Securities Lawyers Blog
The securities attorneys at Gana Weinstein LLP are currently investigating Woodbury Financial Services, Inc. (Woodbury Financial) broker Richard Ginsberg (Ginsberg). According to BrokerCheck Records kept by the Financial Industry Regulatory Authority (FINRA), Ginsberg has been subject to two pending customer disputes concerning unsuitable alternative investments.
Most recently, in December 2017, Ginsberg was subject to a customer complaint in which the customer alleged that Ginsberg had placed the customer in unsuitable investments. This dispute is currently still pending.
In addition, in November 2017, a customer alleged that Ginsberg had placed the customer in unsuitable Real Estate Investment Trusts (REITs). The REITs were unsuitable for the customer in terms of the customer’s investment objectives and risk tolerance. The customer has requested $1,000,000 in damages. This dispute is currently still pending.
Our firm often handles cases involving direct participation products (DPPs), private placements, Non-Traded REITs, and other alternative investments. These products are almost always unsuitable for middle class investors. In addition, the brokers who sell them are paid additional commission in order to hype inferior quality investments providing perverse incentives for brokers to sell high risk and low reward investments.
According to studies, non-traded REITs have historically have underperformed even safe benchmarks, like U.S. treasury bonds – meaning that non-traded REITs provide paltry investment returns considering the risk an investor takes. Alternative investment products like oil and gas partnerships, REITs, and equipment leasing programs are only appropriate for a tight range of investors under certain conditions due to the high costs, illiquidity, and huge redemption charges of the products, if they can be redeemed at all.
Brokers earn high commissions from selling these products to investors – making them popular among brokers without providing any benefit to investors. Many states now limit investors from investing more than 10% of their liquid assets in Non-Traded REITs. States instill these restrictions because it’s understood that such products provide virtually no benefit to investors in relationship to the product’s risks.
Non-traded REITs are rarely suitable. FINRA mandates brokers to advise suitable investments for the customer by following certain criteria. First, there must be reasonable basis for the recommendation the product or security based upon the broker’s research and due diligence into the investment’s properties including its benefits, risks, tax consequences, and other relevant factors. Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives such as the client’s retirement status, long or short term goals, age, disability, income needs, or any other relevant factor.
Ginsberg entered the securities industry in April 2008 and has been registered with Woodbury Financial since September 2016. From April 2008 to September 2016, Ginsberg has been registered with Investors Capital Corp.
Gana Weinstein LLP’s investment fraud attorneys represent investors who have suffered securities losses due to the mishandling of their accounts due to claims of unsuitable alternative investments. The majority of these claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.