ProEquities, Inc. Hit with FINRA Award on Tenant in Common Investments

May 2013–In FINRA Case # 12-1167, Suzy Asad and Suzy Asad Trust v Mamdoh Abas and ProEquities, Inc.,  a Los Angeles panel awarded compensatory damages of $379,424, plus accrued interest, costs of $68,838 and session fees of $25,875, jointly and severally against ProEquities, Inc. and broker Mamdoh Aziz Abas. The Claimant alleged elder abuse, securities fraud , negligence and misrepresentation in connection with the sale of tenant in common investments (TICs).

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

Former LPL Financial Broker Brian Brunhaver Sanctioned Over REIT Sales

Washington State Securities regulators have issued a Findings of Fact and Order to Cease and Desist against former LPL Financial broker Brian Brunhaver, his wife Stacey Brunhaver and his investment advisory firm Brunhaver Financial Services. Regulators have ordered Brunhaver to cease and desist violating various Washington State securities laws, have denied his personal and his company’s securities registrations and have imposed fines of $60,000.

The primary issue raised by the regulators relates to the sale of non-traded real estate investment trusts (REITs) and the fact that he misrepresented the risks associated with these investments and made unsuitable recommendations that clients invest in the REITs.

The order, which may be accessed here, makes many interesting and significant factual findings, including:

  • Brunhaver sold non-traded REITs to over 200 clients during the last few years he worked for LPL (2007-May 2011) and collected more than $548,000 in commissions on those sales
  •  Non-traded REITs are illiquid investments which have no ready market, have less share value transparency than traded REITs, are difficult to value and often fund distributions by borrowing or from the capital raised from new investors.
  • Non-traded REITs present conflicts of interest, have higher up-front fees than traded REITs and have on going management fees.
  • Brunhaver was terminated by LPL in May 2011, ostensibly for communicating with clients through an unapproved email account
  • Brunhaver represented to certain clients that the REITs were safe and/or conservative investments, that no risk was involved and that the investment would be safe and sound, comparing them to the safety of bonds. He told one client that there was no way should could lose money investing in REITs.
  • Some clients were told that their principal investment was guaranteed by the REIT and others were told that the government would guarantee their principal investments in REITs. Some clients were told that the liquidity of the REITs was guaranteed.
  • He told some clients he would waive his commision as an inducement for the clients to make the investment in the REITs, but in fact he did not actually waive his commission.
  • Brunhaver made unsuitable recommendations of the REITs to clients. One client was told to invest 100% of his net worth in REITs. Another was sold an 80% concentration of REITs.
  • Brunhaver submitted forms to LPL that misstated their net worth, income and investment objectives in order to gain approval of these unsuitable investment recommendations. In some cases clients were told to sign forms in blank and Brunhaver completed the forms with inaccurate information. In other cases, Brunhaver altered the account forms to accommodate his scheme.
  • During the investigation Brunhaver and his wife interfered by contacting clients and offering to help them complete the investigatory questionaires from the securities division of Washington.
  • When contacted by the regulators during the investigation, Brunhaver made false and misleading statements by denying that he had been communicating with his clients about the investigation.

According to FINRA records, he has several pending customer arbitrations, including one involving Inland American REIT.

See the sidebar of this blog “REITs” for the 60+ posts we have made on the topic of non-traded REITs, including:

  • Behringer Harvard
  • CNL Lifestyles
  • Cole Credit
  • Columbia Property Trust
  • Cornerstone Core
  • Corporate Property Associates
  • Dividend Capital
  • Healthcare Trust of America
  • Hines
  • Inland American
  • Inland Diversified
  • KBS
  • Landmark
  • Lightstone Value
  • Retail Properties of America
  • TNP Strategic
  • United Development Fund
  • Wells
  • Wells Timberland

We have represented a number of individuals seeking losses on non-traded REITs against LPL as well as several other broker dealers. If you have suffered losses on non traded REITs, call us for information on your legal rights to recover all or a part of your loss.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

FINRA Arbitrators Award Couple $1.1M For Sale of Unsuitable REITs

A Financial Industry Regulatory Authority (FINRA) arbitration panel in Minneapolis, MN, recently awarded over $1.1 million to a couple who alleged that the following investments were unsuitable:

  • Medical Capital Holdings
  • DBSI
  • ICON
  • IMH
  • Behringer Harvard REIT

Claimants stated that the broker misrepresented their investment objective as growth and income as opposed to their stated objectives of preservation of capital and low-risk tolerance. The panel found that these investments in speculative private placements, limited partnerships and real estate investment trusts (REITs) were unsuitable for them. The damages included $500,000 in punitive damages.

FINRA Case # 11-03704-Eugene Opatz and Ruth Opatz v David Alan Theis, Dougherty Financial Services, Inc. and Securities Monitoring Group, LLC. Theis did not appear and the panel awarded the $1.1M damages against him. The other Respondents reached a confidential settlement with claimants.

If you believe you have been sold investments that are not suitable or contrary to your stated investment objectives, you may be able to recover losses through FINRA arbitration.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

More Trouble for LPL Financial-Ex Broker Blake Richards Charged with $2M Theft

Buford, Georgia

UPDATE June 11,2013– an order of preliminary injunction against Blake Richards was entered by the Honorable Julie E. Carnes of the Northern District of Georgia enjoining Richards from further violations of the securities laws.
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In a civil complaint filed in the U.S. District  Court for the Northern District of Georgia, former LPL Financial adviser Blake Richards of Buford, Georgia, was charged the the Securities & Exchange Commission with defrauding investors and misappropriating $2 million dollars from six or more clients.

According to the complaint, the SEC alleges that between 2009-2013, Richards directed clients to write checks to his outside  business instead of LPL and that many of the purported investments were frauds. Most of the invested funds came from client’s retirement savings or life insurance proceeds. The SEC also alleges that Richards gave fake financial statements to at least one client.

Richards registration history in the industry according to FINRA records is as follows:

  • LPL Financial                                      05/2009-05/2013
  • Ameriprise Advisor Services               02/2007-05/2009
  • A.G. Edwards & Sons, Inc.                  08/2004-02/2007
  • Edward Jones                                       04/2000-08/2004

This is the third major issue this week for LPL, the nation’s fourth largest broker dealer.

On May 21, 2013, FINRA hit LPL with a $9 million dollar fine for significant issues related to their email system and for making misstatements to regulators during the investigation. More on that here.

The next day, Massachusetts regulators announced that LPL would have to pay nearly twice the amount , $5 million, to resolve the investigation of their sales practices related nontraded real estate investment trusts (REITs) . See this for more details.

Investors who have suffered losses with LPL or other broker dealers may be able to recover those losses through FINRA arbitration. Contact us for a no charge consultation.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 190

Boca Raton Based VFinance Investments Fined by Regulators

VFinance Investments, Inc. ,was censured and fined $65,000 by FINRA in March 2013 in connection with the sale of nearly $6 million dollars worth of convertible notes in a private placement for a company that was on the firm’s restricted list.

In addition, FINRA alleged that:

  • the firm did not adequately supervise the purchases of stocks on the restricted list
  • the firm authorized purchases of the issuer by customers without conducting an adequate inquiry into the facts and circumstances surrounding those purchases
  • the firm failed to disclose involvement of a statutorily disqualified person who worked with the firm in connection with the private placement
  • the firm should have been on heightened awareness of its obligations to supervise the use of external email accounts and failed to adequately supervise employee’s outside email accounts.

According to FINRA records, VFinance is licensed to sell securities in 53 states and territories and conducts 13 types of business including the sale of private placements.

Investors who have suffered losses may be able to recover all or a part of those losses through FINRA arbitration.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

LPL Financial’s Regulatory Woes Continue

LPL Financial has grown extremely quickly and is now the fourth largest brokerage firm, behind Wells Fargo, Morgan Stanley and Merrill Lynch. They have over 13,000 brokers in 6,500 offices and over 4 million customers. LPL was created in 1989 through a merger of Linsco, an older firm from Boston, and Private Ledger, another older firm, from San Diego.

Their rapid growth has not without numerous issues with securities regulators nationwide.

Most recently, on May 21, 2013, FINRA assessed a record $9 million dollar fine against LPL for serious deficiencies in their email system that prevented the proper supervision of brokers and made it impossible to respond to regulator’s requests for information. See this for more information.

A review of LPL’s disclosure information on the FINRA BrokerCheck website reveals 42 regulatory events, including these recent problems:

  • FINRA-12/31/2012- $400,000 fine for failure of written supervisory procedures to ensure delivery of prospectuses to customers.
  • Montana Commissioner of Securities-11/04/2012-Fine and restitution for failure to provide disclosure documents to customers
  • Massachusetts Securities Regulators-2/6/2013- $2.5 million fine and restitution for failure to supervise and train agents in connection with the sale of non traded REITs.
  • Illinois Regulators-10/24/2011- Fine and restitution in excess of $2 million for failing to supervise a registered representative.
  • Pennsylvania Regulators-12/6/2011- Fine of $400,000 for failing to supervise two registered representatives.
  • Oregon Regulators-11/8/2011- Fine of $100,000 for failing to supervise an agent that sold general partnership units to senior citizen base.

To review their entire disclosure report, visit the FINRA BrokerCheck Website.

Rex Securities Law currently represents a number of former LPL customers who are seeking damages for losses incurred as a result of purchasing non publicly traded real estate investment trusts (REITs). These REITs include KBS, Inland, CNL, Behringer Harvard, Hines, Wells, Dividend Capital and others.

If you have questions about your legal rights and the recovery of investment losses, do not hesitate to contact us.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900

LPL Financial Hit With $9 Million Fine by Securities Regulator

On May 21, 2013, the Financial Regulatory Authority (FINRA) announced a record $9 million dollar fine has been assessed against LPL Financial significant failures in its email system which prevented access to hundreds of millions of emails.

FINRA provided the following examples of email failures:

  • Over a four-year period, LPL failed to supervise 28 million
    “doing business as” (DBA) emails sent and received by thousands of representatives who were operating as independent contractors.
  • LPL failed to maintain access to hundreds of millions of emails during a transition to a less expensive email archive, and 80 million of those emails became corrupted.
  • For seven years, LPL failed to keep and review 3.5 million Bloomberg messages.
  • LPL failed to archive emails sent to customers through third-party email-based advertising platforms.

To make matters worse LPL made material misstatements to FINRA during the investigation of the email problem. FINRA found that LPL likely failed to provide emails  to certain arbitration claimants and private litigants and is required to notify eligible claimants and deposit $1.5 million of the fine in a fund to pay customer claimants for its potential discovery failures.

Rex Securities Law has been investigating the sales practices of LPL Financial, including its sale of non-traded REITs to investors, for more than a year and currently is representing a number of LPL clients who are seeking recovery of investment losses. If you have questions about losses in your LPL Financial account, contact us for more information.

Rex Securities Law , located in Boca Raton, FL, provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

561 391 1900