Broker Gary Saitowitz Sanctioned Over Non-Traded REITs Sales

shutterstock_175835072-300x199The investment fraud attorneys with Gana LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Gary Saitowitz (Saitowitz) currently not associated with any broker-dealer.  According to brokercheck records Saitowitz has been subject to three customer complaints, declared bankruptcy in March 2015, was terminated for cause by Transamerica Financial Advisors, Inc. (Transamerica), and sanctioned by FINRA in January 2017.  Saitowitz’s termination for cause and FINRA sanctions involve his conduct concerning direct participation products (DPPs) such as non-traded real estate investment trusts (REITs) and potentially other alternative investments.

In January 2017, Saitowitz consented to FINRA sanctions that he had customers sign blank and incomplete brokerage forms and that some of the pre-signed forms authorized fund movement or loans from customer accounts, while others related to customer financial information, used by the firm to supervise whether transactions solicited by Saitowitz were suitable for customers. FINRA found that the maintaining of pre-signed forms enhanced the risk that customers would be placed in unsuitable investments or subject to unauthorized account activity.  FINRA also found that his brokerage firm imposed limits on the amount of a customer’s liquid assets that could be invested in non-traded REITs but that in order to circumvent the limits Saitowitz maintained records overstating the liquid net worth of certain customers in connection with sales of non-traded REITs.

FINRA also found that Saitowitz used personal email addresses to conduct securities business in contravention of the firm’s policies and procedures. Finally, FINRA also determined that Saitowitz failed to report a judgment and a tax lien and to timely report five tax liens.

Saitowitz entered the securities industry in 2000.  From August 2008 through May 2009 Saitowitz was registered with Summit Brokerage Services, Inc.  From August 2009 through August 2012 Saitowitz was associated with Kovack Securities Inc.  Then from August 2012 until April 2014 Saitowitz was associated with Transamerica.  Finally, from May 2014 until June 2016, Saitowitz was associated with IFS Securities out of the firm’s Atlanta, Georgia office location.  Saitowitz’s brokercheck also discloses that Saitowitz disclosed outside business activities include Paragon Collegiate Advisors and South Africa Ltd.

Our firm has represented many clients in illiquid alternative investments products.  All of these investments come with high costs and have historically underperformed even safe benchmarks, like U.S. treasury bonds.  For example, products like oil and gas partnerships, REITs, and other alternative investments are only appropriate for a narrow band of investors under certain conditions due to the high costs, illiquidity, and huge redemption charges of the products, if they can be redeemed at all.  However, due to the high commissions brokers earn on these products they sell them to investors who cannot profit from them and have created a large market for a failed product.  Further, investor often fail to understand that they have lost money in these illiquid investments until many years after investing.  In sum, for all of their costs and risks, investors in these programs are in no way additionally compensated for the loss of liquidity, risks, or cost.

Gana LLP’s securities fraud attorneys represent investors who have suffered securities losses due to the mishandling of their accounts in alternative investments and other inappropriate assets.  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.