer them may not be healthy for your investment portfolio.

In a recent Investor Alert, the Financial Industry Regulatory Authority (FINRA) warns investors about potential scams related to “nutraceuticals.” FINRA’s warning about potential nutraceutical stock scamsincludes companies promoting products ranging from fortified foods and energy drinks to “natural” medicines. Some of these companies are running phony operations and may be the source of investment scams that have potential to harm uninformed investors.

Before investing, FINRA recommends the following:

1.    Consider the source of the solicitation.
2.    Always ask: “Why me?”
3.    Be skeptical.
4.    Find out where the stock trades.
5.    If available, read the company’s SEC filings.
6.    What is the company’s business focus, and has it recently changed?
7.    Look into the background of the individual promoting the stock.

For more information on spotting potential stock scams and distinguishing frauds from legitimate investments, read the FINRA Investor Alert.

About Moulton & Arney, LLP

Moulton & Arney is a Houston, Texas, based boutique litigation and FINRA arbitration law firm representing investors nationwide in claims to recover investment losses. The investment fraud attorneys at Moulton & Arney, LLP have extensive experience representing individual investors, in nearly all 50 states, in securities litigation and arbitration. Moulton & Arney has successfully represented thousands of individual investors in securities fraud lawsuits and arbitrations, with combined claims of hundreds of millions of dollars.

Attorney Cynthia R. Levin Moulton, the firm’s founder, has a proven track record in investment fraud claims involving an array of complex investment products. She has been named a Texas Super Lawyer, is rated 5 out of 5 by Martindale.com, and is rated a 10.0 by AVVO.com. To find out more about potential securities fraud claims, please visit securitiesfraudcounsel.com

To contact Moulton & Arney, LLP, visit http://www.moultonarney.com or, call (866) 378-4465, or (713) 353-6699.