Securities Lawyers Blog
The investment fraud attorneys with Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Joseph Sterling (Sterling) currently associated with Geneos Wealth Management, Inc. (Geneos Wealth). According to brokercheck records Sterling has been subject to three customer complaints. Two of the most recent complaints involve his conduct concerning direct participation products (DPPs) such as non-traded real estate investment trusts (REITs) and potentially other alternative investments.
In August 2017 a customer filed a complaint alleging that Sterling made unsuitable recommendations of real estate securities in 2012 and 2013 and other causes of action. The customer alleges $290,000 in damages and the claim is currently pending. Another customer filed a complaint in July 2017 alleging that in 2013 and 2014, Sterling made unsuitable recommendations of real estate securities and other direct investments and other causes of action. The claim alleged $500,000 in damages and is currently pending.
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.
The number of events listed on Sterling’s brokercheck is high relative to his peers. According to InvestmentNews, only about 12% of financial advisors have any type of disclosure event on their records. Brokers must publicly disclose certain types of reportable events on their CRD including but not limited to customer complaints. In addition to disclosing client disputes brokers must divulge IRS tax liens, judgments, and criminal matters. However, FINRA’s records are not always complete according to a Wall Street Journal story that checked with 26 state regulators and found that at least 38,400 brokers had regulatory or financial red flags such as a personal bankruptcy that showed up in state records but not on BrokerCheck. More disturbing is the fact that 19,000 out of those 38,400 brokers had spotless BrokerCheck records.
Sterling entered the securities industry in 1983. Since January 2005 Sterling has been registered with Geneos Wealth out of the firm’s Apple Valley, Minnesota office location.
Gana Weinstein 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.