The securities lawyers of Gana LLP are pleased to announce an award on behalf of their client against Centaurus Financial, Inc. (Centaurus) in the amount of $150,000 plus costs. The complaint was filed The Financial Industry Regulatory Authority (FINRA) and involved multiple brokerage firms that hired advisor Ahmad Hashemian.
The Claimant alleged that Hashemian invested over $2,000,000 in exclusively high cost products and 50% of those investments were in alternative investments such as private placements, oil and gas partnerships, and non-traded real estate investment trusts (REITs). The other 50% was invested in variable and equity-indexed annuities. All of these investments come with high costs and historically have underperformed even safe benchmarks, like U.S. treasury bonds. Brokers, enticed by the high commissions, often times misled their clients into investing in these products.
In this case the panel found that “the investments Hashemian recommended while at Centaurus were not suitable and in Margaret Polito’s best interests. Margaret Polito also provided sufficient evidence to meet her burden of proof to support her allegations in her Statement of Claim that the actions by Hashemian, for which Centaurus is responsible, constitute fraudulent and negligently made material misrepresentations and omitted material information in the sale of the investments to Margaret Polito.” Award Can Be Found Here.
Even more shocking is the fact that some of these activities occurred while Hashemian was under heightened supervision. Nonetheless, Centaurus failed to supervise Hashemian’s misconduct that included having his client sign blank forms and inflating her financial information so that she could qualify for the investments he was recommending.
Unfortunately, Hashemian’s actions are not an isolated incident. Instead, they are part of a culture of non-compliance that prevails at Centaurus and at other brokerage firms. According to a recent study conducted by the Securities Litigation and Consulting Group entitled “How Widespread and Predictable is Stock Broker Misconduct?” the incidents of investor harm at Centaurus is extraordinarily high. The study ranked Centaurus as the fourth worst brokerage firm finding that brokers at the firm had over a 27% misconduct rate. The study stated that investors should stay away from Centaurus “Given their coworkers’ disclosure record as of 2014, 83.7% of the brokers at these six firms would be in the highest risk quintile as defined in the FINRA study and should be avoided by investors. The BrokerCheck reports for most of the brokers at these six firms should prominently display a skull and crossbones warning.”
As long as brokerage firms can make money off of brokers like Hashemian we expect to continue to receive complaints from defrauded victims.
The investment fraud attorneys at Gana LLP represent investors who have suffered securities losses due to the mishandling of their accounts. The majority of these claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.