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Articles Tagged with Alternative Investments

Morrow Allegedly Made Unsuitable Recommendations Involving Alternative Investments 

In what is at least the thirteenth customer complaint naming him, Concorde Investment Services broker William Aubrey Morrow is once more accused of making unsuitable investment recommendations to an investor. 

Morrow, who also operates under the name Financial Designs, LTD, has been involved in a number of broker fraud investor claims related to alternative investments including limited partnerships, real estate investment trusts (REITs)  tenant-in-common (TIC) programs, and other investments. 

Business Development Company May Have Been Unsuitable For Some Investors 

If you are an investor who suffered losses after your stockbroker recommended the Franklin Square KKR Capital II Fund (FSKR), also known as FS KKR Capital Corp II, you may have grounds for pursuing a broker fraud claim for damages. 

This business development company (BDC), which is a merger of four non-traded BDCs, reportedly was unsuitably recommended to a number of customers and/or the risks were never fully disclosed to them.

Crown Capital Securities Broker Was Recently Named in Four FINRA Arbitration Claims  

Dennis Haywood, a Crown Capital Securities broker, is now named in four customer disputes, all of which were filed in the last two months with the Financial Industry Regulatory Authority (FINRA). Haywood is also a Purepath Wealth Management investment adviser. 

The claimants are accusing him of making inappropriate investment recommendations of non-traded real estate investment trusts (non-traded REITs), non-traded business development companies (BDCs), alternative investments, and variable annuities (VA).

Diamond and Other Kalos Capital Brokers Are Accused of Broker Fraud 

Arni Diamond, who is now a registered representative with Dempsey Lord Smith,  is currently the subject of a pending $200K broker fraud claim accusing him of making unsuitable alternative investment recommendations reportedly while he was a Kalos Capital broker. 

Diamond is one of a number of financial representatives currently or formerly associated with Kalos who has been accused of marketing securities products to investors even when they were inappropriate for them.

Texas Stockbroker Purportedly Earned High Commissions From Illiquid Alternative Investments

If you are an investor who was sold alternative investments by First Allied Securities broker William Fox, you may have grounds for an investor claim. Fox, an Austin, TX-based registered representative, has been accused by at least one customer, who already filed a Financial Industry Reguinveslatory Authority (FINRA) claim, of not performing the proper due diligence before recommending that the claimant invest over $2M in retirement funds in illiquid, poor quality alternative investments. 

This included nontraded real estate investment trusts (nontraded REITs), annuities, private placements, equipment leasing, and oil and gas investments. The sale of these investments to the claimant resulted in Fox earning $140K in commissions and an investment advisory fee. 

Another Kalos Capital Broker Sold GPB Investments To Investors

Once again, our GPB investment lawyers at Shepherd Smith Edwards and Kantas (SSEK Law Firm) have filed an investor fraud lawsuit against Kalos Capital and one of its brokers, Kristian Finfrock. 

In this latest broker fraud case, the Claimants are a retired couple who contend that Kalos Capital broker and investment advisor, Kristian Finfrock, pushed them into placing $750K of their life savings into alternative investments including non-traded real estate investment trusts (Non-traded REITs), annuity contracts, and GPB Capital private placements. 

National Financial Services Customers Have 60 Days To Transfer GPB Investments 

Five months after announcing that investors of GPB Capital Holdings private placements would no longer be carrying these alternative investments (AI) on its platform, National Financial Services (NFS) is sending letters to customers notifying them that they have 60 days after January 14, 2020, to transfer their GPB Holdings II securities. 

The GPB Holdings II securities must be transferred to another custodian broker or their alternative investment (AI) positions will be registered directly in their name. This is one of the larger GPB private placement funds that, as of June, had reported a 25.4% drop in value. National Financial Services (NFS) is a Fidelity Investments clearing and custody unit. 

Texas-Based Brokerage Firm Accused of Inadequate Supervision Involving VA Exchanges
The Financial Industry Regulatory Authority is ordering IMS Securities Inc. to pay a $100K fine. The Texas-based brokerage firm is accused of failures related to its monitoring of variable annuity exchanges. By settling, however, it is not denying or admitting to the allegations. 
 
According to the self-regulatory authority, the firm exhibited inadequate supervisory procedures for “problematic rates of exchange” in transactions involving variable annuities. FINRA claims that from 7/ 15/13 through 7/8/14, IMS Securities depended on its CFO to review annuity exchanges but did not provide tools or guidance to help look for “problematic rates of exchange.”  The broker-dealer is accused of not probing possibly “problematic patterns” of VA exchanges and not enforcing written supervisory procedures related to consolidated reports. 

The Financial Industry Regulatory Authority has put out a new investor alert warning about advertisements that are marketing higher-than-average CD yields. The self-regulatory authority says that some of the ads might be an attempt to get investors to buy a much more much more expensive investment, such as a fixed or equity-indexed annuity, that is not risk free. Often, the alternative investments are insurance products.

FINRA warned that with most CD promotions that are marketing ploys, an investor would be required to go to an office or talk to a salesperson, who may try to convince the prospective buyer to purchase an alternative product that is not a CD. Typically, the minimum purchase amount is high, such as $25K. Such ploys would also tout a “bonus”-a sum the salesperson would pay you plus the average percentage yield of the CD. FINRA warns that this bonus is actually an incentive to get you to hear the pitch for the more complex product. Meantime, the seller may be earning a high commission for making the sale.
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Investors are accusing brokerage firms of making inappropriate recommendations and selling investments in Icon Leasing Fund Eleven, LLC and Icon Leasing Fund Twelve, LLC to them even though they would not be able to withstand the high risks. The two funds are registered, non-traded Equipment Leasing Direct Participation Programs (DPPs).

Not only are the Icon Eleven and Icon Twelve investments very high risk and illiquid investments, but also there are little if any secondary markets where their shares can be sold. Investment dividends from Icon cannot be predicted because they are contingent upon profits made from equipment leases.

During their offering periods, the two funds started paying distributions. However, not long after Icon Eleven and Twelve stopped taking new investors, the investments’ value started to drop fast and dividend payments became inconsistent. The decline has resulted in significant financial losses for investors.

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