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Advisor James Vernon Regier Receives Customer Complaints Over Unsuitable Trades

Our law firm, Gana Weinstein LLP, is investigating claims made by Financial Industry Regulatory Authority (FINRA) against broker James Vernon Regier (Regier), formerly associated with Summit Brokerage Services, Inc. The customer complaints allege that Regier engaged in securities law violations, including making unsuitable investments in clients’ accounts. The most recent complaint filed in July 2016 alleges that between 2010 and 2015, Regier engaged in unsuitable trading in a customer’s account by recommending purchases of publicly traded shares of United Development Funding IV (UDF). The complaint is currently pending. In April 2016, another investor filed a complaint and alleged unsuitable activity occurring in the investor’s account from April 2015 – March 2016, causing damages of greater than $5,000.00. That complaint is also currently pending. In January 2012, a customer filed a complaint alleging unsuitable trading activity in 2008. The claim was settled for $104,191.00.

Regier first became associated with FINRA in 2002. Below are the firms that Regier has been employed by and registered with throughout his career:

  • Washington Square Securities, Inc. (January 2002 – August 2002)
  • VSR Financial Services, Inc. (August 2002 – November 2016)
  • Summit Brokerage Services Inc., Topeka, Kansas office (September 2016 – Present)

According to UDF’s website, the company was founded in 2003 and purports to provide investors with an opportunity to diversify their portfolios with “fundamentally sound investments in affordable residential real estate.” However, allegations have been made that UDF IV made false or misleading statements and omissions regarding its business. It has been alleged that UDF IV failed to disclose that:

  1. Subsequent UDF REIT companies provide significant liquidity and capital to earlier UDF companies which allows those companies to repay earlier investors;
  2. If funding from retail investors to the latest UDF company were halted the earlier UDF companies would not be capable of continuing operations;
  3. UDF IV provided liquidity to UDF I, UMT and UDF III, as part of an investment scheme;
  4. UDF IV was being operated in a manner similar to a Ponzi scheme where new capital is being used to pay prior investors;
  5. UDF IV failed to disclose that the company was being investigated by the SEC for its practices; and
  6. UDF IV’s business prospect representations were false and misleading.

All advisers have a fundamental responsibility to deal fairly with investors, including making suitable investment recommendations. There are three primary brokerage responsibilities outlined by the suitability rule:

  • To perform reasonable-basis suitability analysis

The adviser must investigate the investment properties (benefits, risks, tax consequences, and other relevant factors) in order to have a reasonable basis when making recommendations of products or securities suitable to his or her clients.

  • To perform customer-specific suitability analysis

The broker must understand the customer’s specific investment objectives to determine whether or not the specific product or security being recommended is appropriate for the customer based upon their needs.

  • To perform quantitative suitability analysis

All brokers and broker-dealers must have a reasonable basis for recommending a series of transactions, even if suitable when viewed in isolation, are not excessive and unsuitable for the customer when taken together in light of the customer’s objectives.

Investors who have suffered investment losses due to unsuitable investment activity by brokers may be able recover their losses through securities arbitration. The attorneys at Gana Weinstein LLP are experienced in representing investors concerning securities violations in various products including private placement securities. Our consultations are free of charge and the firm is only compensated if you recover.

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