REITs

Austin Dutton and Newbridge Securities Sanctioned By the State of Pennsylvania Over Securities Sales

October 10, 2017 | by Staff Attorney

Former Newbridge Securities Corporation (Newbridge) broker Austin Dutton (Dutton) has been subject to two complaints and a recent sanction citing dishonest or unethical practices in the securities business by the Pennsylvania Department of Banking and Securities and fining Dutton $200,000. According to a BrokerCheck report Dutton recommended the purchase of a security to at least one customer without reasonable grounds to believe that the transaction was suitable for the customer.

In addition, Dutton’s firm, Newbridge, was also sanctioned by the state of Pennsylvania on findings that “From in or about January 2012 until December 2016, Newbridge did not maintain a reasonable system for applying and enforcing written procedures pertaining to their sales of structured products by one agent in Pennsylvania to certain of his clients…” While The order does not name the broker it appears reasonably related to Dutton.

According to newssources, Dutton is known to have recommended and sold and direct participation products (DPPs) such as non-traded real estate investment trusts (REITs). In particular Dutton sold real estate investment trusts formerly managed by Nicholas Schorsch’s private firm, American Realty Capital (ARC), now AR Global. An accounting scandal affected ARC and its REITs. According to sources, Dutton sold these products to retirees and police officers.

American Realty Capital Hospitality Investors Suffer Losses

September 25, 2017 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating investor losses in American Realty Capital Hospitality Trust Inc. (Hospitality Trust), a non-traded real estate investment trust (Non-Traded REIT). The company then changed its name to Hospitality Investors Trust Inc.

Hospitality Trust acquires select-service lodging properties and brand national hotel. Hospitality Trust initial offering was January 2014 and raised $911 million. Hospitality Trust suspended dividend distributions in January 2017 and is not currently offering a redemption plan to shareholders trapping investors in the product.

According to a secondary market providers which allow investors to bid and sell illiquid products such as Non-Traded REITs, Hospitality Trust sells for just $10.50 per share – a significant loss on the original purchase price of $25.00.

Nicolas Toadvine Subject to Customer Complaints Over REITs and Real Estate Investments

July 13, 2017 | by Staff Attorney

Calton & Associates, Inc. (Calton) broker Nicolas Toadvine (Toadvine) has been subject to numerous complaints over non-traded REITs and real estate related investments. According BrokerCheck Lynn has been subject to 12 customer complaints in total and declared bankruptcy in 2013. The securities lawyers of Gana Weinstein LLP are investigating the customer complaints against Toadvine.

Many of the complaints concern private placements and direct participation products (DPPs) such as non-traded real estate investment trusts (REITs).

All of these investments come with high costs and historically have underperformed even safe benchmarks, like U.S. treasury bonds. For example, products like oil and gas partnerships, REITs, and other alternative investments are only appropriate for a narrow band of investors under certain conditions due to the high costs, illiquidity, and huge redemption charges of the products, if they can be redeemed. However, due to the high commissions brokers earn on these products they sell them to investors who cannot profit from them. Further, investor 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.

James Lynn Subject to Multiple Complaints Over REIT Investment Sales

June 27, 2017 | by Staff Attorney

Broker James Lynn (Lynn) was recently terminated by his former employer Voya Financial Advisors, Inc. (Voya). According BrokerCheck Voya alleged that Lynn provided misleading information to the firm during a complaint investigation. In addition to the termination, Lynn has been subject to six customer complaints, one bankruptcy and three judgments or tax liens. The securities lawyers of Gana Weinstein LLP are investigating the customer complaints against Lynn.

Many of the complaints concern variable annuities or direct participation products (DPPs) such as non-traded real estate investment trusts (REITs). The most recent complaint filed in May 2017 requested $115,000 in damages alleging that the investor claimed the that the REIT investments and the replacement of a variable annuity policy was unsuitable. The REITs were purchased in 2014 and 2015. The claim is currently pending.

All of these investments come with high costs and historically have underperformed even safe benchmarks, like U.S. treasury bonds. For example, products like oil and gas partnerships, REITs, and other alternative investments are only appropriate for a narrow band of investors under certain conditions due to the high costs, illiquidity, and huge redemption charges of the products, if they can be redeemed. However, due to the high commissions brokers earn on these products they sell them to investors who cannot profit from them. Further, investor 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.

FINRA Sanctions Broker John Oldham Over Alternative Investment Sales

June 20, 2017 | by Staff Attorney

Broker John Oldham (Oldham) was recently sanctioned by The Financial Industry Regulatory Authority (FINRA) in an enforcement action. According to the FINRA AWC (Letter of Acceptance, Waiver, and Consent 2015046203101) FINRA found that Oldham consented to sanctions that he shared commissions from the sales of alternative investments with an unregistered entity. According to FINRA, Oldham facilitated the sales of the alternative investments totaling more than $4.8 million to customers referred to him and shared commissions with the unregistered entity in the amount of $240,000 for these transactions. FINRA found that while Oldham executed subscription agreements on behalf of the third-party, in some instances this representation on those forms were inaccurate because Oldham had not communicated with the customer who had executed the subscription agreement.

The securities lawyers of Gana Weinstein LLP are investigating the regulatory complaint against Oldham. In addition to the regulatory action, there is one employment termination for cause listed for Oldham alleging possible violation of FINRA Rule 2040.

Our firm often handles cases involving direct participation products (DPPs) and private placements including oil and gas partnerships, non-traded real estate investment trusts (REITs), and other alternative investments.

FINRA Bars John Hudnall Over Non-Traded REIT Transactions

May 17, 2017 | by Staff Attorney

Customers have filed complaints and The Financial Industry Regulatory Authority (FINRA) recently barred broker John Hudnall (Hudnall) – formerly with U.S. BanCorp Investments, Inc. (U.S. BanCorp). The securities attorneys at Gana Weinstein LLP are investing the allegations against Hudnall including unsuitable investments among other claims. According to brokercheck records Hudnall has been subject to six customer complaints and one criminal matter. Many of the complaints involve direct participation products (DPPs) and variable annuities such as non-traded real estate investment trusts (REITs) and other alternative investments.

In FINRA’s complaint against Hudnall it was alleged that he participated in an undisclosed and unapproved private securities transaction by selling a REIT investment to an elderly customer which he split into two simultaneous transactions of $40,000 and $360,000. FINRA alleged that Hudnall did this to circumvent his firm’s supervisory review of such a large transaction of this kind. According to FINRA, the $400,000 REIT investment exceeded the firm’s supervisory thresholds and would have triggered additional supervisory review and likely would have been disapproved. FINRA also alleged that Hudnall made a promotional offer in which he promised to pay certain customers who purchased fixed annuities 1% annual interest if they held their fixed annuities for at least a year, when in fact this offer was not part of the fixed annuity product that he was selling.

Our firm has represented many clients in illiquid alternative investments products. All of these investments come with high costs and have historically underperformed even safe benchmarks, like U.S. treasury bonds. For example, products like oil and gas partnerships, REITs, and other alternative investments are only appropriate for a narrow band 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. However, due to the high commissions brokers earn on these products they sell them to investors who cannot profit from them and have created a large market for a failed product. Further, investor often fail to understand that they have lost money in these illiquid investments until many years after investing. 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.

Broker Raymond Harrison Has Complaints Over Non-Traded REITs

November 30, 2016 | by Staff Attorney

Our investment attorneys are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Raymond Harrison (Harrison) currently associated with Cambridge Investment Research, Inc. (Cambridge) alleging unsuitable investments , lack of due diligence, lack of supervision, and omissions of material information among other claims. According to brokercheck records Harrison has been subject to six customer complaints and two financial disclosures. Many of the complaints involve direct participation products (DPPs) such as non-traded real estate investment trusts (REITs), equipment leasing funds – such as LEAF or ICON, and other alternative investments.

In October 2016 a customer filed a complaint alleging unsuitable investments for investment experience and risk tolerance, lack of adequate due diligence in regard to investments, a lack of supervision and the omission of material information. The customer claimed damages of $603,000. The claim is currently pending.

Our firm has represented many clients in illiquid alternative investments products. All of these investments come with high costs and have historically underperformed even safe benchmarks, like U.S. treasury bonds. For example, products like oil and gas partnerships, REITs, and other alternative investments are only appropriate for a narrow band 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. However, due to the high commissions brokers earn on these products they sell them to investors who cannot profit from them and have created a large market for a failed product. Further, investor often fail to understand that they have lost money in these illiquid investments until many years after investing. 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.

Customers File Complaints Against Kenneth Saunders Over Alternative Investments

November 26, 2016 | by Staff Attorney

Our investment attorneys are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Kenneth Saunders (Saunders) currently associated with National Planning Corporation (NPC) alleging unsuitable investments among other claims. According to brokercheck records Saunders has been subject to six customer complaints. Some of the complaints involve direct participation products (DPPs) such as non-traded real estate investment trusts (REITs) and other alternative investments.

Saunders has also disclosed a number outside business activities including his d/b/a Saunders Investment & Tax Advisory Group, Inc., Heron Bay Association, and Parke Place HOA. The most recent customer complaint was filed in March 2016 and alleged that Saunders recommended unsuitable alternative investments causing $150,000 in damages. The claim is currently pending.

Our firm has represented many clients wo have invested in Direct Participation Products and REITS. Many of these types of investments come with high costs and have historically underperformed various benchmarks. For example, according to FINRA, products like REITs, and DPPs are only appropriate for a narrow band 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. Further, investors often fail to understand that they have lost money in these illiquid investments until many years after investing.

Mark Wesley Terminated by Ameriprise After Unauthorized Trading in Customer Accounts

November 9, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Mark Wesley (Wesley) alleging unsuitable investments, negligence, and breach of fiduciary duty among other claims. According to brokercheck records Wesley has been subject to six customer complaints. Some of the complaints involve direct participation products (DPPs), oil and gas private placements, variable annuities, non-traded real estate investment trusts (REITs), and other alternative investments.

In June 2016, Ameriprise Financial Services, Inc. (Ameriprise) permitted Wesley to resign alleging that he was under suspension for compliance policy violations related to unauthorized trading, use of discretion in a non-discretionary account, supervision of staff and responding to supervision.

In addition, Wesley has been subject to five tax liens totaling millions of dollars. A broker’s inability to handle their personal finances has also been found to be relevant in helping investors determine if they should allow the broker to handle their finances.

Broker Craig Hayward Subject to Customer Complaints Over Non-Traded REITs and Alternative Investments

September 9, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating a customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against broker Craig Hayward (Hayward). According to BrokerCheck records Hayward has been subject to at least six customer complaints. The customer complaints against Hayward alleges securities law violations that including unsuitable investments and misrepresentations among other claims. Many of the complaints involve direct participation products (DPPs) and private placements including oil and gas partnerships, non-traded real estate investment trusts (REITs), and other alternative investments.

Our firm has represented many clients in these types of products. All of these investments come with high costs and historically have underperformed even safe benchmarks, like U.S. treasury bonds. For example, products like oil and gas partnerships, REITs, and other alternative investments are only appropriate for a narrow band of investors under certain conditions due to the high costs, illiquidity, and huge redemption charges of the products, if they can be redeemed. However, due to the high commissions brokers earn on these products they sell them to investors who cannot profit from them. Further, investor 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.

Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client. In order to make a suitable recommendation the broker must meet certain requirements. First, there must be reasonable basis for the recommendation the product or security based upon the broker’s investigation 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.