Securities Lawyers Blog
On August 27, 2014, FINRA filed a complaint against Steven L. Stahler, formerly a registered representative with multiple broker dealers including Lowell & Company, Inc., Ausdal Financial Partners, Inc., Berthel, Fisher & Company Financial Services, Inc., VSR Financial Services, Inc., among others. On November 1, 2013, Lowell & Company terminated Mr. Stahler according to his form U5.
FINRA alleges that Mr. Stahler made unsuitable recommendations to customers in violation of FINRA Rule 2310 and 2110 and FINRA Rule 2010. Under FINRA Rule 2110 and 2310, all financial advisers and brokerage firms have a responsibility to deal fairly with their customers. All sales efforts are judged based upon the standards outlined in the FINRA Rules. Furthermore, all brokers must recommend the purchase, sale or exchange of securities that are reasonable given the customers investment objectives and risk tolerances.
According to the complaint, VSR Financial’s written supervisory procedures specify that no more than 40%-50% of a customer’s liquid net worth should be invested in alternative investments. VSR’s guidelines also required that new account forms used outline the customer’s percentage of the portfolio they would feel comfortable investing in high risk investments. FINRA alleges that from September 13, 2006 through October 24, 2006, Mr. Stahler recommended that a married couple, who had stated that no more than twenty percent of their portfolio be invested in aggressive/high risk investments, invested approximately $837,000 in twelve high risk investments at Mr. Stahler’s recommendation. These alternative investments included:
• 9/13/06 ICON LEASING FUND ELEVEN, LLC $25,000.00
• 9/13/06 CYPRESS EQUIPMENT FUND XII, LLC $50,000.00
• 9/14/06 AMREIT MONTHLY INCOME & GROWTH III, LTD. $75,000.00
• 9/14/06 INLAND AMERICAN REAL ESTATE TRUST, INC. $75,000.00
• 9/14/06 ODYSSEY RESIDENTIAL II, LLC SECURED 9.0% NOTES $too,000.00
• 9/14/06 ICON LEASING FUND ELEVEN, LLC $75,000.00
• 9/14/06 CYPRESS EQUIPMENT FUND XII, LLC $50,000.00
• 9/14/06 ARCITERRA REAL ESTATE INVESTMENTTRUST, INC. $75,000.00
• 9/14/06 COLE CREDIT PROPERTYTRUST II, INC. $75,000.00
• 9/14/06 BEHRINGERHARVARD OPPORTUNITY REIT 1, INC. $75,000.00
• 9/21/06 LEASE EQUITY APPRECIATION FUND II, L.P. $50,000.00
• 10/24/06 LAEROC EDGE FUND, L.P. $62,500.00
• 10/24/06 ODYSSEY OPERATING PARTNERSHIP II, LTD. $50,000.00
In addition, Mr. Stahler allegedly advised a 63 year-old woman, who told VSR that she was a moderate investor and did not want more than five percent of her investments in aggressive/high risk investments, to invest approximately $790,000 in eleven alternative investments. These alternative investments included:
• 8/14/07 AMREIT MONTHLY INCOME & GROWTH FUND IV, L.P. $100,000.00
• 8/14/07 ARCITERRA WHITEFISH OPPORTUNITY FUND, LLC $70,000.00
• 8/14/07 FLORIDA CAPITAL REAL ESTATE PARTNERS 28, LTD $70,000.00
• 8/14/07 KBS REAL ESTATE INVESTMENT TRUST, INC. $100,000.00
• 8/14/07 LAEROC EDGE FUND, L.P. $50,000.00
• 8/14/07 MPF INCOME FUND 24, LLC $75,000.00
• 8/14/07 ODYSSEY DIVERSIFIED NOTES VII $75,000.00
• 8/14/07 LEAF EQUIPMENT LEASING INCOME FUNDIH, L.P. $50,000.00
• 10/12/07 CYPRESS GROWTH FUND, LLC $100,000.00
• 10/12/07 CYPRESS INCOME V, LLC $50,000.00
• 5/23/08 MEWBOURNE ENERGY PARTNERS 08-A, L.P. $50,000.00
Mr. Stahler made a total of approximately $52,000 in net commissions on these private placements and REITs, according to FINRA.
In August 2006, Mr. Stahler recommended that a 77 year-old woman to invest her retirement savings. During the period from August 11, 2006 through April 22, 2009, the woman invested approximately $864,000, despite stating that no more than 5% of her portfolio was to be invested in aggressive/high-risk products and no more than 30% in high risk/moderate investments.
These alternative investments included:
• 8/11/06 ARCITERRA REAL ESTATE INVESTMENT TRUST, INC. $50,000.00
• 8/11/06 CYPRESS EQUIPMENT FUND XII, LLC $50,000.00
• 10/4/06 AMREIT MONTHLY INCOME & GROWTH M, LTD. $75,000.00
• 10/4/06 ICONLEASING FUND ELEVEN, LLC $50,000.00
• 11/9/06 LAEROC EDGE FUND, L.P. $62,500.00
• 11/10/06 ODYSSEY OPERATING PARTNERSHIP II, LTD. $67,000.00
• 11/28/06 CNL INCOME, 2ND OFFERING $70,000.00
• 11/28/06 ODYSSEY PROPERTIES III, LLC $70,000.00
• 6/29/07 UNITED DEVELOPMENT FUNDING III, L.P. $20,000.00
• 7/4/07 ARCITERRA WHITEFISH OPPORTUNITY FUND, LLC $55,000.00
• 10/26/07 ODYSSEY DIVERSIFIED NOTES VH $55,000.00
• 12/18/07 LEAF EQUIPMENT LEASING INCOME m $100,000.00
• 2/21/08 MPF SENIOR NOTE PROGRAM H, LP $25,000.00
• 4/18/08 ATLAS RESOURCES PUBLIC #17-2008 (B) L.P. $25,000.00
• 4/18/08 BRADFORD DRILLING ASSOCIATES XXV, L.P. $25,000.00
• LEAF COMMERCIALFINANCE FUND, LLC
• 11/5/08 8.25% SECURED RECOURSE NOTES $55,000.00
• 04/22/09 CYPRESS EQUIPMENT FUND 16, LLC $10,000.00
Moreover, Mr. Stahler has been the subject of eight customer complaints, five of which resulted in settlement.
Gana Weinstein LLP fights for the rights of investors and represent broker-dealer customers in a wide array of securities claims including selling away, unsuitable investments, and fraud. If you, or someone you know, lost money investing with VSR, Berthel Fisher, or Steven Stahler, contact us.