The Financial Industry Regulatory Authority is accusing VFG Securities of failing to supervise brokers to make sure that clients\u2019 portfolios did not become overly concentrated in illiquid investments. In its complaint against the brokerage firm, the regulator said that from 11\/10 to 6\/12, VFG made nearly 95% of revenue from the sale of nontraded real estate investment trusts and direct participation programs. An audited financial statement with the SEC said that by 6\/30\/12, the broker-dealer had nearly $4M in revenues for that past year.<\/p>\n
The self-regulatory organization said that VFG Securities owner Jason Vanclef wrote a \u201cThe Wealth Code,\u201d which he used as sales literature to market investments in direct participation programs and nontraded REITs, in order to bring potential investors. He purportedly claimed in the book that nontraded REITs and nontraded direct participation programs provide capital preservation and high returns\u2014a claim that is misleading, inaccurate, and not in line with information in the prospectuses for the instruments sold by VFG Securities. Such investments are typically high risk to the extent that an investor may end up losing a substantial part of if not all of his\/her investment.<\/p>\n
Vanclef also wrote in the book that by investing in the instruments that he recommended, investors stood to earn 8-12% results and consistent returns. FINRA said that he and the firm did not give readers a \u201csound basis\u201d upon which to assess such claims.<\/p>\n