Securities Lawyers Blog
Previously financial advisor Deborah Anderson (Anderson), previously employed by brokerage firm LPL Financial LLC has been subject to at least 4 disclosable events. These events include 4 customer complaints. According to a BrokerCheck reports most of the recent customer complaints concern either corporate debt securities or 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.
FINRA BrokerCheck shows a pending customer complaint on February 28, 2024.
The customers allege that the Registered Representative recommended unsuitable investments and investment strategies in various illiquid alternative investments. No specific dates for the alleged activity were identified in the Statement of Claim.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $50,000.00 on February 28, 2024.
The customer alleges that in October of 2019, the Registered Representative recommended an unsuitable, high-risk, illiquid investment, and breached her fiduciary duty.
FINRA BrokerCheck shows a settled customer complaint on May 23, 2023.
In February 2019, the customer alleges that the Registered Representative misrepresented an high-risk and unsuitable investment.
FINRA BrokerCheck shows a settled customer complaint on February 13, 2023.
The customer alleges that the Registered Representative recommended an unsuitable, high-risk, speculative and illiquid investment. No dates for the alleged activity were identified in the Statement of Claim.
DDPs include products such as non-traded REITs, oil and gas offerings, equipment leasing products, and other alternative investments. Investors almost never benefit from these alternative investments, which are typically inappropriate because of their high fees and expense structure. By offering brokers extra commissions, firms incentivize the sale of poor-quality investments, ultimately leading to a manipulated market driven by artificial demand.
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 offering these products are required to inform investors that non-traded REITs come with lower returns than treasuries, along with high risk and illiquidity—but they rarely do. As investors do not gain extra returns to offset higher risk and illiquidity, these alternative investment products are almost never a good fit for them.
Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client after conducting due diligence. Due diligence includes an investigation into the investment’s properties including its benefits, risks, tax consequences, issuer, history, and other relevant factors. Appropriate due diligence would identify that an alternative investment’s high costs, illiquidity, and conflicts of interests that would make the investment not suitable for investors. Investors 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.
Unfortunately, these types of alternative investment products continue to popular among brokers due to their high commissions. In order to counter the perverse incentives to sell these flawed product many states now limit investors from investing more than 10% of their liquid assets in Non-Traded REITs and BDCs. Many states impose these limitations because these investments do not benefit investors.
Anderson has been in the securities industry for more than 33 years. Anderson has been registered as a Broker with LPL Financial LLC since 2020.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.
