Securities Lawyers Blog
According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker John Notman (Notman) has been the subject to an astonishing 31 customer complaints along with two firm terminations for cause. The customer complaints against Notman allege a number of securities law violations including that the broker made unsuitable investments and misrepresentations and false statements among other claims. Many of the complaints involve Notman’s sales of tenants-in-common (TICs). These claims along alleged combined investor losses of well over $20,000,000.
Notman entered the securities industry in 1982. From March 2003, until September 2012, Notman was registered with Berthel, Fisher & Company Financial Services, Inc (Berthel Fisher). In September 2012, Berthel Fisher filed a notice of termination Form U-5 stating that the reason for terminating Notman from the firm was due to his failure to report certain financial disclosures.
As a background, TICs largely been sold unfairly as tax advantaged products that allow customers to defer capital gains taxes on appreciated real estate. TICs are private placements that have no secondary trading market and are therefore illiquid investments. In a typical TIC, the investor receives a fractional interest in the property along with other stakeholders and the profits are generated mostly through the efforts of the sponsor and the management company that manages and leases the property. The sponsor typically structures the TIC investment with up-front fees and expenses charged to the TIC and negotiates the sale price and loan for the acquired property. Because these fees are often higher than 15%, there is often no way for the investment to be profitable for the investor.