Securities Lawyers Blog
The securities lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Jeffrey Nesseth (Nesseth) currently associated with Independent Financial Group, LLC (Independent Financial) out of Plano, Texas. According to a BrokerCheck report, Nesseth has been subject to at least four customer disputes, two of which are still pending. Nesseth’s customer complaints mostly concern alternative investments and direct participation products (DPPs) such as non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and equipment leasing programs. The attorneys at Gana Weinstein LLP have extensive experience handling investor losses caused by these types of products.
In June 2018 a customer alleged that Nesseth engaged in an over-concentration in REITs that was unsuitable to the customer’s investment needs. The customer has requested $100,000 in damages. This dispute is currently still pending.
In June 2010 a customer alleged that from December 2007 to May 2008, Nesseth made unsuitable investments of corporate debt and oil & gas causing $300,000 in damages. The claim settled for $47,500.
DDPs include products such as non-traded REITs, oil and gas offerings, equipment leasing products, and other alternative investments. These alternative investments virtually never profit investors and are almost always unsuitable for investors because of their high fee and cost structure. Brokers selling these products are paid additional commission in order to hype these inferior quality investments providing a perverse incentives to create an artificial market for products that no honest advisor would sell.
According to studies, non-traded REITs have historically have underperformed even safe benchmarks, like U.S. treasury bonds. Brokers selling these products must disclose to the investor that non-traded REITs provide lower investment returns than treasuries while being high risk and illiquid – but almost never do. Because investors are not compensated with additional return in exchange for higher risk and illiquidity, these kinds of alternative investment products are rarely, if ever, appropriate for investors. In addition, these products often continue to deceive investors for years through their control over their own prices, returning investor capital as a false distribution from operations, high fees on their redemption programs, and control of pertinent investor information. Investors often fail to understand that they have lost money until many years after agreeing to the investment in these products nor do they function as their advisors claim they do.
These types of alternative investment products have become so popular among brokers without providing any benefit to investors that many states now limit investors from investing more than 10% of their liquid assets in Non-Traded REITs and BDCs. Many states impose these limitations because no rational person can come up with an argument to support the continued sale of these products. Unfortunately for investors there is no regulatory authority in the United States with the ability to analyze investments and ban flawed investment products.
Nesseth entered the securities industry in 1990. Since October 2011 Nesseth has been registered with Independent Financial out of the firm’s Plano, Texas office location.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.