Securities Lawyers Blog
The law offices of Gana Weinstein LLP recently filed a securities arbitration case on behalf of a family of four investors against First Allied Securities, Inc. (First Allied) and Centaurus Financial, Inc. (Centaurus) concerning allegations that their financial advisor Seyed Ahmad Hashemian (Hashemian) made unsuitable and inappropriate investment recommendations to claimants’ by recommending a near 100% concentration in illiquid, speculative, and high commission investments including variable annuities, equity-indexed annuities (EIAs), private placements, oil and gas ventures, non-traded real estate investment trusts (REITs), and Advanced Equities private placements.
Our law offices have represented over a dozen investors who alleged that they were sold the Advanced Equities private placements through the use of false and misleading advertising materials. In addition, to customer complaints both FINRA and the SEC have sanctioned Advanced Equities concerning the misleading nature of their sales practices. Customers have alleged that the products were misrepresented as “late stage equities” that were a mere 12-36 months from going public. The complaint also alleged that the investments were sold as providing “Higher near-term investment returns than the public equity markets” while providing “Greater short-term liquidity and lower risk profiles.” The complaint alleged that these representations were false and that First Allied failed to conduct even basic due diligence to verify the accuracy of these statements.
In the case of the recent complaint filed, claimants’ investments were alleged to have been made using money that was supposed to be used to replace the earnings the untimely passing of a family member. As a result, the complaint alleged that over a nearly nine year period where the broader market indexes have hit all-time highs, claimants have lost significant sums their investments. The claimants alleged that they have been deprived of the ability to generate reasonable returns by being trapped in illiquid and unsuitable investments.
The complaint alleged that while it was extremely lucrative for Hashemian to recommend the private placements to claimants, the firms failed to conduct the necessary due diligence before selling the speculative private placements to claimants. Hashemian also allegedly misrepresented the private placements and annuities to claimants by, for example, telling claimants that the REITs would provide safe and stable income while the other private placements and annuities would provide growth opportunities with minimal risk. The complaint also alleged that Hashemian also instructed certain claimants to circumvent the securities laws by having certain family members transfer funds to other family members in order to avoid Regulation D’s “accredited investor” requirement. The specific advanced equities private placements include Metricstream, Presto Services, Inc., Luxtera, Inc., and Azul Systems, Inc.
The complaint alleged that Hashemian actions in this case are indicative of his long history of misrepresenting securities to investors. Hashemian has been subject to disciplinary action by FINRA, terminated from two firms, including First Allied, and has had at least eight customer complaints filed against him concerning his sales practices. According to FINRA, between 2005 and 2007, Hashemian acted as a broker for customer in the sale of three variable life settlements where Hashemian never informed the customer of the amount of the commissions he received which was not conducted through his firm. See FINRA v. Seyed Ahmad Hashemian, FINRA Letter of Acceptance, Waiver and Consent (AWC) No. 2008012757901 (May 2010).
The attorneys at Gana Weinstein LLP can help you or someone you know evaluate their potential securities case. If you suspect misconduct in your account please contact us for a free consultation.