Previously financial advisor Gustavo Dolfino (Dolfino), previously employed by brokerage firm Silver Leaf Partners, LLC has been subject to at least one disclosable event. These events include one tax lien. According to a BrokerCheck reports most of the recent customer complaints concern either corporate debt securities or alternative investments such as direct participation products (DPPs) like business development companies (BDCs), non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and private placements. The attorneys at Gana Weinstein LLP have represented hundreds of investors who suffered losses caused by these types of high risk, low reward products.
FINRA BrokerCheck shows a final customer complaint on October 15, 2024.
The Securities and Exchange Commission deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted against Gustavo Dolfino (‘Respondent’ or ‘Dolfino’). In anticipation of the institution of these proceedings, Dolfino has submitted an Offer of Settlement which the Commission has determined to accept. The Commission finds that These proceedings concern material misrepresentations Dolfino made to actual and prospective investors in Student Global, LLC (‘Student Global’), an education-tech start-up. Dolfino was the founder and Chief Executive Officer (‘CEO’) of Student Global. Between 2016 and 2022 (the ‘Relevant Period’), Dolfino raised approximately $20.6 million dollars from investors by selling them membership interests in Student Global. To make the investment opportunity appear more attractive, Dolfino made material misrepresentations to investors concerning his prior entrepreneurial success, his own investment in Student Global, and his net worth. Specifically, Dolfino told investors that he had sold an internet-based pharmaceutical company, founded and sold a hedge fund, personally invested millions of dollars in Student Global, and that he was worth hundreds of millions of dollars. None of this was true. Dolfino dissolved Student Global in November 2023 after it ran out of money to finance its operations. Student Global’s investors never received any distribution or other return on their investment, and Student Global’s membership interests are now worthless. As a result of his conduct, Dolfino willfully violated Section 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
Alternative investments like nontraded REITs, oil and gas offerings, and equipment leasing products are part of DDPs. Due to their steep costs and fee structures, these alternative investments are nearly always unsuitable and seldom yield profits for investors. By offering brokers extra commissions, firms incentivize the sale of poor-quality investments, ultimately leading to a manipulated market driven by artificial demand.
Several studies have confirmed that Non-traded REITs underperform publicly traded REITs with some showing that Non-Traded REITs cannot even beat safe benchmarks, like U.S. treasury bonds. It is the responsibility of brokers to inform investors that non-traded REITs deliver lower returns than treasuries and are both high risk and illiquid—but they frequently fail to do so. Given that investors are not rewarded with higher returns for assuming greater risk and illiquidity, such alternative investment products are rarely appropriate for them.
Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client after conducting due diligence. Due diligence includes an investigation into the investment’s properties including its benefits, risks, tax consequences, issuer, history, and other relevant factors. Appropriate due diligence would identify that an alternative investment’s high costs, illiquidity, and conflicts of interests that would make the investment not suitable for investors. Investors often fail to understand that they have lost money until many years after agreeing to the investment. In sum, for all of their costs and risks, investors in these programs are in no way additionally compensated for the loss of liquidity, risks, or cost.
Unfortunately, these types of alternative investment products continue to popular among brokers due to their high commissions. In order to counter the perverse incentives to sell these flawed product 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 these investments do not benefit investors.
Dolfino has been in the securities industry for more than 15 years. Dolfino has been registered as a Broker with Silver Leaf Partners, LLC since 2014.
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.