The law offices of Gana LLP recently filed a statement of claim with FINRA on behalf of their 60 year old client concerning inappropriate investments in private placements, non-traded real estate investment trusts (Non-Traded REITs), low priced securities, and private securities transactions. The complaint was filed against Newbridge Securities Corporation (Newbridge) and alleges that the firm’s broker Dennis Hayes (Hayes) recommended these unsuitable transactions. In total the Claimant alleges approximately $750,000 in damages.
According to the Statement of Claim, the Claimant divorced her husband in 2012 leaving her with approximately $1,500,000 in assets of which $500,000 was non-qualified money and about $1 million was qualified IRA funds. Claimant explained to Hayes that her goals were to protect her assets while providing her with returns to meet her immediate income needs. Shortly after transferring the funds, Hayes solicited the Claimant to invest in a gold fund called USA Gold. According to the complaint, Hayes recommended $300,000 in USA Gold through a self-directed IRA account.
The complaint alleges that after a diligent search there appears to be no Regulation D filing for a private placement for USA Gold and no evidence of any registration of the offering. USA Gold appears to be an unregistered securities offering and most likely an investment scam. Even more shocking is that Newbridge has failed to properly investigate and terminate Hayes for his involvement in the unregistered offering thereby continuing to place investors at risk. According to the Statement of Claim, Claimant complained to Gene Robert Abrams (Abrams), Newbridge’s General Counsel and Co-Chief Compliance Officer that Hayes was involved in private securities transactions.
The Statement of Claim showed that Claimant sent Abrams text messages she received from Hayes, an impermissible form of communicating to clients, showing Hayes’ involvement in USA Gold. Somehow despite this evidence, Newbridge immediately, and without further investigation, concluded that Hayes was not involved in making the recommendations in USA Gold, even though Newbridge admit that Hayes also invested in the same fraudulent investment.
Despite evidence from multiple sources involving fraudulent private securities transactions being provided to Newbridge senior principals showing Hayes’ involvement in USA Gold, Hayes continues to be employed by Newbridge as of the date of this writing. The Statement of Claim alleges that by continuing to employ Hayes Newbridge continues to aid and abet the USA Gold investment scheme by knowingly continuing to license and employ USA Gold’s agents like Hayes who hold themselves out to the public as professional licensed advisors.
The complaint also alleged that the vast majority of Claimant’s assets were invested in risky non-traded REITs including American Realty Capital Hospitality REIT, Carter Validus Mission Critical REIT, Griffen Capital Essential Asset REIT, and Business Development Corporation of America. In addition, it was alleged that Hayes recommended a real estate private placement called Shopoff Land Fund IV. Further, it was alleged that Hayes concentrated Claimant’s remaining funds in speculative securities such as RCS Capital Corporation (Symbol: RCAP).
Hayes is currently registered with, Newbridge, a brokerage firm that has been identified as employing troublesome brokers. According to a recent follow up study to the Securities Litigation and Consulting Group’s initial report entitled “How Widespread and Predictable is Stock Broker Misconduct?” entitled Smaller Brokerage Firms Are Even Worse! the incidents of investor harm at Newbridge is extraordinarily high. The study ranked Newbridge as one of the worst brokerage firms finding that brokers at the firm had over a 47% misconduct rate.
The investment 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.