Securities Lawyers Blog
The law offices of Gana Weinstein LLP are investigating broker Douglas Hyer (Hyer), currently associated with First Allied Securities, Inc. (First Allied) out of Great Neck, New York. According to a BrokerCheck report, Hyer has been subject to at least four customer disputes and one termination for cause during his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), the customer complaints allege that Hyer engaged in unsuitable sales of 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 April 2019 a customer alleged that from 2009 through 2012, Hyer recommended illiquid, risky and non-traded products that were unsuitable to the customer’s investment needs. The claim alleged over $5,000 in damages and settled for $15,000.
In February 2013 Hyer was permitted to resign from Next Financial Group, Inc. (Next Financial) after the firm found that Hyer failed to follow company policies and misused the social media.
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.
Hyer entered the securities industry in 1983. From September 2008 to February 2013, Hyer was registered with Next Financial. Since January 2013 Hyer has been associated with First Allied out of the firm’s Great Neck, New York and San Diego, California office locations.
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.