Securities Lawyers Blog
Currently financial advisor Joseph Weinbauer (Weinbauer), currently employed by brokerage firm Berthel, Fisher & Company Financial Services, Inc. has been subject to at least 2 disclosable events. These events include 2 customer complaints. 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 pending customer complaint on January 13, 2025.
The claimants allege that the Firm and representative failed to make a suitable recommendation and over-concentrated claimants account in alternative investments and private placements in October 2014. The claimants further allege that the Firm and representative misrepresented the investments and induced the claimants to retain the investment and caused them to suffer a loss.
FINRA BrokerCheck shows a pending customer complaint with a damage request of $235,000.00 on July 02, 2024.
The claimants allege that the Firm and representative failed to make a suitable recommendation and over-concentrated claimants’ accounts in alternative investments and private placements in November – December 2014. The Claimants further allege that the Firm and representative misrepresented the investments and induced the client to retain the investment causing the client to suffer a loss.
Non-traded REITs, oil and gas ventures, equipment leasing products, and other alternative investments are among the products included in DDPs. Investors almost never benefit from these alternative investments, which are typically inappropriate because of their high fees and expense structure. To push these subpar investments, brokers are given additional commissions, leading to perverse incentives that manipulate the market.
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. Although brokers are required to disclose that non-traded REITs underperform treasuries and come with high risk and illiquidity, they seldom fulfill this obligation. 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.
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.
Weinbauer entered the securities industry in 1997. Weinbauer has been registered as a Broker with Berthel, Fisher & Company Financial Services, Inc. since 2010.
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.
