Arizona Retirees Win $2.6M FINRA Arbitration Award Against First Allied Securities

Cetera Broker-Dealer Unsuitably Recommended Non-Traded REITs to Retired Couple

Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm at and Menzer & Hill, PA, are pleased to announce that a Financial Industry Regulatory Authority (FINRA) arbitration panel has awarded our clients a $2.6M award against First Allied Securities. This includes $1.1M in compensatory damages, $818K in market-adjusted damages, more than $660K in legal fees, and $40K in other expenses.

This was a unanimous decision by the three-person panel of arbitrators, which awarded the retired couple the total amount they requested. The arbitration panel was just as troubled as our knowledgeable broker misconduct attorneys were about the actions of First Allied Securities and its financial advisors. First Allied is a Cetera Financial Group broker-dealer. 

This $2.6M award, which was market adjusted, considered how the couple’s portfolio would have performed during the same period at issue had it been appropriately managed. Not only that, but the granting of a complete award sends a clear message that First Allied Securities and its brokers are the ones at fault. The claimants did nothing wrong when they followed the broker-dealer’s recommendations to invest in non-traded real estate investment trusts (non-traded REITs) and other unsuitable products. 

Risky, Illiquid, Unsuitable Investments That Were Overconcentrated 

Non-traded REITs are illiquid, risky, and unsuitable for many retail investors, including most retirees. They are not listed on public exchanges, distributions are not guaranteed, and the commissions and associated fees can add up.

Unfortunately, First Allied Securities unduly concentrated the couple’s portfolio in these investments while misrepresenting the risks involved. Some of the non-traded REITS and other products unsuitably recommended to the claimants included: 

  • Northstar Healthcare Income
  • American Realty Capital Healthcare Trust II 
  • Hospitality Investors Trust (f/k/a ARC Hospitality Trust) 
  • Global Net REIT (f/k/a ARC Global)
  • Cole Capital 
  • Griffin Capital Essential 
  • UIT Advisors Bond Fund 
  • Griffin-American Healthcare REIT III
  • Ridgewood Energy
  • Midland Annuity
  • Jackson Life Annuity
  • AXA Annuity 
  • MetLife Annuity 

It is important to note that American Realty Capital, the parent company of First Allied when its non-traded REITS were sold to the claimants, was under investigation for accounting fraud at that time. 

First Allied Securities misrepresented these retirees as sophisticated investors interested in risky investments. However, through diligent discovery, our seasoned non-traded REIT investment lawyers discovered that the firm’s book of business mostly was made of these investments and other products that earned them high commissions. 

Clearly, recommending non-traded real estate investment trusts to this Arizona couple was never in their best interests. 

Seasoned Non-Traded REIT Attorneys

SSEK Law Firm has been fighting for investors for more than 30 years. We have recovered millions of dollars for thousands of retail investors, high-net-worth individual investors, and institutional investors. 

It is important that skilled non-traded REIT investment lawyers represent you if you want to maximize your chances for a full financial recovery. This is not the kind of legal claim you want to pursue without experienced legal representation. 

Call our experienced investment fraud lawyers at SSEK Law Firm on (800) 259-9010 today.

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