Cetera Investment Services Broker Unsuitably Recommended Non-Traded REITs

Cetera Investment Services Broker Chang Vung Named in Six-Figure Non-Traded REIT Claim

A self-employed New York investor has filed a Financial Industry Regulatory Authority (FINRA) arbitration claim against Cetera Investment Services and its broker Chang Jen Vung. The claimant sustained losses in non-traded real estate investment trusts.

The claimant is pursuing up to $500K in damages and contends that Vung used their shared cultural affinity when recommending that he concentrate his portfolio on high commission, illiquid products. These products included Healthcare Trust Inc., Griffin Realty Trust, and NorthStar Healthcare Income REIT.

Our New York non-traded REIT lawyers are representing this investor in FINRA arbitration. If you also suffered losses in non-traded REITS while working with Cetera Investment Services, please call Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com) at (800) 259-9010.

Cetera Concentrated Customer’s Account With Privately Traded REITs

While this claimant had some investing experience, he was an unsophisticated investor regarding private placements and privately traded securities. This claimant was a longtime client of First International Bank (now Royal Business Bank), which has a third-party contract with Cetera for the latter to provide clients with financial advisory services. This investor was approached by Vung, who claimed to have new investment opportunities.

Despite the investor making it clear that he didn’t want to take on undue risk, the Cetera Investment Services broker recommended speculative products that were privately traded, invested in real estate ventures, charged high fees, and were high risk. This included the privately traded REITs that were wrong for the claimant.

What are Privately Traded Products?

Privately traded products are unregistered securities generally offered to a limited pool of investors that have to be accredited and experienced. They are illiquid with limited disclosures about their finances. They also tend to charge high commissions.

For example, Northstar Healthcare Income charges high upfront fees and commissions on its shares. Add all of that together, and only 86.4% of investor proceeds end up funding actual real estate investments.

Quite honestly, if Cetera Investment Services felt like the investor would have benefited from exposure to real estate, they could have easily recommended publicly-traded REITs. There are over 200 on AMEX or the NYSE. Unfortunately, there was no way the claimant could have known that his Cetera broker was making unsuitable investment recommendations.

Not only that, but his financial advisor reassured him on multiple occasions that his investments were doing well. Now, it appears this investor may have lost everything.

Negligence and Failure To Supervise

Misrepresentations and omissions were involved, as were negligence and grossly negligent behavior. Cetera and Chang Vung breached their fiduciary duty to the claimant, and the broker-dealer failed to properly supervise its financial advisor.

According to Vung’s BrokerCheck record, he has been a Cetera Investment Services broker for 14 years in the industry. Previous disclosures include an unsuitability claim from June 2021 that was denied. Another customer dispute, filed in 2019 and alleging misrepresentations and fraud, was settled for $14,500.

Fighting for Investors Against Cetera Investment Services

SSEK Law Firm has brought several FINRA arbitration claims against Cetera Investment Services over the past year. Not only for its unsuitable sale of REITS to retail customers but also for selling off-shore annuities in Northstar Financial Services (Bermuda) to foreign nationals who are now contending with huge losses.

Our securities lawyers have been fighting for investors for over 30 years, and we have recovered many millions of dollars for our clients. Nationwide, call SSEK Law Firm at (800) 259-9010 today. You can also speak to our New York REIT attorneys at (716) 261-3529.