Gana LLP Broker Spotlight: LPL Financial Advisor Karl Romero’s Private Placement Sales

shutterstock_103681238According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Karl Romero (Romero) has been the subject of at least 9 customer complaints over the course of his career. Customers have filed complaints against Romero alleging that the broker made unsuitable investments primarily in private placements and alternative investment related products. Some of the claims appear to involve Romero’s handling of customer accounts and recommendations in the LaeRoc Income Fund, a troubled real estate private placement.

The LaeRoc Funds manage over $650 million in assets and focuses on income producing properties in the western US. The LaeRoc 2005-2006 Income Fund LP in 2011 attempted to raise $11 million to $14.5 million to pay off at least $49 million of debt. The claims against Romero claim breach of fiduciary duty and unsuitable investments.

Romero has been registered with FINRA since 1971. From 1989 to present Romero has been registered with LPL Financial, LLC (LPL). According to public records Romero operates out of a DBA business called Karl H Romero & Assoc Inc.

All advisers have a fundamental responsibility to deal fairly with investors including making suitable investment recommendations. Thus, the product or investment strategy being recommended must be appropriate for the investor and the advisers must convey the potential risks and rewards before bringing it to an investor’s attention.

Private placement securities are offered through the Regulation D exemption for securities registration. While the private placement market allows many small companies to efficiently raise capital significant problems in the due diligence and sales efforts by brokerage firms selling these products occur with surprising frequency. Brokerage firms have a duty to conduct a reasonable investigation concerning the private placements issuer’s representations concerning the security. In recent years investors have suffered dramatic losses because brokerage firms ignored red flags or conducted only a cursory review of the product before allowing it to be recommended to clients.

The number of complaints made by investors against Romero is relatively large by industry standards. According to InvestmentNews, only about 12% of financial advisors have any type of disclosure event on their records. Brokers must disclose different types of events, not necessarily all of which are customer complaints. These disclosures can include IRS tax liens, judgments, and even criminal matters.

Investors who have suffered losses may be able recover their losses through securities arbitration. The attorneys at Gana LLP are experienced in representing investors in cases of unsuitable investments and brokerage firm’s failure to supervise their representatives. Our consultations are free of charge and the firm is only compensated if you recover.