Securities Lawyers Blog
The securities attorneys at Gana Weinstein LLP have been investigating H. Beck, Inc. (H Beck) broker Soonhee Cho (Cho). According to BrokerCheck records, Cho has been subject to a customer dispute and a permitted resignation from employment.
In November 2017, a customer alleged that from June 2013 to November 2017, Cho recommended non-traded Real Estate Investment Trusts (REITs) which were unsuitably risky to the customer and that he also failed to disclose the illiquidity of the investment to the customer. The customer has requested $193,000 in damages.
In addition, Cho has been subject to permitted resignation from member firms. In September 1999, Cho was permitted to resign from Waddell & Reed, Inc. for failing to comply with the firm’s correspondence procedures.
Non-traded REITs come with high costs and historically have underperformed even safe benchmarks, like U.S. treasury bonds. They 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.
Non-traded REITs are rarely suitable. The Federal Industry Regulatory Authority (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.
According to newsources, only about 7.3% of financial advisors have any type of disclosure event on their records among brokers employed from 2005 to 2015. However, studies have found that in certain parts of California, New York or Florida, the rates of disclosure go up to as high as 18%. Brokers must publicly disclose reportable events on their CRD customer complaints, IRS tax liens, judgments, investigations, and even criminal matters.
Cho entered the securities industry in 2009 and has been registered with H. Beck since February 2009.
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 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.