Securities Lawyers Blog
Advisor William Sines (Sines), currently employed by Berthel, Fisher & Company Financial Services, Inc. (Berthel Fisher) 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, annuities, and equipment leasing programs. The attorneys at Gana Weinstein LLP have represented dozens of investors who suffered losses caused by these types of high risk, low reward products.
In July 2019 a customer complained that Sines violated the securities laws by alleging that Sines pressured her into liquidating an annuity which cost her thousands of dollars in surrender penalties and lost interest credit in order to invest her into a REIT which she feels was an inappropriate investment. The claim alleged $38,651 in damages and was closed.
In November 2017 a customer complained that Sines violated the securities laws by alleging that Sines recommended unsuitable investments. The claim settled for $19,737.
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.