Broker Jeffrey M. Isaacs (Issacs) of Investors Capital Corporation (ICC) was recently suspended and sanctioned by The Financial Industry Regulatory Authority (FINRA) over allegations that Isaacs made negligent material misrepresentations of fact in connection with the unsuitable sale of two private placements to ICC customers. In addition, after the customers complained to Isaacs, he settled their claims without notifying ICC.
From January 12, 2005, through December 12, 2011, Issacs was associated with Investors Capital Corporation. On December 12, 2011, ICC filed a Form U5 stating that Isaacs “submitted a voluntary request to terminate association with the firm while under investigation for failing to follow firm policies.” Thereafter, Isaacs was registered with TFS Securities, Inc. (TFS) from November 21, 2011 through December 15, 2011. On December 15, 2011, TFS filed a Form U5 stating that Isaacs’ termination was voluntary. Issacs’ BrokerCheck discloses that he is also employed by JB Financial Resources.
FINRA alleged that Isaacs negligently misrepresented two customers that an investment in the Insight Real Estate LLC 2007 Secured Debenture Offering (Insight) was a safe, low-risk investment, misstated its payment terms, and omitted material facts relating to the speculative nature of the investment. The customers invested $100,000 in Insight in reliance on Issacs’ representations. Thereafter, FINRA alleged that Isaacs negligently misrepresented to the customers that an investment in CIP Leverage Fund Advisors, LLC (CIP) was for moderately conservative investors and would pay interest to the investors on a monthly basis. In fact, the CIP was a speculative investment that paid interest only on an accrued basis with the final payment of principal. The customers also invested $100,000 in CIP in reliance on Issacs representations.
FINRA found that Isaacs’ recommendations of the Insight and CIP investments to the customers was unsuitable in light of the customers’ age, risk tolerance, net worth, and the fact that the customers needed to borrow from their home equity in order to make the investments. Both customers were in their 60s and one was a retired U.S. postal worker and the other customer worked as a special education teacher. The customers stated that their risk tolerance was low and Isaacs knew that the customers borrowed $200,000 from their home equity in order to invest in Insight and CIP.
In addition, to the FINRA suspension and fine Issacs has been subject to other regulatory action and several customer complaints. On March 5, 2013, Isaacs entered into a Consent Order with the New Jersey Bureau of Securities agreeing to a three-year suspension from registration with the New Jersey Bureau of Securities and a $5,000 civil monetary penalty for dishonest or unethical practices in the securities business. In addition, at least four customers have filed complaints against Issacs in connection with his sales activities. One complaint alleges that the customer’s investment in Cornerstone CIP Leveraged Fund was unsuitable. Another customer complaint alleges that the customer’s investment in a debenture, Insight 2007-A, and Lightstone REIT was unsuitable.
The attorneys at Gana LLP are experienced in investigating claims concerning the sale of private placements and REITs. Our attorneys can help you detect and uncover suspicious activity in your accounts. Our consultations are free of charge and the firm is only compensated if you recover.