Sean Brady Barred By FINRA Over Complaints Concerning Alternative Investment Sales Practices

shutterstock_159036452-257x300Former First Allied Securities, Inc. (First Allied) broker Sean Brady (Brady) has been subject to at least six customer complaints, one employment termination for cause, and one regulatory action resulting in a bar from the industry.  According to a BrokerCheck report many of the customer complaints concern alternative investments and direct participation products (DPPs) such as non-traded real estate investment trusts (REITs).  The attorneys at Gana Weinstein LLP have extensive experience handling investor losses caused by these types of products.

In October 2017 First Allied terminated Brady on allegations that he violated the firm’s policies pertaining to client falsification of signature on documents, text messaging, and consolidated account reports.  Thereafter, Brady was subject to a FINRA investigation concerning his sales practices.  FINRA found that Brady failed to provide the regulator with information and documents requested resulting in a automatic industry bar.

The most recent customer complaint alleges Brady misrepresented her net worth, made an unsuitable recommendation, and made misrepresentations and omissions with respect to her investment from 2017 causing $265,000.  The claim is currently pending.

Our firm often handles cases involving direct participation products, Non-Traded REITs, oil and gas offerings, equipment leasing products, and other alternative investments.  These products are almost always unsuitable for investors.  In addition, the brokers who sell them are paid additional commission in order to hype inferior quality investments which provides a perverse incentives by brokers to create an artificial market for products that no honest advisor would sell.

According to studies, non-traded REITs have historically have underperformed even safe benchmarks, like U.S. treasury bonds – meaning that non-traded REITs provide paltry investment returns considering the risk an investor takes.  Alternative investment products like oil and gas partnerships, REITs, and equipment leasing programs are rarely, if ever, appropriate for investors due to their high costs, illiquidity, high risks, and huge redemption charges of the products, if they can be redeemed at all.  Investors often fail to understand that they have lost money until many years after agreeing to the investment.

Unfortunately, due to the high commissions brokers earn on these products they sell them to investors who cannot profit from them.  These products have become so popular among brokers without providing any benefit to investors that many states now limit investors from investing more than 10% of their liquid assets in Non-Traded REITs.  Many states impose these limitations because its understood that that they provide virtually no benefit to investors in relationship to their risks.

In addition, the number of disclosures with respect to Brady is high relative to his peers.  According to newsources, only about 7.3% of financial advisors have any type of disclosure event on their records among brokers employed from 2005 to 2015.  Brokers must publicly disclose reportable events on their CRD customer complaints, IRS tax liens, judgments, investigations, and even criminal matters.  However, studies have found that there are fraud hotspots such as certain parts of California, New York or Florida, where the rates of disclosure can reach 18% or higher.  Moreover, according to the New York Times, BrokerCheck may be becoming increasing inaccurate and understate broker misconduct as studies have shown that 96.9% of broker requests to clean their records of complaints are granted.

Brady entered the securities industry in 2001.  From May 2008 November 2017 Brady was registered with First Allied out of the firm’s St. Louis, Missouri office location.

At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts.  Claims may be brought in securities arbitration before FINRA.  Our consultations are free of charge and the firm is only compensated if you recover.