Securities Lawyers Blog
Currently financial advisor Richard Oh (Oh), currently employed by brokerage firm Taglich Brothers, Inc. has been subject to at least one disclosable event. These events include one customer complaint. 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 with a damage request of $876,101.98 on December 06, 2024.
The arbitration was filed September 2024 almost 9 years after the last investment with Taglich Brothers, Inc. (TBI). The Claimant is alleging the Respondents are responsible for his current financial circumstances 9 years after the last investment made through TBI. The Claimant, himself, completed all the paperwork, wrote and signed detailed and precise instructions for investments in the private placement transactions made through TBI during the 11 years. There was no fraud and no malfeasance on behalf of the Respondents. Richard Oh did not engage in sales practices with the Claimant nor did he have direct contact with the Claimant. The Claimant, a successful workmen’s compensation plaintiff’s attorney, made investments in several private placements through TBI simultaneously placing unsolicited orders for trading in equities listed on the stock market. The Claimant, a practicing attorney, breached his legal fiduciary obligations in handling his mother’s brokerage accounts, knowingly committed fraud representing in writing, including, but not limited to, his financial ability to invest in the private placements, his understanding of the risks of the investments, his knowledge of the securities markets, which he knew would be read and was relied upon by the Respondents and the companies he invested in.
Alternative investments, including nontraded REITs, oil and gas offerings, and equipment leasing products, are examples of DDPs. Due to their steep costs and fee structures, these alternative investments are nearly always unsuitable and seldom yield profits for investors. Brokers earn additional commissions for promoting these low-quality investments, fostering a system of skewed incentives that result in an artificially sustained 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. As investors do not gain extra returns to offset higher risk and illiquidity, these alternative investment products are almost never a good fit 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.
Oh entered the securities industry in 1995. Oh has been registered as a Broker with Taglich Brothers, Inc. since 1995.
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.
