A FINRA arbitration panel found that TIC investments were unsuitable and ordered Pacific West Securities to pay $2.1 million in damages to a couple that had been clients.
TICs are real estate securities also known as tenant-in-common exchanges and have been very popular over recent years.
Unfortunately the investor may see little or none of the money since Pacific West’s CEO announced that the firm would be forced to close down. This danger, entrusting your nest egg to a firm that may have limited resources, is one we have warned investors about in the past. See this link (bottom of page “A Word to the Wise…”) for more on the dangers of dealing with a thinly capitalized broker-dealer.
The arbitration panel found that the TICs were not suitable for the couple “given their age, financial condition, cash flow needs, risk tolerance, over concentration in real estate and for other reasons”. The panel also awarded $200,000 in attorney fees and interest and was particularly concerned about the lack of a suitability analysis, saying in their order:
“Among other evidence of a violation of a standard of care under the Securities Act of Washington was the disavowal by [Pacific West and its broker, William Swayne II] of any obligation to conduct a suitability analysis for the sale of TICs in the circumstances of a Section 1031 — like-kind-assets exchange for tax deferral purposes,” according to the award. The arbitrators “determined that the sale of these securities to (the couple) violated the duty of reasonable care.”
Broker dealers that sold TIC investments include:
Alternative Wealth Strategies
American Wealth Management
Berthel Fisher & Co
Cambridge Investment Research
CapWest Securities Inc.
DBSI Securities
DeWaay Financial Network, Inc.
Equity Services Inc.
FINTEGRA LLC
F.A. Repple & Co.
Grubb & Ellis
INVEST Financial Corp.
Investment Security Corporation
Investors Capital
J.P. Turner Co. LLC
LaSalle St. Securities
KMS Financial Services, Inc.
LPL Financial
MCL Financial Group Inc.
Meridian Capital Partners
Next Financial Group
NPV/Direct Invest
Omni Brokerage Inc.
Orchid Securities
Pacific West Securities
QA3 Financial Corp.
Quest Securities
Questar Capital Corp.
Regent Financial Group
Sanders Morris Harris
Sagepoint Financial
Securities Network LLC
Sigma Financial
U. S. Advisors LLC
U. S. Commercial
WFP Securities
Rex Securities Law , with offices in Boca Raton, FL, and Austin, TX, 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.
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