Securities Lawyers Blog

Lee Kramer Has Complaint Over Alternative Investment Sales Practices

May 6, 2020 | by Staff Attorney

Advisor Lee Kramer (Kramer), currently employed by FSC Securities Corporation (FSC Securities), has been subject to at least two customer complaints, seven regulatory actions, and two employment terminations for cause during the course of his career. According to a BrokerCheck report one of the customer complaints concern 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. Kramer discloses that he operates a number of outside businesses, some of which are investment related, including Kramer Financial, LLC and Kramer Wealth Managers. The attorneys at Gana Weinstein LLP have represented hundreds of investors who suffered losses caused by these types of high risk, low reward products.

In October 2019 a customer complained that Kramer violated the securities laws by alleging that Kramer engaged in sales practice violations related to recommending alternative investments such as BDCs and an annuity. The claim alleges $93,000 and is currently pending.

DDPs include products such as non-traded REITs, oil and gas offerings, equipment leasing products, and other alternative investments. These alternative investments virtually never profit investors and are almost always unsuitable for investors because of their high fee and cost structure. Brokers selling these products are paid additional commission in order to hype these inferior quality investments providing a perverse incentives to create an artificial market for the investments.

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. Brokers selling these products must disclose to the investor that non-traded REITs provide lower investment returns than treasuries while being high risk and illiquid – but almost never do. Because investors are not compensated with additional return in exchange for higher risk and illiquidity, these kinds of alternative investment products are rarely, if ever, appropriate for investors. Continue Reading

John Davenport Subject to Regulatory and Customer Complaints Over Sales Practices

May 4, 2020 | by Staff Attorney

According to BrokerCheck records financial advisor John Davenport (Davenport), currently employed by Liberty Partners Financial Services, LLC (Liberty Partners) has been subject to three customer complaints, one regulatory action, one employment termination for cause, one bankruptcy, and two judgement or tax liens during his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), the customer complaints against Davenport concern allegations over variable annuity sales practices.

In January 2019 FINRA alleged that Davenport consented to the sanctions and to findings that he placed two securities transactions for a registered representative of another firm and split the commissions generated from the transactions with that representative, without the knowledge or consent of either firm. FINRA determined that Davenport paid the registered representative from the other firm approximately $50,000 on the variable annuity transactions ostensibly as a referral fee causing his firm’s books and records to be inaccurate. FINRA further made findings that Davenport permitted his assistant to use a personal email address to communicate with securities customers concerning business-related matters, which was not approved by the firm, causing the firm to fail to retain the emails among its books and records.

Variable annuities are complex financial and insurance products. In fact, the Securities and Exchange Commission (SEC) released a publication entitled: Variable Annuities: What You Should Know encouraging investors to ask questions about the variable annuity before investing. Essentially, a variable annuity is a contract with an insurance company under which the insurer agrees to make periodic payments to you. The investor chooses the investments made in the annuity and value of your variable annuity will vary depending on the performance of the investment options chosen. The primary benefits of variable annuities are the death benefit and tax deferment of investment gains.

Stephen Holt Has Complaints Over Tenant-In-Common (TIC) Real Estate Sales Practices

May 4, 2020 | by Staff Attorney

Advisor Stephen Holt (Holt), currently employed by Lighthouse Capital Group, LLC (Lighthouse Capital Group, LLC), has been subject to at least two customer complaints during the course of his career. According to a BrokerCheck those customer complaints concern private placement sales of Tenant-in-Common (TIC) real estate products. The attorneys at Gana Weinstein LLP have represented hundreds of investors who suffered losses caused by these types of high-risk products.

In February 2020 a customer complained that Holt violated the securities laws by alleging that Holt engaged in sales practice violations by conducting limited due diligence regarding a DST investment in 2015. The claim alleges $227,847 and is currently pending.

In December 2019 a customer complained that Holt violated the securities laws by alleging that Holt engaged in sales practice violations by conducting limited due diligence regarding a DST investment in 2015. The claim alleges $168,370 and is currently pending.

TIC investments have led to devastating investor losses and are in almost all cases unsuitable products. The near certainty of failure of investing in TICs as a whole has led to the product virtually disappearing as an offered investment from most reputable brokerage firms. According to InvestmentNews “At the height of the TIC market in 2006, 71 sponsors raised $3.65 billion in equity from TICs and DSTs…TICs now are all but extinct because of the fallout from the credit crisis.” In fact, TICs recommendations have been a major contributor to bankrupting brokerage firms. For example, 43 of the 92 broker-dealers that sold TICs sponsored by DBSI Inc., a company whose executives were later charged with running a Ponzi scheme, a staggering 47% of firms that sold DBSI are no longer in business.

Dustin Shafer Has Complaints Over Alternative Investment Sales Practices

May 3, 2020 | by Staff Attorney

Advisor Dustin Shafer (Shafer), currently employed by Newbridge Securities Corporation (Newbridge Securities), has been subject to at least seven customer complaints and two tax liens or judgement during the course of his career. According to a BrokerCheck report one of the customer complaints concern 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.

In January 2020 a customer complained that Shafer violated the securities laws by alleging that Shafer engaged in sales practice violations related to recommending an investment that was not explained and that was guaranteed a montly dividend. The claim alleges $175,000 and is currently pending.

In January 2020 a customer complained that Shafer violated the securities laws by alleging that Shafer engaged in sales practice violations related to recommending alternatives investment beginning in 2013 that were misrepresented. The claim alleges violations of Illinois securities laws, breach of fiduciary duty, negligence, and violation of FINRA rules. The claim alleges $454,000 in damages and is currently pending.

Timothy Touloukian Has Complaints Over Private Placement Sales Practices

May 3, 2020 | by Staff Attorney

Advisor Timothy Touloukian (Touloukian), currently employed by Paulson Investment Company LLC (Paulson Investment), has been subject to at least four customer complaints, two employment terminations for cause, four regulatory actions, and two judgement or tax liens during the course of his career. According to a BrokerCheck report some of the customer complaints concern private placements. The attorneys at Gana Weinstein LLP have represented hundreds of investors who suffered losses caused by these types of high risk products.

In 2011 Touloukian was terminated by Advanced Equities, Inc. – a firm that was itself expelled from the securities industry over its sales practices – for selling a private equity investment to a non-qualified investors.

In January 2020 a customer complained that Touloukian violated the securities laws by alleging that Touloukian engaged in sales practice violations related mading material misrepresentations concerning an investment in a private placement. The claim alleges $500,000 and is currently pending.

In January 2020 another customer complained that Touloukian violated the securities laws by alleging that Touloukian engaged in sales practice violations related mading material misrepresentations concerning an investment in a private placement. The claim alleges $200,000 and is currently pending.

Private placement offerings are among the most speculative and costly investment products offered to retail investors. While the size of the private placement market is unknown, according to 2008 estimates, companies issued approximately $609 billion of securities through Regulation D offerings. Private placements allow many small companies to efficiently raise capital. However, regulators continue to find significant problems in the due diligence and sales efforts of some brokerage firms when selling private placements to investors. These problems include fraud, misrepresentations and omissions in sales materials and offering documents, conflicts of interest, and suitability abuses.

Ameriprise Financial Advisor Jeffrey McHale Has Customer Complaints

April 16, 2020 | by Staff Attorney

The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that financial advisor Jeffrey McHale (McHale), currently employed by Ameriprise Financial Services, LLC (Ameriprise) has been subject to at least three customer complaints during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), McHale’s customer complaints alleges that McHale recommended unsuitable investments in various investments including allegations of concentrations in biotech stocks and low cap stocks among other allegations of misconduct relating to the handling of their accounts.

In December 2019 a customer complained that McHale violated the securities laws by alleging that McHale made investments recommendations in unsuitable investments including pharmaceutical and biotech stocks while at Ameriprise from 2015 through 2019. The investors also allege that their accounts were overconcentrated and certain transactions were marked unsolicited despite being recommended by respondent advisor. The claim alleges $655,000 in damages and is currently pending.

In December 2018 a customer complained that McHale violated the securities laws by alleging that McHale made investments recommendations in unsuitable investments. The investors allege that respondent recommended a high concentration of equity securities, did not recommend bonds and instead recommended low priced low market cap securities. The claim alleges $180,000 in damages and is currently pending.

Rodney Potratz Has Complaint Over Alternative Investment Sales Practices

April 16, 2020 | by Staff Attorney

Advisor Rodney Potratz (Potratz), currently employed by FSC Securities Corporation (FSC Securities), has been subject to at least two customer complaints during the course of his career. According to a BrokerCheck report one of the customer complaints concern alternative investments such as direct participation products (DPPs) like non-traded real estate investment trusts (REITs), oil & gas programs, and private placements. Potratz discloses that he operates a number of outside businesses, some of which are investment related, including Stonebridge Financial Advisors and Diversified Financial Advisory Group. The attorneys at Gana Weinstein LLP have represented hundreds of investors who suffered losses caused by these types of high risk, low reward products.

In November 2019 a customer complained that Potratz violated the securities laws by alleging that Potratz engaged in sales practice violations related to recommending various alternative investments were inappropriately recommended. The claim alleges $6,000,000 and is currently pending.

DDPs include products such as non-traded REITs, oil and gas offerings, equipment leasing products, and other alternative investments. These alternative investments virtually never profit investors and are almost always unsuitable for investors because of their high fee and cost structure. Brokers selling these products are paid additional commission in order to hype these inferior quality investments providing a perverse incentives to create an artificial market for the investments.

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. Brokers selling these products must disclose to the investor that non-traded REITs provide lower investment returns than treasuries while being high risk and illiquid – but almost never do. Because investors are not compensated with additional return in exchange for higher risk and illiquidity, these kinds of alternative investment products are rarely, if ever, appropriate for investors.

Enrique Lopez Has Complaints Over Alternative Investments

April 14, 2020 | by Staff Attorney

Advisor Enrique Lopez (Lopez), currently employed by Arkadios Capital, has been subject to at least four customer complaints during the course of his career. According to a BrokerCheck report the customer complaints concern alternative investments such as direct participation products (DPPs) like non-traded real estate investment trusts (REITs), oil & gas programs, and private placements. Lopez discloses that he operates a number of outside businesses, some of which are investment related, including Cristobal Eden Partners, LLC, Lopez Brothers Distribution, LLC, Gallop Investment Partners, LLC, Cordero Diego, LLC, and Texas Regional Bank. The attorneys at Gana Weinstein LLP have represented hundreds of investors who suffered losses caused by these types of high risk, low reward products.

In January 2020 a customer complained that Lopez violated the securities laws by alleging that Lopez engaged in sales practice violations related to recommending investments that were not suitable including non-traded REITs. The claim is currently pending.

In June 2019 a customer complained that Lopez violated the securities laws by alleging that Lopez engaged in sales practice violations related to between 2014 and 2016 advisor misrepresented and recommended unsuitable, concentrated investments in speculative real estate investment trusts. The investor also alleged that the advisor recommended an unsuitable annuity switch. The claim seeks $2,000,000 in damages and is currently pending.

DDPs include products such as non-traded REITs, oil and gas offerings, equipment leasing products, and other alternative investments. These alternative investments virtually never profit investors and are almost always unsuitable for investors because of their high fee and cost structure. Brokers selling these products are paid additional commission in order to hype these inferior quality investments providing a perverse incentives to create an artificial market for the investments. Continue Reading

Advisor Murray Roark Alleged to Have Recommended Unsuitable Energy Securities

April 14, 2020 | by Staff Attorney

According to BrokerCheck records financial advisor Murray Roark (Roark), currently employed by B. Riley Wealth Management (B. Riley Wealth), has been subject to at least five customer complaints during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA) Roark has been accused by multiple customers of unsuitable investment advice concerning various investment products including energy stocks most likely including energy related investments like master limited partnerships (MLPs). The law offices of Gana Weinstein LLP continue to report on investor related losses and potential legal remedies due to recommendations to investor in oil and gas and commodities related investments.

In May 2019 a customer filed a complaint alleging that Roark violated the securities laws by engaging in, among other violations, from June 2013 to April 2017 the broker engaged in breach of fiduciary duty, negligence, negligent supervision, unsuitable recommendations and concentration in the energy sector. The claim alleges $300,000 in damages and is currently pending.

In February 2016 a customer filed a complaint alleging that Roark violated the securities laws by engaging in, among other violations, that there was a lack of diversification, over concentration, and misrepresentation. The dates of alleged activities are October 2014 through December 2015. The claim alleges $303,950 and was settled for $275,000.

Our firm handles claims and is also investigating securities claims against brokerage firms over sales practices related to the recommendations of oil & gas and commodities products such as exchange traded notes (ETNs), structured notes, private placements, master limited partnerships (MLPs), leveraged ETFs, mutual funds, and individual stocks.

Timothy Vanlohuizen Has Complaints Over Alternative Investments

April 13, 2020 | by Staff Attorney

Advisor Timothy Vanlohuizen (Vanlohuizen), currently employed by SagePoint Financial, Inc. (SagePoint Financial) has been subject to at least seven customer complaints during the course of his career. According to a BrokerCheck report the customer complaints concern alternative investments such as direct participation products (DPPs) like non-traded real estate investment trusts (REITs), oil & gas programs, 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.

In February 2020 a customer complained that Vanlohuizen violated the securities laws by alleging that Vanlohuizen engaged in sales practice violations related to recommending unsuitable investments. The claim seeks $100,000 and is currently pending.

In May 2019 a customer complained that Vanlohuizen violated the securities laws by alleging that Vanlohuizen engaged in sales practice violations related to recommending negligence, unsuitable investments, misrepresentations, and breach of fiduciary duty related to oil and gas investments and precious metals. The claim seeks $350,000 and is currently pending.

DDPs include products such as non-traded REITs, oil and gas offerings, equipment leasing products, and other alternative investments. These alternative investments virtually never profit investors and are almost always unsuitable for investors because of their high fee and cost structure. Brokers selling these products are paid additional commission in order to hype these inferior quality investments providing a perverse incentives to create an artificial market for the investments. Continue Reading