Securities Lawyers Blog
The Financial Industry Regulatory Authority (FINRA) has brought a complaint against financial advisor Brian H. Brunhaver (Brunhaver) formerly of LPL Financial, LLC (LPL) concerning allegations Brunhaver used an unauthorized e-mail account for communications related to his securities business and committed securities fraud in making oral and written misrepresentations to customers regarding a non-traded REIT.
Brunhaver entered the securities industry in 1994. From May 1995, until June 2011, he was registered through LPL. On or about June 2, 2011, LPL filed a Uniform Termination Notice (Form U5) for Brunhaver disclosing that he had been discharged on May 3, 2011. From August 2011, until December 2011, Brunhaver was registered through Pacific West Securities, Inc. On or about February 25, 2013, LPL filed an Amended Form U5 disclosing the receipt of a Statement of Claim where certain customers of Brunhaver alleged that he had recommended unsuitable investments in REITs and had made misrepresentations to them while employed by LPL.
In addition, Brunhaver’s BrokerCheck discloses that the broker has at least nine customer complaints filed against him. The majority of the complaints involve allegations that Brunhaver made unsuitable recommendations and material misrepresentations in the sale of non-traded REITs including Inland American REIT, among others. LPL has been sanctioned by regulatory authorities for failing to supervise its broker’s sales of non-traded REITs
In the complaint, FINRA alleged that from October 4, 2006, and continuing until at least April 19, 2011, Brunhaver used an unauthorized e-mail account to communicate with customers regarding securities business. FINRA alleged that LPL had an Electronic Communications Policy Guide stating that all of the LPL’s financial advisors must use either the e-mail address provided by the firm or a compliance-approved proprietary Doing Business As (DBA) address. FINRA alleged that before August 2006, Brunhaver used both his firm provided e-mail address and a personal e-mail account with AOL.com for business communications. FINRA further alleged that following the Advisor Alert Brunhaver continued to use both e-mail addresses for his securities business
FINRA also alleged that from September 10, 2008, until November 10, 2008, Brunhaver made false statements in approximately five e-mail messages to a customer regarding the Inland American Real Estate Trust, a non-traded REIT. In those messages AOL account messages, FINRA alleged Brunhavcr falsely informed the customer that her principal investment would be guaranteed, that the investment involved no risk, and that she could not possibly lose her money. In reliance of those communications, FINRA alleged that the customer invested $114,300 in the Inland REIT and incurred a loss as a result.
FINRA also alleged that on or about January 7, 2009, Brunhaver sent a “blast” e-mail message to an unknown number of existing retail customers from his personal AOL account making false statements regarding the Inland REIT. FINRA alleged that Brunhaver falsely stated that the REIT had a “guarantee of principle [sic]” and that there was “no fundamental default of principle [sic] risk” in the Inland REIT. FINRA further alleged that the messages did not disclose the substantial risks of the investment, were not fair and balanced, and contained false, exaggerated, unwarranted or misleading statements. FINRA alleges that Brunhaver’s statements were fraudulent under the FINRA and Federal securities laws.
The attorneys at Gana Weinstein LLP are experienced in investigating claims concerning the fraudulent sale of alternative investments including REITs. We welcome all inquiries.